Markets to consolidate ahead of F&O expiry

Post two weeks of global market volatility, Indian markets influenced by further volatility ahead of domestic factors of rising trade deficit and shocking bank fraud weigh on sentiment.

Nifty ended flattish at 10,452 lost three points on a weekly basis while mid and small cap indices lost 0.86% and 1.47% and the Nifty bank lost 1.18%. The energy sector gained by 1% rest all the sector indices ended negative, the biggest loser was the PSU banks which lost 8.4%.

FIIs sold equities worth Rs 2,849 crore while DIIs bought worth Rs 2,368 crore in the last week.

Indian markets were laggards on weekly basis and still down by 8% from the highs while the US markets post-mayhem recovered more than 50% from the recent lows. The US bond yield is trading flat around 2.89% post sharp rally in the last two weeks. In the last week highlights, Indian market sentiment was affected mainly post Punjab National Bank announced that it faced $1.77bn fraud by a jewelry company via LoU back in the year 2011 and the amount turns to whopping Rs 11,400 crore today which will be a straight hit to the company and will raise its NPA by 25%, PNB stock lost 21% in two trading sessions.

India’s trade deficit widened to $16bn which raised concern over the market sentiment while inflation numbers are very much under control due to lower vegetable and fuel price. Q3 corporate earnings disappointed in its closing season with poor results from the PSU banks, Tata Motors and Sun Pharma which further spoiled the market's sentiment.

The US markets are closed today in observance of President Day. Key data to watch in this week, US FOMC meeting minutes, the US and Euro Flash and Services PMI on Wednesday, US Crude oil inventories and unemployment claims data will be released on Thursday.

For the week, markets will face some volatility ahead of February F&O series expiry on Thursday, global volatility has settled for now. The market will remain in consolidation in the week, individual stock price correction in strong fundamental stock provides buying opportunity for the investors.

Technically, the short-term trend is still under pressure till Nifty remains below 10,650 and on the downside, immediate support is seen at 10,300 and Nifty 200DMA is placed near to 10,050-10,070 levels. The broader trading range for the week is likely to be 10,650-10,300.

SEE-SAW TRADE

• Technically, the short-term trend is still under pressure till Nifty remains below 10650
   
• On the downside, immediate support is seen at 10300 and Nifty 200 DMA is placed near to 10050-10070 levels

The writer is VP- retail research, Motilal Oswal Securities Ltd