Market may remain volatile ahead of F&O expiry

The market may remain choppy as traders rollover positions in the futures & options (F&O) contracts from the near-month August 2011 series to September 2011 series. The near-month August 2011 derivatives contracts expire on Thursday, 25 August 2011.

The market sentiment remains edgy due to sustained selling by foreign funds. FIIs have sold shares worth Rs 8053.88 crore this month, till 18 August 2011, as per data from the stock exchanges. There was a massive outflow of Rs 5279.30 crore in just three trading sessions between 5 August 2011 and 9 August 2011.



FIIs have sold shares worth a net Rs 13093.13 in calendar year 2011 so far, as per data from the stock exchanges. Domestic institutional investors have bought shares worth a net Rs 20608.77 this year so far.

Redemption pressure for funds based in Europe may trigger selling by European funds in other markets around the world. Investor worries have escalated off late over the health of European banks amid exposure to the euro zone's long-running debt crisis and what's viewed as a lack of resolve among European leaders to tackle the problems.

A recent correction in global commodity prices, including that of oil and metals augurs well for Indian manufacturing firms and also the government in reining in oil subsidy burden. Lower commodity prices may also help rein in high inflation. Commodities have plunged 16% from the April 2011 high on concern the sovereign-debt crisis is threatening global growth and demand for raw materials.

The government will unveil data on some wholesale price indices viz. the food price index, the primary articles index and the fuel price index for the year through 13 August 2011 on Thursday 25 August 2011.

Shares of non-banking finance companies may edge higher on reports the Reserve Bank of India is shortly expected to release its draft guidelines for new private sector bank licenses to seek public comments.