Stock markets may witness high volatility this week as first quarter corporate results roll in amid profit-booking mood at current levels, against the backdrop of poor US job data that could make investors cautious on the global economic recovery, say experts.
The sentiment may also be impacted by the imminent Cabinet reshuffle and the factory output numbers, they said.
“The world market cues are not encouraging at the moment. The US job data was below expectation. I foresee a range-bound market this week which can see volatility moving up,” said Geojit BNP Paribas Financial Services Research Head Mr Alex Mathews.
“IT major Infosys in most probability will deliver smart numbers this time which can give support to the market,” Mr Mathews added. The IT bellwether, with the second heaviest weight on the BSE 30-stock benchmark Sensex after Reliance Industries, will announce results on July 12.
During last week, the BSE 30-stock key index Sensex gained over 95 points to end the week at 18,858.04, led by good buying in realty, consumer durables and auto counters.
“The market at present is in a profit-booking mood. Some weakness is expected this week ahead of a likely Cabinet reshuffle. Besides, Infosys earnings will set the tone for the market,” CNI Research CMD Mr Kishore P. Ostwal said.
Meanwhile, the US economy added just 18,000 new jobs in June, much lower than expected, while unemployment rate rose to 9.2 per cent. It came as a dampener for hopes of strong labour market recovery.
Besides, the metals and mining stocks have been on a losing streak.
Last week, a ministerial panel — headed by the Finance Minister, Mr Pranab Mukherjee — approved the draft Mines and Mineral (Development and Regulation) Bill, 2011, which proposes that coal miners share 26 per cent of their profits and non-coal miners pay 100 per cent royalty to the people affected by their projects.
The draft is to be sent for the Cabinet approval soon.
Globally, besides the US job data last week, China raised interest rates again and Moody’s downgraded Portugal. Overall, foreign fund flows have seen a surge in the Indian markets over the past couple of weeks.