Volatility expected, as bills, data, tax to weigh on sentiments: Experts (Market Outlook)

After suffering significant losses in the previous week, the Indian equities' markets are expected to remain volatile in the weekly trade starting May 11, analysts said.

They said investors will anxiously watch for any signs on resolving the minimum alternate tax (MAT) issue, macro-economic data and the government's frantic push to pass key bills in the extended period of the budget session.

"The markets are expected to remain volatile as anxiety will prevail on account of various issues. Top-most on the minds of investors will be the outcome of the MAT issue," Devendra Nevgi, chief executive of ZyFin Advisors, told IANS.

The MAT on capital gains is expected to impact the margins of foreign funds. This has hit their investment appetite for the Indian equities' market.

The Foreign Portfolio Investors (FPIs) had turned into net sellers in the Indian equities market for the week ended May 8, selling stocks worth Rs.6,553.44 crore or $1.02 billion in the equities market.

"Other major triggers for the markets will be the final outcome of the budget session. Investors will follow the government's move to pass key bills," Nevgi said.

The Lok Sabha session, which was to have concluded Friday, has been extended till Wednesday, the same day the Rajya Sabha session is set to conclude.

The government is expected to aggressively push some of the key pending bills like those on land acquisition, goods and services tax (GST) and black money stashed away abroad.

Dipen Shah, head of private client group research with Kotak Securities, said: "In the next week, developments on the GST bill in the Rajya Sabha, inflation numbers and developments on Greece will be the major events to watch out for."

Another major trigger will be the reaction of the Federal Reserve on the better-than-expected growth in the non-farm jobs in the US.

Growth in jobs has the ability to push the Federal Reserve to increase interest rates, thereby attracting funds back into the US equities' market.

On a cautionary note Vinod Nair, head for fundamental research with Geojit BNP Paribas Financial Services, said: "The risks prevailing with the fourth quarter results and outcome of key bills still remain. These will decide the market momentum going forward."

Last week, the MAT issue, coupled with a poor fourth-quarterly earnings season, rising oil prices and the growth in US non-farm jobs had weighed heavy on investor sentiments.

The MAT issue led to an exodus of foreign funds from the stock markets, which lost significantly for three straight days till Thursday. The losses took a key markets index to its lowest level in 28 weeks.

With a fall of 0.18 percent on Tuesday, 2.63 percent on Wednesday and 0.44 percent the day after, the 30-share sensitive index (Sensex) of the Bombay Stock Exchnage had closed at its lowest since Oct 21, 2014.

However, Nevgi added that the market correction has made the entry into the markets cheaper and that the domestic investors have been on a buying spree.

(Rohit Vaid can be contacted at rohit.v@ians.in)