Markets likely to remain volatile

Global news flow will play a key role in determining the direction of the equity market this week. Events, like the Reserve Bank of India (RBI) meet on Tuesday and the F&O expiry on Thursday, will also play a crucial role and as such most market players expect a volatile session going forward.

Broking houses are advising their clients to stick to frontline stocks, even as large players appear reluctant to take fresh positions. While last week did witness some wild swing in the indices, analysts are not yet convinced that the worst is over. A further fall in the range of 500-1,000 points is what most experts are betting on.

“To me, the worst is over. Considering Friday’s run up, I guess there could be a further correction of about 500 points,” said India Infoline vice-president (research) Amar Ambani. “Market would be a bit unstable in the near term. Investors should start investing in large-cap stocks now,” he added.

In a similar context, Religare Securities president-equity Amitabh Chakraborty feels that frontline stocks will lead the rally, while mid-caps will follow. However, a shock from the US has the potential to upset the optimism, he adds.

Already, there have been enough indications that US-based financial majors, who have been reeling under the ongoing subprime crisis, are advising their Indian arms to reduce exposure towards Indian equities. There is a lurking possibility of subprime crisis spreading to vehicle finance and credit card loans in the US, feels Mr Chakraborty.

Global news flow will play a key role in determining the direction of the equity market this week. Events, like the Reserve Bank of India (RBI) meet on Tuesday and the F&O expiry on Thursday, will also play a crucial role and as such most market players expect a volatile session going forward.

Broking houses are advising their clients to stick to frontline stocks, even as large players appear reluctant to take fresh positions. While last week did witness some wild swing in the indices, analysts are not yet convinced that the worst is over. A further fall in the range of 500-1,000 points is what most experts are betting on.

“To me, the worst is over. Considering Friday’s run up, I guess there could be a further correction of about 500 points,” said India Infoline vice-president (research) Amar Ambani. “Market would be a bit unstable in the near term. Investors should start investing in large-cap stocks now,” he added.

In a similar context, Religare Securities president-equity Amitabh Chakraborty feels that frontline stocks will lead the rally, while mid-caps will follow. However, a shock from the US has the potential to upset the optimism, he adds.

Already, there have been enough indications that US-based financial majors, who have been reeling under the ongoing subprime crisis, are advising their Indian arms to reduce exposure towards Indian equities. There is a lurking possibility of subprime crisis spreading to vehicle finance and credit card loans in the US, feels Mr Chakraborty.

Via ET