Corporate Earnings Season to Create Volatility

During last fortnight, the equity markets across all over the globe seem to be strong and showing good traction. The Indian market too showed good appreciation and the Indian indices such as Sensex, Nifty, Midcap index and Small cap index surged by almost 3 per cent during the fortnight. The IT stocks made smart move and the IT index surged by almost 7 per cent during the period. The rate sensitive sectors such as Auto and Bank too showed good up move and their respective indices surged by almost 3 per cent. The foreign institutional investors bought Indian equities worth of Rs 3026 per cent during the same period.

On European markets front, the logjam over Greece debt issue seems to be fading as the European creditors were ready to give conditional bailout for next three years. The bailout allowed Greek banks to reopen and enabled to avoid the Grexit from Euro. The European markets showed good traction during the fortnight. The Spanish index CAC 40 surged by about 11 per cent during the period and topped in major indices. The German index DAX surged by almost 8.7 per cent over diminishing risk. The UK index FTSE 100 surged by more than 5 per cent during the fortnight after the Greece bail out.

Meanwhile gold showed a considerable correction during last few trading sessions. On last Wednesday, the gold witnessed the 10th day loss which is longest run of losses since 1996 and the market experts predicted further correction in the gold. The correction in gold was predominantly due to a lack of safe-haven interest after Greece debt crisis and China’s market slide. Further, the recent weakness is shown in commodities over the expectations of US Fed’s chances to raise interest rates later this year.

On US markets front, the markets showed volatility over the fortnight and showed positive biased over the Greece debt crisis easing and corporate earnings season. The Dow Jone Industrial Average surged just 1 per cent during the fortnight. However, the S&P 500 and NASDAQ indices closed up almost by 2 and 3.5 per cent respectively.

On domestic front, the government is making all its efforts to make market participants happy and create bullishness to start investment cycle. In a major move to give confidence to private players, the central and state governments are taking constructive administrative steps to roll out Goods and Service Tax and meet the deadline of April 1, 2016. Further, on a major step towards infrastructural development in the country, the central government may include a fresh section in Land Bill to allow state governments have the provision of a consent clause and social impact assessment while implementing the law. The government is taking every step to speed up the process of passing the Land bill in the parliament.

The recently started June quarter earnings season is expected to create volatility across the domestic market. Further, the market participants are too keeping watch on the reserve bank’s bi-monthly meeting and expecting some respirator on monetary front.