According to experts, Indian equity benchmarks are expected to witness high volatility this week as traders roll over their positions amidst the expiry of the July Futures & Options (F&O) contracts on Thursday.
Meanwhile Q1 earnings from Sensex blue chips and the fate of crucial reforms will also set the tone for the country's stock markets this week.
Traders will eye Q1 earnings numbers from Sensex heavyweights such as ICICI Bank, HDFC, NTPC, L&T and Maruti Suzuki this week. So far, the June quarter corporate earnings season has been more or less a disappointment with high interest costs and suppressed rural demand denting profitability at India Inc. while high level of stressed assets continue to play spoilsport for state-run banks.
Doubts have crept over the Modi-led government's ability to get Parliamentary nod for key reforms in the ongoing Monsoon Session, which has been a washout thus far with opposition parties demanding resignations from the BJP's key ministers amid graft allegations, signaling uncertainty over the GST and Land Acquisition reforms.
Global stock market trend and the rupee's movement against the US dollar will also have a bearing on the direction of the Sensex this week. Worries over China's slowdown have intensified, sparking a global commodities rout and casting doubts over the strength of the global economy, curbing risk taking appetite. The two-day US Federal Reserve policy meet beginning Tuesday will also be eyed as traders await cues over when the world's top central bank raises interest rates for the first time since 2006.
The Sensex, which shed 351 points last week to end at 28,112.31, may continue to be in correction mode this week.