MUMBAI: Stock markets could gap down Monday, taking cues from the SGX Nifty and derivatives which show huge shorts to have been formed. Indian bourse shut after Wednesday for a shortened week marked by Mahavir Jayanti and Good Friday, with the last Nifty closing at 17475.65.
The SGX, a derivative of the Nifty index that is traded on the Singapore Exchange, traded down 154 points at 17322 as of April 15. “This clearly indicates that markets could be under pressure at opening on Monday,” said Rajesh Palviya, derivatives head of Axis Securities. “Techs will be a drag, while the markets keenly watch HDFC Bank quarterly numbers, which will be out on Saturday .”
Infy and TCS , which announced their results earlier this week, showed record-high attrition rates of 27.7% and 17.4% at the end of March 2022. This implies margins could continue to remain under pressure, as per Hormuz Maloo, AFco Investments.
HDFC Bank, which powered to a 14% high of Rs 1722.10 on the news of HDFC merging into it on April 4, fell almost 15% post that day to Rs 1464 on April 13. Data shows markets could trade 2% above or below 17500 in the coming week , with a bias for downside as of now The range for the week is 17218 -17782.
However, the extent of shorts are huge, and any positive surprise could result in a 100-200 point rally on Nifty. FIIs have net purchased shares worth Rs 3189 crore since the beginning of the current fiscal, after having sold a record Rs 1.4 lakh crore worth of shares in the previous fiscal (FY22). They remain net short index futures — Nifty and Bank Nifty — which is an added bearish sign for the short term.
The Nifty is 6% off its record high of 18604.45 on October 19 last year. The hardening of interest rates in the US and tapering of bond purchases along with the Russian invasion of Ukraine have impacted emerging markets like India, which is hugely import-dependent on oil.
The Russian invasion of Ukraine took the price of Brent to almost 140 USD a barrel.