Markets may see volatility, global cues and rupee hold key

Stock markets are likely to remain volatile this week ahead of the derivatives contract expiry for this month, while global cues and rupee movements may largely drive the trading sentiments, say experts.

Moreover, monsoon rains, investment trend by foreign investors and crude oil movement would also influence trading.

"Forwarding the prevailing sentiments, this week is likely to remain volatile as the F&O August series expiry is scheduled on Thursday," said Jayant Manglik President Retail Distribution at Religare Securities.

"In absence of any major events, participants will continue to eye global markets for further cues alongside movement in the currency. Needless to say, progress of monsoon and movement in crude will also be closely tracked," Manglik added.

Last week, Sensex lost 701.24 points to 27,366.07 and the NSE Nifty ended 218.60 points down at 8,299.95.

Considering the recent sell-off and existence of support in index, we expect some rebound in index first followed by consolidation, he said.

"Going forward, sentiments in the near-term will be driven by a host of global and domestic factors. These include currency volatility, US interest rate movement, progress on reforms and monsoon, update on MAT on FIIs.

"Apart from this, notably, while a depreciating currency may invite certain challenges for the economy, it is a positive for pharma and IT sectors," said Hitesh Agarwal - Head Research - Reliance Securities.

In a possible relief to FIIs, a government-appointed committee has recommended that there was no case for imposing the controversial minimum alternate tax (MAT) on FIIs retrospectively, a suggestion that the government is said to be "favourably" considering.

"Movement of index in near term will depend on further reform initiatives and also expiry of derivative contracts of August month," said Vivek Gupta, CMT - Director Research, CapitalVia Global Research Limited.

"While the broader markets are expected to be volatile and correct for some more time, the undercurrent of the markets is strong," said Jimeet Modi CEO of SAMCO Securities.

On the global front, geopolitical tension between South and North Korea and concerns about the health of China's economy has kept investors worried.