Markets to stay volatile; to take cues from developments overseas

Markets to stay volatile; to take cues from developments overseas

Mumbai: Stock markets, which are likely to witness small gains this week, will take cues from overseas developments, including the US housing market reports and outcome of the Federal Open Market Committee (FOMC) meeting scheduled for Tuesday.

Domestic equities managed to eke out modest gains for the third straight week amid volatile conditions. The benchmark Sensex climbed nearly 67 points to close at 16,933.83 on Friday last week.

However, experts warn that volatility is likely to remain high in the coming days due to global uncertainties.

“Investors should stick to a stock-centric approach, as a lot of headwinds that have hurt the market this year have not been dealt with. The US housing market reports and the FOMC meet will be the key events to keep an eye on this week," brokerage firm India Infoline said in a research note.

Besides, in keeping with its hawkish stance, the RBI last Friday announced a 25 basis points hike in policy rates to tame uncomfortably high inflation levels. The apex bank could go for one more rate hike, especially if inflation does not cool and the rupee remains under pressure, noted the report.

“Market had already discounted 25 basis points hike in interest rate and performed accordingly. Now the market will be more influenced by global developments, which either favourable or negative will directly influence the short term market trend.

“Nifty is likely to consolidate within 4,900- 5,200 range," Bonanza Portfolio senior research analyst Shanu Goel said.

Investors will now look at other policy measures like prices of petroleum products like LPG and diesel, along with the international factors.

In another major event, finance minister Pranab Mukherjee and his counterparts from Brazil, China, Russia and South Africa will discuss the state of global economy and policy responses during their meeting in Washington on 22 September.