Dalal Street is likely to witness heavy volatility this week, as although the RBI has announced a slew of positive measures there were just promises from world leaders to wipe away the economic crisis, feel analysts.
“Amid the general negative bias in the market, D-street will take cues from the Reserve Bank of India’s steps and the G-20 summit. Accordingly though market may trade in the positive zone for some time but will eventually fall back in the red,” Kejriwal Research and Investment Services (KRIS) official Arun Kejriwal said.
RBI’s action can spell boon for two sectors - realty and finance - but overall there exists a negative trend and as a result there will be heavy volatility, marketmen said.
“Volatility is extremely high across the world markets and till the uncertainty boils over, domestic markets are likely to continue on their downward journey. Stocks are oversold and awaiting a positive trigger to bounce back,” brokerage firm SMC Global Vice President Rajesh Jain said.
The benchmark index Sensex witnessed a highly volatile trade last week and settled down by nearly two per cent at 9,385 points on Friday.
World leaders have warned that economic momentum is slowing substantially across the world and the global outlook has weakened. Leaders in the G-20 summit have agreed to initiate “strong and significant actions” to stimulate economies, bring transparency in financial system, offer liquidity and reform financial institutions to beat recession.
The summit also pledged to help emerging and developing economies gain access to finance.
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Meanwhile, the RBI has announced a slew of measures, including permission to housing finance firms to raise funds from overseas markets and raising the interest rate ceiling on foreign currency deposits.
Bonanza Portfolio President Research P K Agarwal said, “the trade on Monday will be crucial for indicating a direction for the domestic market, even as the US market on Friday settled down already discounting the outcome from the meeting of global leaders”.
Volatility is likely to continue with lack of any triggers which may pull up market sentiments,” Agarwal added.
Besides, RBI has also raised the time-limit for availing low-cost export (pre-shipment) credit from 180 days to 270 days to encourage exports and promised to take more measures if necessary.
Foreign institutional investors have been pulling out their investments from India and other emerging markets to shore up resources to beat the global liquidity crunch. FII outflow reached Rs 51,047.40 crore in 2008 so far, while in November they have purchased equities worth Rs 1,091 crore.
Domestic mutual funds have also made sale of shares worth Rs 626.90 crore in 2008 so far, putting further pressure by aiding bear operators on the stock exchanges.Stock Market outlook