Markets Would Remain Volatile

The Indian markets may remain volatile as they would take cues of the global markets, as yesterday markets was closed on account of Independence day which is a public holiday.

Markets on a day before (Monday) closed on a positive note with the broader Indices closing higher almost 0.60 per cent. This is after Investors and traders speculated that RBI may take a rate cut in its next monetary review as the WPI Inflation numbers came in at 6.87 per cent which was below the streets expectations of around 7.25 per cent. However we at Dalal Street Investment Journal believe that Inflation risk still hovers above the economy as the shortfall in monsoon would again take food price to move higher while on the other hand talks of diesel deregulation is on the cards. Further the crude price has is again moving northwards adding more worries to the economy.

Further According to business standard, Prime Minister Blames lack of political consensus for slow growth. Further the report said that he vowed to do everything to boost economy through investments while linking development processes to national security. Addressing the nation from the ramparts of historic Red Fort on the occasion of 66th Independence Day, he promised to work for reducing corruption in public life and sought the help of all political parties in passing the Lokpal and Lokayuktas Bill in Parliament in this regard.

Overnight European markets closed lower in the negative territory with major Indices like FTSE, CAC and DAX closed lower 0.03 to 1.20 per cent respectively. While the US markets also looking after media reports which said that the better tone of the economic data in the two weeks since the Federal Reserve’s last policy meeting have caused some Fed watchers to doubt that the central bank will launch another massive bond purchase program next month.

Asian markets yesterday ended lower in the negative territory. With Hang Seng and Shanghai closed lower more than one per cent. This is after Bloomberg report which said that China’s stocks fell, dragging down the benchmark index to the lowest in two weeks; on concern the nation’s economic slowdown is curbing demand for products from copper to household appliances.

The rupee is still above the comfort levels against the dollar. It is currently trading at Rs 55.805 against a dollar. Brent crude has moved up smartly and is trading at USD 113.61 per barrel which should be considered as high and above the comfort zone. Rising crude prices coupled with Rupee depreciation would worsen the fiscal situation which would affect the Indian economy.

Further most of the companies have declared June quarter numbers of 2012, which were also not encouraging. There are stocks like, Best & Corporation, Intrasoft Tech, JCT electronics etc which are going to announce their results. We could see some volatility in the share price of these companies post their June numbers.   

In conclusion we believe the market will remain volatile and we advise our readers to plat with cautious.