'Global trends, Q3 earnings major drivers for equity market this week'

New Delhi: Equity markets will look for directions from global trends, ongoing quarterly earnings and investment patterns of foreign institutional investors (FIIs) in a holiday-shortened week ahead and may encounter volatility amid the scheduled monthly derivatives expiry, according to analysts.

Equity markets will remain closed on Wednesday on account of 'Republic Day'.

"This week is a holiday-shortened one and it's going to be critical due to the list of events and data that are lined up. First, markets will react to the earnings of two index heavyweights Reliance Industries and ICICI Bank," said Ajit Mishra, vice-president (research) of Religare Broking.

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

"Amid all, the monthly expiry of January month derivatives contract would keep traders on their toes," he said.

In the run-up to the Budget, sector-specific expectations will further add to the choppiness, he added.

"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 along with several others," Mishra said. Weak global sentiments wreaked havoc in the volatile domestic market last week.

Last week, the Sensex lost 2,185.85 points or 3.57 per cent, while the Nifty slumped 638.60 points or 3.49 per cent in tandem with a sell-off in global equities amid concerns over inflation and monetary policy tightening.