Mumbai: The markets are expected to be volatile as companies continue to report June quarter earnings amid expiry of July futures and options (F&O) on Thursday.

Investors will also turn focus to the decision on interest rates post a two-day meeting of the US Federal Reserve on 25-26 July. The Federal Open Market Committee is not expected to raise key interest rate. Earlier this month, chair Janet Yellen had commented that the central bank expects to keep raising a key interest rate at a gradual pace and will start cutting its massive bond holdings this year. The Fed had raised the target range for its federal funds rate by 25 basis points (bps) to 1-1.25% during its June 2017 meeting. One bps is one-hundredth of a percentage point.

“Markets are moving higher backed by immense liquidity and good set of numbers being announced by the companies. Sentiments are approaching at high levels and therefore the risks of sudden reversal have also increased. Any adverse clues from the global markets will have ripple effects in India too," said Jimeet Modi, chief executive officer, SAMCO Securities.

Index heavyweights which will announce quarterly earnings this week are HDFC Bank, Axis Bank, ICICI Bank, Asian Paints, Bharti Airtel, Hero MotoCorp, ICICI Prudential, HDFC, Yes Bank, Nestle India, Maruti Suzuki, Idea Cellular, ONGC, Glenmark Pharma, Larsen and Toubro, Karur Vysya Bank and LIC Housing Finance.

According to Vinod Nair, head of research, Geojit Financial Services, the quarter earnings growth may not match current premium valuation due to a tepid start to the result season. “Currently, investors are giving more weight to the prevailing positive macros which is maintaining a positive vibe in the market. However, there is a chance of consolidation in the near term due to ongoing quarter results, Federal Reserve policy and Organization of the Petroleum Exporting Countries (Opec) meet next week. Sensex FY18 earnings per share (EPS) forecast is very high at 20% while preview for Q1 is dull which will lead to downgrade," he said.

According to a Reuters report, key Opec and non-Opec oil nations will discuss the situation in producers, including Libya and Nigeria, at a meeting on Monday. “Speculation has been swirling in oil markets that the meeting might ask Libya and Nigeria to join a production cutting deal from which they are currently exempt," the Reuters report said.

The ongoing monsoon Parliament session which is passing through a rough patch with continuous adjournments may influence market sentiments, said Vijay Singhania, founder-director, Trade Smart Online. “In the current Monsoon Session, 21 bills in Lok Sabha and 42 bills in Rajya Sabha are pending for approval. Apart from this, currency and crude oil moves will also be closely watched by the investors," he added.