What is your view on the stock markets for Wednesday 20th April and how do you see Q4 results impacting markets?

Over the last five days, the markets have been falling due to a mix of macros and company specific concerns. The recent sell-off in Infosys and HDFC Bank happened after they reported below average results in the previous week. On Tuesday, ACC announced results which again showed strong pressure on operating margins and also on profit growth.

Let me turn to the market structure now. On Tuesday, the breadth of market indicator was unfavourable with the Advance / Decline or A/D ratio at 6:44. Adding to the risk, the VIX rallied to 19.78 levels. While the HDFC family of stocks led the fall; gainers in the Nifty included names like Reliance, Coal India and Apollo Hospital Enterprises.

FPIs net sold Rs.5,872 crore as domestic funds and LIC bought stocks worth Rs.3,981 crore on Tuesday. FPIs have sold more than Rs.12,200 crore in last 2 days. In global market trends, Dow was up 500 points and the NASDAQ was also up 288 points as recovery sharpened. European markets were in the red but SGX Nifty is 55 bps higher in early trades on US cues.

Regarding Q4 numbers, it looks like the margin pressure is a reality across the board amidst spiking commodity inflation. Infosys and HDFC Bank continued to put pressure on markets. ACC also reported operating margin strain. An additional risk factor has come with the IMF downsizing global growth by 80 bps to 3.6% and even India growth by 80 basis points to just about 8.2% for FY23. Under such pressure, it is best to use bounces to sell.