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Market Volatility To Increase This Week

Monday, February 15, 2016
By Dominic Rebello

Last week, the both the key indices recorded their biggest weekly fall since July 2009 with Sensex falling 1,631 points or 6.62% and Nifty down 508.15 points or 6.78%. While the weakness in global economy, falling commodities prices and China woes where not the only factors to be blamed, the weak Q3 earning season too had a major impact on the sentiments of the markets, according to experts.

Today the China markets will reopen after a week long gap due to holidays. The movement of Chinese markets too will impact sentiments across Asia. Apart from that the data for consumer price inflation (CPI) for January and industrial production data (IIP) for December 2015 which was released last Friday too will have a bearing on the markets.

“With the quarterly results season nearly over, focus will shift to the budget and we can see sector specific movements over the next few days. However, global factors will continue to have an impact. With the Chinese markets scheduled to open on Monday after a week-long gap, movements in that markets as well as economic data will impact sentiments,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities.

“The current state of hyper pessimism can’t last forever. When fear grips markets, rationality is by passed and people take decisions based on emotional behavior. It’s time to keep patience in good quality stocks and sit tight,” said  Jimeet Modi, CEO, SAMCO Securities

The other important factor that is expected to impact market sentiment is the upcoming budget at the end of this month. Volatility is expected to rise due to the slew of macro-economic data released and its impact on the economy and the sentiments of market participants.

“Traders should plan their trades accordingly and limit their positions till further clarity emerges. The next decisive support is at 6800 level in Nifty and its sustainability holds the key for any recovery or consolidation in the coming future otherwise selling will continue,” said Jayant Manglik, President, Retail Distribution, Religare Securities Ltd.

“Macroeconomic data to dictate trend during the week. Data on inflation based on the wholesale price index (WPI) for January 2016 is due to be released today. On the global front, China's trade data for the month of January 2016 and US Industrial production numbers for January 2016 are scheduled this week," said Vijay Singhania, Founder-Director, Trade Smart Online.

“Every time such heightened pessimism occurs the human behavior becomes automatic and investors sell off their investment holdings only later to repent. The distilled wisdom- “When others are fearful be greedy and when others are greedy be fearful” in other words ‘buy low, sell high’ should be the strategy for the investors, but majority reverse the rule,” advised Jimeet Modi, CEO, Samco Securities.

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