Benchmark indices are likely to trade volatile next week as investors will rollover their positions in the August derivatives series to the next month due to the expiry of current month contracts on Thursday. Markets expect the National Stock Exchange's 50-scrip Nifty to trade between 5300 and 5480, but they are unsure of where the August contract will expire.
While some expect the expiry to be in a range of 5350-5400, others expect it to be closer to 5450 as there are a lot of long positions in Fifty’s August contract, which will get rolled over to September. Spot Nifty yesterday ended at 5386.70, down 28.65 points or 0.5% from Thursday, while the August contract closed at 5407.00, down 20.15 points or 0.4%. BSE's 30-stock Sensex closed at 17783.21, down 67.01 points or 0.4%. In the week to date, the spot indices have risen by a mere 0.4%, with the Nifty swinging between 5340 and 5450 due to a lack of any triggers. Yesterday, total turnover in the cash segments of the BSE and the NSE stood at around 108 bln rupees versus 120 bln rupees on Thursday.
Overseas markets will remain on the radar, especially amid an absence of any major domestic events. The market will particularly eye a meeting of Greek Prime Minister Antonis Samaras and German Chancellor Angela Merkel, due on yesterday, where in the former will seek an extension on the deadline given to debt-troubled country to meet its budget austerity requirements. Germany's Finance Minister Wolfgang Schaeuble has already contested the idea of giving Greece the additional time and said that doing so will only raise the cost to creditors. Samaras will meet French President Francois Hollande on Saturday to discuss the issue.
Next week, US Federal Reserve Chairman Ben Bernanke's address to an annual gathering of central bankers in Jackson Hole, Wyoming, will also keep investors clued in. The market will eye the Central Statistics Office's data of India's gross domestic product growth for Apr-Jun, due on Aug 31. If the government does not very soon speed up policy reforms and improve foreign investments and economic growth, then this sideways (rangebound) movement in the market could break and equities could face a risk-off downward rally.
The Parliament was stalled for a fourth straight day yesterday due to an uproar over the Comptroller and Auditor General of India's report on coal block allocation. Among sectors, market participants are bullish on pharmaceutical, consumer goods, automobile, and private-sector banking stocks. Investors of telecommunications companies will eye the outcome of a Supreme Court hearing on a Department of Telecommunications plea on Monday, seeking extension of the deadline for conducting 2G spectrum auction to Nov 12 from Aug 31.
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