Cautious trade dominates ahead of Q4 earnings, RBI meet

Amid ongoing geopolitical tensions, rising crude oil prices, weak global markets and sustained selling by FIIs;market ended lower for the sixth consecutive week.During the week, theSensex fell 263.67 points, or 0.35%, to end at 73,319.55, while the Nifty was down 106.5 points, down 0.46%, to finish at 22,713.10.Ahead of Q4 earnings season, the broader market witnessed sporadic buying.

The BSE Midcap index declined 0.5 percentand the BSE Smallcap index gained nearly 1 percent.FIIs extended their selling streak for the seventh consecutive week, offloading equities worth ₹29,425.34 crore. In contrast, DIIs remained net buyers, purchasing equities worth ₹29,274.93 crore during the same period.

This record selling was driven by a confluence of factors, including the ongoing conflict, a sharp spike in crude oil prices above the $100 mark, the steady depreciation of the rupee, and a strengthening US dollar.Focus of marketmen will be on outcome and commentary of RBI MPC meeting from April 6-8. A lot has changed from the time the Monetary Policy Committee (MPC) met to announce the policy in February to now.

In the last meeting though geopolitical risks were highlighted, no macro projections would have assumed a West Asia war and the consequent impact of the same on supply chains, commodity prices, and currency markets etc.Now with geopolitical tensions escalating dramatically with the US-Israel war and leading to a considerable change in the macro-economic assessment of the Indian economy, a total relook looks inevitable.

The “goldilocks” scenario of high growth and low inflation is likely to alter as growth is expected to move lower while there are risks for inflation to move higher.The April policy is likely to be a status quo policy, and the stance is also expected to stay unchanged. Fortunately, India has strong growth, and a low inflation mix now, there is some room for flexibility and ease of time for the RBI.

Important would also be the RBI’s new projections on growth and inflation, which can also provide some cues to the risks ahead with respect to the growth-inflation mix and hence on how monetary policy would conduct itself.The Indian rupee snapped its four-week losing streak, posting its biggest gain in more than 12 years on intervention by RBI through specific measures like curbs on offshore derivatives.

Earlier in the week ended, it had weakened past the 95 mark for the first time, hitting a record low of 95.12. For the week, the domestic currency ended 171 paise stronger at 93.10.Oil prices have witnessed a sharp surge in 2026, with Brent crude recording an extraordinary 56% monthly gain—its strongest rally on record, amid escalating tensions between the U.S. and Iran.

The global oil market has remained under significant pressure. Observers of the stock market say that at the bottom of the cycle, volatility climbs, investor risk appetite shrinks and short-termism prevails. Such a sudden shift in volatility represents shifts in market structure, which is an opportunity to capitalise rather than capitulate.

Be prepared to invest in a down market and to “get out” in a soaring market, as per the philosophy of Warren Buffett.

FUTURES & OPTIONS / SECTOR WATCH

During the week ended laced with holidays, marketstraded with a distinct negative bias. Nifty gradually drifted lower and breached key short-term supports. It oscillated in a range of 758 points before closing near the lower end of the range.Losses were partially capped by support from IT, metal stocks and a stronger Indian rupee, which helped the market recover from deeper declines.

In theoptions segment, the significant Call open interest for Nifty was observed atthe 23,000-strike level whereas notable Put open interest was concentratedat the 22,000 strikes. For Bank Nifty, significant Call open interest was seenat the 52,000 strike with substantial Put open interest at the 51,000 strike.Volatility cooled off, with India VIX dropping by 4.78% on a weekly basis, reflecting increased nervousness amid global uncertainties.

On the upside, 22,800–23,000 remains an immediate resistance band, followed by a stronger supply zone at 23,200–23,500. Only a sustained move above these levels would indicate a meaningful recovery. Momentum indicators continue to remain weak, signalling a lack of strength in the current move.

On the downside, a break below 72,000 could extend the correction towards the 71,500–71,000 zone. While selective buying may emerge at lower levels, strong conviction remains absent.Any pullbacks toward resistance levels should be used to lighten positions rather than initiate fresh exposure. Overall, a guarded and risk-managed strategy is recommended while closely monitoring the behaviour around the 21,700-support zone.

Class Room:From April 1, 2026, derivatives traders in India are confronted with heavier cost structure. STT on futures jumped from 0.02% to 0.05%. On options, it moved from 0.1% to 0.15%. These numbers that look small on paper but compound fast in trading, and they always compound against you.Stop Overtrading, Especially on Expiry Day.More trades do not mean more opportunity.

They mean more cost.Futures STT has risen by 150%. When you add minimum brokerage, Nifty futures now need around 13 points to break even, Bank Nifty needs 27, and Sensex requires about 40. That is before you make a single rupee of profit.When buying options, focus only on high-probability setups.

Avoid chasing small premiums. Before entering any trade, calculate your full breakeven including STT and brokerage. If the math does not work, the trade does not work.Stocks looking good are Adani Enterprises, BEL, Bharti Airtel, HCL Tech, Maruti and RIL.Stocks looking weakare Bajaj Finance, Eternal, Pidilite Inds, Sun Pharma and Muthoot Finance.

(The author is a senior maket analyst and former vice-chairman, Andhra Pradesh State Planning Board)

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