Markets may see wild swings next week as US-N Korea drama spooks investors

Stock markets may witness volatility on account of derivatives expiry next week and the recent spike in tensions on the Korean peninsula, say experts.

A fresh war of words broke out between the US and North Korea last week, spooking investors.

"As global tensions mount with North Korea pushing to a next level of tests with hydrogen bomb, it will be hard for bulls to have a comeback which was as swift as before. Also, we don't see any cues that can lead us to a decline in volatility," said Mustafa Nadeem, CEO, Epic Research.

Vinod Nair, Head of Research, Geojit Financial Services, said: "In the recent times, domestic market was the best performing among emerging markets due to strong reform agenda and stable policies.

"However, any meaningful uptick in corporate earnings and normalisation of global markets will be the key for supporting the current premium valuation. Though DIIs flows are very strong, but any earnings hiccups in coming quarters may limit these inflows."

Over the last week, the BSE recorded a hefty fall of 350.17 points, or 1.08 per cent, the biggest since August 11. The NSE, too, ended lower by 121 points, or 1.19 per cent for the week.

"With global equity markets in risk off mode over Korean tensions, the ongoing weakness has gained more momentum. Approaching F&O expiry has also added to liquidation pressure," said Anand James, Chief Market Strategist, Geojit Financial Services Ltd.