Market Likely To Volatile Ahead Of F&O Expiry

Indian equities indices slipped for the second consecutive week in a volatile trade due to profit booking in frontline stocks and the BSE Sensex dropped to one-and-a-half month lows and Nifty slumped below 8,600-level. The week’s trade witnessed extreme volatility to range-bound momentum, as the retail inflation data dampened hopes of a rate-cut by the Reserve Bank of India (RBI) in April and fear of a US Fed rate-hike in June put emerging market currencies under pressure.

Last week, the sensex closed 0.84% or 242 points lower at 28,261.08 points, while NSE’s Nifty closed 76.85 points or 0.88% lower at 8,570.90 points. The BSE Mid-Cap index declined 1.57%. The BSE Small-Cap index shed 3.12%. The decline in both these indices was higher than the Sensex's decline in percentage terms.

U.S. stocks market posted gains on Friday and for the last week. The main event was the mid-week Federal Reserve meeting and Janet Yellen’s press conference which assured investors that interest rate hikes were going to be slow and still some distance away. For the week, the Dow Jones Industrial Average gained 2.1%, the S&P 500 added 2.7% and the Nasdaq tacked on 3.2%.

European stocks jumped Friday, strengthening on the prospect that U.S. interest rates will stay low for a longer period of time, and finding support as Greece said it's drawing up another plan for economic reforms. The Stoxx 600 logged a weekly advance of 1.9%, marking a seventh straight week of gains, with European stocks buoyed by the impact of the European Central Bank's asset-purchase program. Germany's DAX 30 leapt 1.2% to 12,039.37, its first win after three sessions of declines. The index logged a weekly rise of 1.2%, marking its 10th consecutive weekly gain.

Asian shares started the week on a strong note on Monday after a weaker U.S. dollar helped fuel solid gains on Wall Street. Japan's Nikkei 225 index rose 1.07% and touched a fresh 15-year high as a strong finish on Wall Street offset the impact of a rangebound yen. Australia’s S&P/ASX 200 Index was the only major benchmark gauge in Asia to decline today. The NZX 50 Index was little changed in Wellington, while the Kospi index in Seoul rose 0.16%. Hong Kong’s Hang Seng Index climbed 0.62% and China's Shanghai Composite charged up 1.3% to its highest level since May 2008 amid a broad-based rally.

SGX Nifty is trading marginally up by 10 points. Indian markets are likely to remain volatile in the current week due to ahead of March month F&O expiry due on 26 March 2015. The choppiness will also continue in near term, at least till the fourth quarter (Q4FY15) earnings announcement.