Market may turn volatile

Volatility is likely to be high on the bourses in the short term ahead of expiry of June 2007 derivatives contracts on Thursday, 28 June 2007. As is the case at the time of expiry of near month contracts, the extent of rollover to July 2007 contracts from June 2007 contracts will dictate the trend in the near term. A higher rollover indicates that the market players expect bourses to remain firm in the month ahead and vice versa.

The market surged last week despite liquidity concerns arising from the mega follow-up public offer of ICICI Bank. The BSE 30-shares Sensex rose 304.65 points or 2.15% to 14,467.36, while the S&P CNX Nifty gained 80.6 points or 1.93% to 4,252.05 in the week ended 22 June 2007.

As per provisional data, FIIs were net sellers to the tune of Rs 28.23 crore in equities on Friday, 22 May 2007. Domestic institutions bought shares worth a net Rs 512.30 crore on that day.

The only major Q4 result left which of ONGC will be out today, 25 June 2007. ONGC’s results for the quarter ended March 2007 are likely to be disappointing due to a surge in the subsidy burden.

Some Asian markets had recovered from lower level today, 25 June 2007, after initial fall that was caused by overnight sharp fall in US stocks on Friday, 22 May 2007. Hong Kong’s Hang Seng rose 61.37 points (0.28%) at 22,061.28, South Korea’s Seoul Composite was up 7.78 points (0.44%) at 1,778.76 and Taiwan Weighted was up 155.44 points (1.76%) at 8,968.35.

Japan’s Nikkei 225 average was down 92.49 points (0.51%) at 18,096.14 and Singapore’s Straits Times was down 12.58 points (0.35%) at 3,602.80. On Friday (22 June 2007, MSCI's measure of Asia Pacific stocks excluding Japan had struck an intraday record high.

US stocks tumbled on Friday, 22 June 2007, wrapping up their worst week since a global sell-off in February amid fears that trouble at two Bear Stearns hedge funds may signal worse problems lie ahead for credit markets. The Dow Jones industrial average was down 183.31 points, or 1.35 percent, at 13,362.53. The Standard & Poor's 500 Index was down 19.50 points, or 1.28 percent, at 1,502.69. The Nasdaq Composite Index was down 28.00 points, or 1.07 percent, at 2,588.96.

The Q1 June 2007 Indian corporate earnings season will kickstart from less than a month from now and, over the next few days, traders are likely to build positions based on Q1 results expectations. The Q4 corporate earnings were strong which had helped trigger a solid surge in domestic bourses since early April 2007.

Over the next few months, the progress of the July-September monsoon will hold key. The weather office said in April 2007 that this year’s monsoon was likely to be 95% of the long-term average, with a 5% margin of error. The annual monsoon is vital for India’s economic health as it is the main source of water for agriculture, which generates more than a fifth of the gross domestic product