Markets Would Remain Volatile

The Indian markets may remain volatile taking cues from the Jackson Hole meet which was scheduled on Friday (Post Indian market hours) and on Saturday.

Indian markets last week ended on a negative note with four out of five days markets closed in the negative territory. Markets on Friday despite some attempt at recovery following the announcement of the GDP number it closed in the deep red zone. The GDP figure for Jun 2012 came in at 5.5% (stood at 8% in the similar period last year), beating the street’s expectations that were anywhere in the range of 4.9%-5.3%. Despite a weakened economic environment, the numbers have still come in higher by 20 bps on a sequential basis (Mar 2012 quarter GDP stood at 5.3%).

Further according to business standard, dismissing reports about BJP relenting on their demand for Prime Minister's resignation, Leader of the Opposition in Lok Sabha, Sushma Swaraj today asserted that the party would continue to seek Manmohan Singh's ouster in Parliament.

Last weekend Globally Investors watched out the Jackson Hole meet which to some extent gave some kind of positives, which resulted the major developed market Indices like Dow Jones, Nasdaq, S&P 500, CAC and DAX to close higher in the positive territory. According to media reports, At Jackson Hole, cautious wording of Bernanke's speech interpreted as Fed chairman leaning toward another round of easing, perhaps as soon as FOMC's September meeting. According to reports, in his remarks, Bernanke called the stagnation in the U.S. labor market “a grave concern.” And he dismissed the concerns of critics who worry quantitative easing would rekindle inflation and distort financial markets.

Asian markets last week on Friday closed lower with major Indices like Hang Seng, Shanghai and Nikkei closing down in the negative territory. Japanese market Nikkei plunged on Friday after the reports which said that country’s industrial output showed a surprising drop in July, with an equally bleak view for the months ahead. Further the latest media report which was released on weekend said that China’s manufacturing unexpectedly shrank for the first time in nine months as new orders contracted and output rose at a slower pace, signaling the slowdown in the world’s second-biggest economy is deepening. This may result the Chinese market to feel some heat in its early trades which could keep the Asian markets a bit volatile in today’s trade.

The rupee is still above the comfort levels against the dollar. It is currently trading at Rs 55.7215 against a dollar. Brent crude has moved up smartly, up more than 2 per cent to USD 114.92 per barrel this is after media reports which hinted that Fed Chairman’s would go with third round of quantitative easing any time soon in the near future. Current Brent Crude prices 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.

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