Markets week ahead: Volatility to rule amid earnings release

During the holiday-shortened week gone by, equity markets remained choppy and traded higher on optimism of the second stimulus package. However, the bourses rallied on Friday after Reserve Bank of India (RBI) announced liquidity boosting measures to support the economy amid coronavirus pandemic.

Both the benchmark indices, Sensex and Nifty gained nearly 3% during the week. S&P BSE Sensex jumped 986 points or 3.22% to close the session at 31,589, while the broader Nifty settled at 9,266, up 275 points or 3.05%.
The concerns around the coronavirus and the consequent economic distress is weighing on the financial markets.
Also, a major part of the world population is under lockdown and it is expected that markets may not take any material direction till the lockdown ends.
Markets are expected to respond more to information on the virus and when the economy will reopen than earnings or economic data.

Clarity on the earnings growth front and Coronavirus will keep investors sentiments under check. Hence, this earning season would generate volatility but no meaningful price direction.
On the other hand, The Indian Rupee ended 48 paise higher at 76.39 against the US dollar on Friday buoyed by RBI measures.
Hence, the stress on economy from Coronavirus along with outflows from local equities will push the rupee sub-77 mark soon.

FIIs/ FPIs seem to be a worried lot as the rupee is losing its value continuously, and they, therefore, continue to sell selectively, even though with lesser intensity, whereas domestic investors are still cautious and unwilling to put more money given that the indices have already increased by 24% from their lows.

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