Stock markets would largely be dictated this week by macroeconomic data, foreign fund flows and global cues while the volatility in the market is not likely to end anytime soon, experts say.
Besides, the progress of monsoon, movement of the rupee against the dollar, crude oil prices and auto sales numbers will also be key factors determining the trend on the bourses.
“Movement of index in the near term will depend on further reforms initiatives to be taken by the government and monthly auto sales numbers to be announced starting September 1, 2015,” said Vivek Gupta, CMT Director Research, CapitalVia Global Research.
In the trading week gone by, volatility ruled. In weekly terms, the Sensex lost 973.69 points, or 3.55 percent, and the NSE Nifty 298 points, or 3.59 percent. However, the markets staged a smart recovery, with the Sensex closing in the green.
“The recent bout of weakness in the Indian stock market has largely come about on account of global factors,” Gupta said, adding that the market breadth indicates that its overall health is strong.
The BSE benchmark index closed at 26,392.38, up 161.19 points, while the wider Nifty ended at 8,001.95, up 53 points, on August 28. Market analysts said whenever such aggressive corrections happen, the bottoming-out becomes a slow and steady process.
Moreover, the heavy outflows over the last week are not likely to come back soon. Ditto with volatility, which is likely to stay.
“In the near term, investor focus will remain on news emanating from China and the US, especially from the Fed, as market participants have started to bake in the probability of the rate hike getting pushed to December in the wake of the recent global developments,” Reliance Securities Head Research Hitesh Agrawal said.
“Furthermore, from an investment point of view, in such volatile times, the most prudent strategy is to stick with quality companies as they are relatively better placed to weather economic challenges,” Agrawal added.
Market analysts said India’s GDP data for the June quarter, scheduled for Monday, 2015 will also dictate the trend. In addition, the Nikkei India manufacturing PMI for August 2015 is due on Tuesday (September 1).