Analysts have also signaled that equity markets may encounter volatility amid the scheduled monthly expiration of derivatives. Meanwhile, stock markets will remain closed on Wednesday due to Republic Day. Additionally, the domestic market is expected to remain highly volatile as investors await the outcome of the upcoming budget announcement.

Ajit Mishra, Vice President (Research) of Religare Broking, said: “This week is a shortened week and it is going to be critical due to the list of events and data that is lined up. First, markets will react to earnings from two index heavyweights – Reliance Industries and ICICI Bank.”

Reliance Industries Ltd announced its best ever quarterly performance in October-December 2021 on Friday, helped by a slight rise in two ‘Rs’ – refining and retail, a recent rate hike accelerating Jio’s growth and a one-time gain of the sale of the shale gas business in the United States.

While private sector lender ICICI Bank on Saturday reported a nearly 19% jump in consolidated profit to ₹6,536 crore for the quarter ended December 2021, helped by higher net interest income (NII) and lower provisions.

Currently, uncertainty surrounding the quantum of a rate hike by the US Federal Reserve is spooking markets around the world and participants are expecting clarity in the outcome of the scheduled FOMC meeting (Federal Open Market Committee) on January 26, Mishra added.

“Overall, the monthly expiration of the January derivatives contract would keep traders on their toes,” he said.

Noting that ahead of the budget, sector-specific expectations will further add to the instability, Mishra said, “On the earnings front, we have some big names like Axis Bank, Kotak Mahindra Bank, Maruti, Cipla, Vedanta and Larson & Toubro who will announce their results with several others.”

Just last week, weak global sentiment wreaked havoc on the volatile domestic market. Last week, the Sensex lost 2,185.85 points or 3.57%, while the Nifty fell 638.60 points or 3.49% as global stocks sold off amid concerns regarding inflation and the tightening of monetary policy.

While the indices saw a 4% rise last week, so too did the REIT see large-cap and some high-quality mid-cap gains.

S Ranganathan, Head (Research) at LKP Securities, said “rising oil and input prices coupled with a slowing rural economy kept investors vigilant as markets turned volatile.” It is very likely that the evolution of the market will also depend on the evolution of the rupee-dollar and the Brent.

Siddhartha Khemka, head (retail research) at Motilal Oswal Financial Services Ltd, said “results from heavyweights Reliance Industries and ICICI Bank over the weekend will give direction to the market on Monday.” Additionally, other companies expected to report results this week are Federal Bank, BHEL, Canara Bank and PNB.

Vinod Nair, Head (Research) at Geojit Financial Services, said: “As recent earnings failed to excite the market, earnings results this week will be a key factor in determining investor sentiment.”

Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, said: “Investors will be focused on the upcoming Union budget, earnings season and the national elections in India.”