Ind-Ra: DebtFX: Volatility to Rein Markets

After getting off to a shaky start for 2016, investors are likely to adopt a cautious stance this week, says India Ratings and Research (Ind-Ra). Wariness on the back of excessive volatility may constrain any major position building this week. Persistence of vulnerability of rupee is likely to keep the rupee in the range of 67.30-68.10/USD over the coming week. Interest rates, on the other hand, may witness an upward bias with the 10-year benchmark G-sec yield staying between 7.62%-7.72%.

In terms of incoming data points, China is slated to release GDP growth numbers for 4Q15 on Tuesday. This will be followed by US releasing its December retail inflation along with data on housing on Wednesday. Separately, the European Central Bank Governing Council meet for its monetary policy review is on Thursday. A confluence of factors has led to coordinated financial market volatility since the beginning of 2016. Crude oil supply glut and consequent carnage in energy prices, languishing Chinese growth outlook coupled with patchy recovery in US pushed frenzied investors towards perceived 'safe-haven' assets. New upcoming data on the economies is unlikely to alleviate these concerns instantly.

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