The week that passed by was an extremely volatile one with most of the major indices across the globe finishing the week in red , including US indices recording the highest fall in the last 4 years. The Indian indices the Sensex and the Nifty closed down 2.50% at 27,366 and 8,300 respectively. a wave of risk aversion has gripped the financial markets as selling was witnessed across all asset classes fearing a global slowdown – kicked off by weak data from China , further augmented by the FOMC July meeting. The CBOE-VIX index which shows the level of fear among investors spiked 133% to 28 indicating fear among investors in the US.
Going ahead, the present week is also going to be a volatile one with derivatives contract expiring. The open interest is at 24,000 crore which indicates that the volatility is likely to be high. In the absence of major events, stock markets are likely to be guided by the global cues, monsoon data and the investment trend by foreign investors. Indian rupee has been on a down trend and it has crossed 65 against a dollar.The weakening Indian currency is in fact, good news for IT and Pharma sectors but its bad news for other companies due to the premium they have to pay for imported raw materials. The current levels are major support levels for the indices. If the indices can move upwards from here, there could be some change in the current trend else, there could be a fall in the indices to 26,300 / 7,900 in September.
The Indian stock market benchmarks – The Sensex and The Nifty closed last week on a flat note after a roller coaster ride mostly due to china devaluing the Yuan. Timely clarifications from the Chinese government helped financial market recover from the initial crash. The sensex and the Nifty closed at 28,067 and 8,519 respectively.
Moving ahead, there are positives in the form of seven month low inflation, high IIP and high indirect tax collections. Now that the first quarterly results are over, markets will be keenly watching the outcome FOMC meet apart from the domestic numbers and events. Until there is a clarity on how the fed are going to plan its activities, the markets are likely to move sideways. The minutes of the FOMC’s July meeting to be announced mid week will be closely watched by market participants. Apart from the FOMC, the other factors to be watched out include progress of the monsoon, rupee movement, FIIs and further cues from Greece and China.
The Indian stock market closed with marginal gains last week. Both the benchmark indices were seen struggling to move past the resistances at 28,500 and 8,650 which shows the lack of conviction among market participants. One main reason for this is that the first quarter results of most of the corporates were dismal and fell below expectations. Along with the above, the pace of reforms measures taken and the overall rainfall recorded are concerns that are pulling the bulls away from the markets.
Going ahead, the Federal Reserve has announced starting of the monetary tightening from next month. Scaling down the stimulus program will impact the financial markets worldwide. But as seen from the last couple of months , Indian markets buyers are willing to invest more at lower levels and hence, even if there is a dip in near future, the markets will hold on preventing deep cuts.
The Indian markets closed on a flat note last week with the Sensex and the Nifty ending at 28,115 and 8,533. Both the indices bounced back from intra week lows of 27,416 and 8,321. The recovery was led by banking stocks after the announcement of Rs 70,000 crore over 4 years lifeline to PSU banks by the finance ministry.
Looking back, July was a volatile month with markets swinging heavily on news flow and earnings numbers. It was very difficult to guess the market direction since most of the time, a decisiveness among participants kept reflecting in market moves. This confusion about the direction of the market still remains and clear direction will surface once the RBI monetary review is done on August 4 2015. RBI has so far reduced 75 basis points this year to boost the economy.
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