Volatility in Indian markets is likely to remain high in the near term due to higher crude oil prices

New Delhi, Oct 1 (IANS) Given the upside risk of domestic inflation due to higher crude oil prices, volatility is expected to remain high in the near term, said Vinod Nair, head of research at Geojit Financial Services. Investors will closely monitor upcoming releases of domestic, U.S. and Chinese PMI data and other indicators as these are expected to influence future market trends, he said.

The domestic market faced volatility throughout the week amid increasing concerns over rising prices and inflationary pressures, compounded by fears of another interest rate hike by the Fed, he said.

The rise in US bond yields and INR volatility further reduced the attractiveness of domestic indices for foreign investors. Furthermore, the market is facing strong resistance at higher levels due to low liquidity and lack of buying impulses.

During the week, IT stocks underperformed due to unfavorable global signals, while the pharmaceutical sector saw strong buying interest as investors adopted a defensive strategy in response to global uncertainties. Still, the market ended the week on a positive note, driven by healthy momentum in industrial growth, which grew 12 percent year-on-year, he said.

Siddhartha Khemka, Head – Retail Research, Motilal Oswal (NS:) Financial Services, said on Monday that Indian markets will remain closed on the occasion of Gandhi Jayanti.

Overall, we expect the market to trade in a broader range as higher oil prices have reignited inflation concerns and could lead to a continued high interest rate environment, he said.

Auto stocks remain in focus as companies report monthly sales figures. The interest rate sensitive sector would also be in focus as an RBI policy meeting is scheduled next week.

Investors would also look to macro data released globally, he said.

–IANS

san/pgh