It is expected to be a volatile week for the markets when traders and brokers resume after a holiday-extended weekend, with investors anticipating data from China after the US Federal Reserve finally decided to hold interest rates.
This has now given a major push to widespread opinion that the Reserve Bank of India, at its forthcoming monetary policy review on September 29, should cut interest rates which will improve balance sheets of Indian companies by reducing interest payments on their debt. Fed’s move coupled with general disinflationary trends in India provide RBI with a good opportunity.
On September 18, the Bombay Stock Exchange (BSE)’s Sensex ended 1% up, while the NSE’s Nifty rose 1% on hopes that with the US holding back on interest rates, foreign portfolio investors (FPI) would remain in India and also increase their holdings.However this trend is likely to take some more time to manifest.
“Global sentiment is cautious as the Fed may hike rates (year-end) and growth in emerging markets remains subdued,” said Vijay Singhania, founder of Trade Smart Online.
“Federal Reserve is focussing on the slowdown in China and emerging economies. Volatility will remain as we don’t have clarity on when the Fed will raise rates as it has acknowledged that it is monitoring global environment,” he added.
Although Indian indices continued to build on gains from the previous week, investors’ focus will shift back to global economic growth challenges. “In the immediate short-term, market is expected to be volatile in wake of the September 2015 series futures and options (F and O) expiry,” said Reliance Securities research head Hitesh Agrawal.
Expiry of futures and options indicates that investors have chosen not to exercise their right to buy or sell a security.