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Markets took a breather and settled with a cut of a percent, after 3 weeks of successive rebound.  The tone was cautious from the beginning, taking the hint from high inflation data, which could prompt the apex banks to move more swiftly and that may result in recessionary pressure globally. Moreover, on the domestic front, a tepid start to the earnings season by the IT majors also added to the participants’ worries. Consequently, both Nifty and Sensex shed over a percent each to close at 16,049.2 and 53,760.8 respectively. The sectoral indices ended mixed wherein auto, FMCG and realty posted gains while IT and banking settled lower. Amid all, the broader indices outperformed the benchmark wherein the midcap index gained over a percent.

In absence of any major event, we feel earnings and global cues will largely dictate the trend.

On the earnings front, participants will first react to HDFC Bank’s numbers. Besides, some prominent names like Ambuja Cement, Hindustan Unilever, Indusind Bank, Wipro and UltraTech Cement will announce their results in the following sessions.

We’re seeing a tussle among the bulls and bears, not only in Indian markets but globally. A decisive close below 15,900 may change the index tone again but we feel sectors like auto and FMCG would continue to offer trading opportunities on the long side. Besides, select stocks from other sectors like pharma, realty, banking and financials are also attracting decent traction. On the flip side, IT and metals are still not showing any sign of reversal despite the oversold positions. Participants should align their positions accordingly and prefer a hedged approach citing the overnight risk and volatility due to the earnings season.