Stock markets are expected to remain volatile this week in view of derivatives contract expiry,besides foreign fund outflow,decline in rupee and the US Fed’s monetary stimulus exit plan may lead to jittery investor sentiment in near-term,experts said.
“Expect the markets to remain jittery this week as FIIs continue to pull out heavily from Indian debt and equities in line with rupee’s decline against dollar. Fed’s decision to start pulling back stimulus later this year has knocked the breath out of markets,” said Aditya Trading Solutions,Founder,Vikas Jain. Investment activity of foreign institutional investors (FIIs),trend in global markets and rupee movement will remain in focus,an expert said. The BSE benchmark Sensex fell by 2.1 per cent to close the week at 18,774.24 on Friday.
“Going forward,apart from derivative expiry,there are no other major events next week. So,now the focus is expected to shift back to USD-INR. The street will watch out for liquidity flow,” said Nagji K Rita,CMD,Inventure Growth & Securities. Another analyst,Jayant Manglik,President Retail Distribution,Religare Securities said: “With expiration of F&O contracts this week,we expect marginal recovery from current levels but markets are in for stock-specific volatility.”
Fed Chairman Ben Bernanke last week said central bank will likely slow its bond-buying programme this year and end it in 2014. A withdrawal of stimulus may hit FII inflows in India,experts said. The rupee on Thursday touched a life-time low of nearly 60-level intra day against the dollar after US Fed’s stimulus exit strategy spooked global markets. Meanwhile,on Friday it staged a smart recovery to end at 59.27. A weak rupee makes imports costlier. On the other hand,IT companies stand to benefit from rupee’s fall. A weak rupee boosts revenue of IT companies in rupee terms as the sector derives huge share of revenue from exports.