Markets strategy ahead of the Q4 result season

It has been a choppy ride for the Indian markets thus far in 2022, as global and domestic headwinds impacted sentiment.
The next leg of the market trend is likely to be led by Q4 earnings – starting with IT majors like TCS and Infosys, on April 11 and April 13, respectively. HDFC Bank is scheduled to announce its numbers on April 16.
 
As per the F&O data, the Nifty witnessed some long unwinding in the first week of April, as traders opted to take home some profit ahead of the earnings season and RBI policy outcome on April 08.

The Nifty Open Interest, or OI, had increased sharply by 51.87 lakh contracts at March-end owing to the April rollover.
However, post that the OI has dropped in successive trading sessions, along with a fall in Nifty in the last three trading sessions – thus indicating long unwinding.

Among frontline IT stocks that are scheduled to announce their March quarter numbers next week, Infosys has seen a consistent rise in OI since the start of the month even as the underlying price declined by nearly 5 per cent.

Similarly, TCS too has seen a rise in OI while the price has declined marginally. The options data reads as follows:

A closer look at the options data indicates a likely trading range of Rs 3,650 to Rs 4,000 for TCS; with some resistance expected around Rs 3,875-odd levels.
Infosys, on the other hand, is expected to trade in the range of Rs 1,680 to Rs 1,940.

On Friday, the market participants will keenly track the RBI policy developments for cues on the future rate cycle and inflation forecast.

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