Witness Upward Move From Here But Volatility To Come Along

Both the Dalal Street and Mint Street are going to welcome next governor of Reserve Bank of India, Urjit Patel on the day of Ganesh Chaturthi. Urjit Patel and current governor of RBI, Raghuram Rajan belong to the same school of thought, the Streets have been assured by none other than country's Prime Minister, Narendra Modi. Patel's appointment is broadly viewed as continuity in tightening inflation target. He is taking over the reins from Rajan when India's growth is picking pace and-and rupee exchange rate stands stable.

On the global front, markets were taking cue from the US Federal Reserve Chair Janet Yellen's statement on Friday August 26, 2016. She said, better shape of the US economy is making good case for rate hike in future. Global uncertainty before Friday, slogged the market downward during the last week of August. The market could see a correction and some volatility in short term.

In last fortnight, all global indices were wearing a flattish to down look. All the three US indices i.e. Dow Jones Ind, S&P 500, NASDAQ were flat. London's FTSE 100 was also marginally low by 0.31 per cent. On the Europe front; DAX and CAC 40 were steady. On Asian ground, Hang Seng, Nikkei ended on flat notes and Shanghai ended on a negative note down by 1.27 per cent.

Flow into Indian markets is quite strong since past few weeks. Net buy by FIIs stood at Rs 1438 crore in last 15 days while DIIs are still playing on back foot. On Tuesday, August 30, 2016-Nifty and Sensex- the barometers of Indian stock markets, made new highs. Nifty reached 16- month high of 8750 by climbing 142 points. Sensex rose by 440 points and ends on 28343. Before August 30, 2016, all the sectors closed on flattish to negative note. On August 30, 2016; all these sector indices ended on green note especially pharma owing to many US FDA approvals. We see the positive earning numbers and strong liquidity position across globe kept the indices ticking.

In the previous week, two stocks - Welspun India and J Kumar Infra swayed the market. Welspun breached lower circuit due to order cancellation by a major client while J Kumar Infra clocked upper circuit as the company was awarded order worth Rs 5012 crore from Mumbai Metro Rail Corporation Ltd.

On commodity front, oil prices fell nearly 2 percent on Monday August 29, 2016 on cautions over galloping Middle East crude output and a stronger dollar which was boosted by speculation of the US rate hike by the year end.

Going forward, we see much improvement in the markets as good monsoon translates in demand revival and in turn boosts top line of the companies. We also believe that the markets will take cue from implementation of administrative and policy changes at both global and domestic front. Overall, we believe market will slowly creep upwards however volatility will remain the flavour of the season.