Indian equities to see high volatility: analysts

As mayhem in global stock markets continues amid fears of global economic slowdown, there are no major positive triggers in sight for Indian equities in the short-term and they will witness high volatility in the days ahead, analysts said today.

Indian stocks saw heavy selling throughout the day and at one point the Sensex slipped below the 16,000-mark. However, later Bombay Stock Exchange index, Sensex, recovered somewhat and closed at 16,141.67, down 328.12 points.

"Worsening global cues have spoilt investor sentiment. There are no fresh positive triggers for the market at present except, may be, Futures & Options expiry due on August 25. Rate hike fears have also rattled investors confidence," said Geojit BNP Paribas Research Head Alex Mathews.

"In the near-term, global cues will dictate the market trend and one can see some technical bounce back after such a huge fall, but overall the trend will continue to be volatile," he added.

According to reports, investment banker Morgan Stanley said yesterday that the US and European economies may be headed for a recession, triggering a fresh round of financial market turmoil.

"Dismal economic data from US led the fall in US markets, which percolated to European and Asian markets," said Shanu Goel, Senior Research Analyst at Bonanza Portfolio.

IIFL's Head of Research Amar Ambani said, "As anticipated, the Indian market mirrored the steep fall seen across global markets with the BSE Sensex sinking by over 328 points."

Besides global woes, investors in India are facing high inflation and rising interest rates. The Reserve Bank has hiked its key interest rates 11 times since March last year, hitting corporate margins hard.

There are other issues as well that are troubling investors, analysts said.

"An average monsoon, moderation in the economy and dismal progress in disinvestment has also increased the risk of higher-than-forecast fiscal deficit," Ambani said.

IT, capital goods and financial stocks were battered badly on the bourses today, with Infosys, ICICI Bank emerging as major laggards.