Markets May Remain Volatile

The Indian markets may remain volatile during the week as there is some kind of positive sentiment on the D-Street while there is also a possibility that we may also have a correction, as the markets since last four week has shown a continuous uptrend. We at Dalal Street Investment Journal have little bias over the latter one. Further one should note that this week we would be having 4 working days, as the markets would be off on Tuesday, on account of Gandhi Jayanti.

Indian markets last week markets ended on a positive note. There were domestic events such as government announcing debt restructuring package for the State electricity board which would help them as well as power companies and banks which are correlated with the SEB’s in their business. Also after some of the international news like Spanish Austerity measures and media reports which said that China’s would also take some kind of stimulus package which will help the global growth helped the market to move northwards.

On Friday US markets ended lower in the negative territory, with major Indices like Dow Jones, Nasdaq and S&P 500 closed lower in the range of 0.3 to 0.7 per cent respectively. This is after bloomberg reports which said that market participants had concern over the Europe’s debt crisis and stimulus measures may not be enough to boost the economic growth. Also Market Watch reported that this week will be the starting of the final quarter of 2012 with a heavy schedule of reports highlighting conditions in the U.S. economy, with all leading up to figures that will show if there’s been any improvement in the shaky labor market.  

European Markets also ended in deep red on Friday, with major Indices like FTSE, CAC and DAX closed lower down 0.6 to 2.5 per cent respectively. This is after Bloomberg report which said that European stocks posted their biggest weekly decline since June as concern that the latest round of bond buying in the U.S. will fail to encourage growth. CAC Index closed 2.5 per cent lower, after the Bloomberg report which said that France is maintaining its budget deficit and growth targets for 2013 by increasing taxes on the wealthiest 10 percent of the population and big companies    

Asian markets on Friday closed in mixed bagged with Nikkei closing lower 0.9 per cent while Hang seng and Shanghai closed higher 0.37 and 1.43 per cent respectively. This is after media reports which said that China’s central banks infused around USD 57.92 billion dollars into the money market last week, which is the largest weekly injection of money into the system in order to boost the economic growth. It seems that Chinese economy is facing serious slowdown and government would take all possible measures which could bring back the growth on track.  

The rupee has been appreciating since last couple of weeks as it has come down from the levels of sub Rs 56 per dollar to the Rs 52.697 against a dollar which is good for our economy. Going ahead, we believe that the government which has put an end to the policy paralysis will help the rupee to appreciate against the dollar and one may see Rupee moving to the 50 dollar a mark soon. Brent crude continues to trade in the range of USD 109 to USD 115 per barrel. Any movement of the Crude downside would be positive for our economy and vice-versa.

Further the second quarter results may kick start from this week as some of the companies like CCL products, Jai Balaji Industries, Bajaj Corp etc announcing their results which may affect their share price movement. We at Dalal Street Investment Journal believe the next big trigger for the market is the September quarter results which could take the market in either direction.

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