New Delhi : Even as the Brexit overhang persists, Indian indices may see spells of volatility this week with the upcoming derivative expiry on Thursday posing as an element of uncertainty, say experts.
Even as the market will closely monitor global developments, particularly in Europe, the focus is seen shifting to domestic triggers such as the progress of monsoon.
“Early this week, we may continue to see volatility in Indian markets and some more downside cannot be ruled out completely,” Pankaj Sharma, Head of Equities, Equirus Securities. “The global economy is still extremely fragile and there is a fair amount of probability that we get a couple of extreme negative surprises from different parts of the world over the next 18-24 months.”
“This week, volatility will also remain as traders roll over positions in the futures and options (F&O) segment,” Vijay Singhania, Founder Director, Trade Smart Online said. The June futures of Nifty 50 settled at 8086.90 today, at a discount of 1.7 points to the spot index, compared with the 13-point discount intraday as short positions got covered. Open interest in the contract fell 15.43% to 13.44 mln.
Besides, stocks of auto companies will be in focus amid release of monthly sales data for June from Friday. “The Indian market will undoubtedly be affected by global factors, but we expect it to hold out better versus other EMs given its decent macroeconomic position and limited linkages to global influences,” Kotak Institutional Equities said in a report.
On Friday, the day of Brexit referendum results, the benchmark Sensex lost nearly 1,100 points intra-day before closing 604.51 points lower.
On a weekly basis, heavy selling pressure at the fag end of the week due to a sharp fall in global markets as the UK voted for Brexit pulled down the Sensex by 228 points and Nifty by 82 points.
“We see Brexit as a buying opportunity in the long term. While it is difficult to predict market movement in the short term, recent correction offers a long-term buying opportunity for investors. There will be concerns if monsoon turns adverse, (and) not Brexit,” said S Naren, ED and CIO, ICICI Prudential AMC.
Among stocks, shares of Tata Motors are seen extending losses and may fall up to 400 rupees in the short-term, according to an analyst. According to reports, the company’s UK-based arm Jaguar Land Rover’s annual profits could fall by 1 bln pound sterling up till 2020 due to ‘Brexit’.
