Mkts may remain volatile; Rupee movement, GDP data key

Economy estimated to have grown in 4.8-5% range in April-June quarter

The movement of rupee, global cues and foreign fund flows would largely drive the stock market this week even as shares are likely to remain volatile in view of the monthly derivatives expiry, experts say.

Besides, the data of gross domestic product (GDP) for the first quarter ended June 2013, would be declared on Friday, which will also keep the markets on the edge.

The economy is estimated to have grown in 4.8-5% range in the April-June quarter of 2013-14.

Expiry of August derivatives contracts on Thursday is also likely to would keep wary investors on the sidelines.

"It should also be noted that there is August series derivative expiry this week and GDP number announcement at the end of the week,," said Nagji K Rita, Chairman & MD, Inventure Growth and Securities.

"So, volatility and certain amount of confusion about the trend of the market, may persist in the minds of market participants," he added.

The movement of the market will also depend on how US dollar-Indian rupee pair moves this week. Although USD INR rates are in the overbought zone, it would be too early to call it at peak because as of now it is in an uptrend, Rita added.

The rupee made a stunning comeback on Friday, snapping a six-session losing streak to close at 63.20, its second- biggest rise in a decade in absolute terms.

Finance Minister P Chidambaram had on Thursday said the rupee is undervalued and has overshot appropriate levels while asserting there is no need for excessive and unwarranted pessimism. The Reserve Bank had said it has adequate foreign exchange reserves to deal with the declining rupee.

"Economic factors like growth, currency and CAD continue to be major concerns and shall be watched closely in coming week. FIIs figures have not been encouraging for this month so far and selling on rallies is likely," said Rakesh Goyal, Senior VP, Bonanza Portfolio Limited.

Shares are also expected to closely track oil prices.

"We expect crude oil prices to trade on the positive note on the back of rise in worries over supply disruption due to unrest in Middle East along with the decline in US crude oil inventories from EIA. Further, strong manufacturing data from China, Euro Zone and US may support prices to trade in green," said Vivek Gupta, Director-Research, CapitalVia Global.

In coming sessions, 5,500 shall be crucial deciding level for Nifty in near-term, and the index is likely to witness further buying above this level, Bonanza Portfolio's Goyal said. The BSE benchmark Sensex last week fell marginally by 0.42% to 18,519.44. Overseas investors last week sold shares worth over Rs 4,000 crore.

On the global front, investors will also monitor the Federal Reserve's annual monetary conference in Jackson Hole, Wyoming for further cues on the exact timing of its plan to wind down the expansive economic stimulus.