JOIN USMarkets to remain volatile, say experts
Stock markets are likely to remain volatile this week amid concerns over deficient monsoon and a string first quarter corporate earnings, say experts.
Brokers said investors became cautious following differences between the Congress and Agriculture Minister Sharad Pawar-led NCP which has raised questions over functioning of the government and the UPA coalition.
However, hopes are high that the government will initiate fresh reform initiatives after the Presidential elections. Reforms are a prerequisite for the markets to move up, they added.
“Post the Presidential elections, hopes are high that the government will initiate fresh reform initiatives. Reforms are a prerequisite for the markets to move up. Some of the reform initiatives are likely discounted and hence, if these do not come through, it may disappoint the markets,” said Kotak Securities Head (Fundamental Research) Dipen Shah.
Meanwhile, NCP, which has decided to pull out of the UPA government in protest against the way the party was being treated by the Congress, has said it will remain part of the ruling coalition and continue to support the government.
Marketmen are keenly watching whether the government will announce policy reforms such as increase in diesel prices, allowing foreign investment in aviation and retail sectors. Besides, progress of monsoon rains will also be closely monitored.
“Monsoons are still deficient till date and is also of concern.
his has implications for inflation and also, to some extent, on the RBI policy action (July 31),” Shah added.
“Till date, most regions of India have reported deficient rainfall, which has adversely impacted Kharif sowing. Poor monsoon season is particularly worrying because the economy is already sluggish and monsoon shortfall will only add to the woes by lowering agriculture output, hurting rural consumption, raising food prices and impacting hydro-power generation,” Edelweiss Securities said in a report.
Stock-specific action will be at the fore as the first quarter June 2012 earnings season is underway. Among major result announcements this week are HUL, L&T, Cairn India, Sesa Goa, Jindal Steel & Power, Power Grid, HCL Tech, ITC, Bhel, Sterlite Industries, ACC, Ambuja Cements, ICICI Bank, NTPC, PNB, Maruti Suzuki India and HDFC.
“Quarterly results will impact market sentiment and volatility in trade may be seen this week,” Bonanza Portfolio VP Rakesh Goyal said.
The monthly expiry of derivatives on Thursday will also keep trades volatile, experts said.
“FII flows have stayed positive this month on hope that the UPA will initiate a few key reforms before the start of the monsoon session of Parliament on August 8,” said IIFL Head (Research) Amar Ambani.