Truncated week to see high volatility

K. RAGHAVENDRA RAO | Updated on March 12, 2018

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Interest rates under pressure as Govt plans for heavy borrowing

This week, the Nifty and the Sensex are expected to lose up to three per cent over last week's close.

Volatility will be high this week. Moreover, the markets will be closed for Mahavir Jayanti and Good Friday on Thursday and Friday, respectively.

Fixed income market (dominated by banks) will be closed on Monday for annual closing of accounts of banks.

The benchmark 10-year G-sec saw its worst loss in a decade as far as the fiscal closing is concerned. There is tremendous pressure on interest rates given the size of the Government's borrowing programme at Rs 4.8 lakh crore.

Of this, the first half from April to September 2012 will see auctions worth Rs 3.7 lakh crore.

The RBI will conduct a large auction for securities worth Rs 18,000 crore on Tuesday.

Following this, yield on 10-year G-Sec is likely to remain strong. Yields could breach 8.65 per cent this week and touch 8.75 per cent levels.

The rupee will retrace back to Rs 50.2 levels to a dollar this week from last week's close of Rs 50.85.

Globally, marketmen are anticipating a correction after a good first quarter in 2012, if US sanctions on Iran go through.

Nymex crude oil futures are expected to bottom out at $101 to a barrel this week.

The US' 10-yr treasury yields will remain range-bound between 2.1 per cent and 2.3 per cent levels. This is due to volatility induced by data coming in from the US, which has not been consistently positive.

The International Monetary Fund welcomed the Euro zone Finance Ministers' decision to raise its financial firewall to €700 billion.

The firewall is lesser than the IMF-prescribed €one trillion to protect Euro zone's larger economies from debt contagion.

The Euro is expected to remain slightly bullish against the dollar at around 1.3450 dollar levels to a Euro.

Gold is expected to weaken significantly and touch $1580 levels to an ounce this week.


Published on April 01, 2012

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