Political uncertainty to make markets volatile

Written by Markets Bureau | Mumbai | Updated: May 12 2009, 04:18am hrs
Indian equity markets will now look forward to the elections results, which would start pouring in by the weekend. If the markets participants are too believed than, there will be greater anxiety in the mind of traders in the coming days, due to uncertainty of the results. Global market developments will, like the past few weeks, will also be watched closely.

Overall, market denizen increased volatility would be noticed in the market place. The current week would lay the base for the extent of swings that would come before a government is elected.

The overall consensus is that a Congress-led UPA or even a BJP-led NDA coming into power, would provide investors with a greater comfort with regard to stability as well as policies. According to a report by UBS on the election outcome, We believe the formation of a United Progressive Alliance (UPA) or National Democratic Alliance (NDA) government would be positive for the Indian equity market. They also remain extremely positive on the Indian equity markets. We are positive on the Indian stock market.We believe the Indian economy and corporate earnings are likely to recover from second half of FY10, with a full recovery likely to occur in FY11, the report adds.

Meanwhile, markets across the globe have rebounded sharply on signs of improving global economy and US markets closing in green last Friday will have positive a impact on the benchmark indices which open on Monday. On Friday last trading day of the previous week, the 30-share Sensex of the Bombay Stock Exchange (BSE) closed below 12K at 11,876.43 points down by 240.51 points or 1.98%. The broader S&P CNX Nifty of National Stock Exchange (NSE) lost 63.20 pints or 1.72% to end the day at 3,620.70 points.

Despite benchmark indices closing the last day in red, they continued their weekly gains and added over 4% in the last one week. Dealers also added that, foreign institutional investors (FII) which were planning to enter the Indian markets might start coming in, after the results are declared. Deven Choksey, MD of KR Choksey securities said, At this point of time, only few FIIs are buying but as the current situation get more clear, other will also start entering the Indian markets.

With industrial production data for March scheduled to be released in the coming week and quarter results season on the way, markets are likely to remain under pressure for the next few days.