It was another week of flat gains for the benchmark indices, with volatility far lesser, as compared to the previous week.
The Sensex ended the week with losses of 0.8 per cent, while the Nifty lost 0.6 per cent.
Several stocks saw great volatility. Shares in Infosys was pounded this week, after the company said that margins could come under pressure. There was short build-up in the counter as well as delivery based selling.
The credit policy also went and came and was largely uneventful. The Reserve Bank of India maintained the status quo on interest rates. However, on the day of the policy banking stocks saw large scale short covering with several private sector banking names like ICICI Bank, State Bank of India and Axis Bank gaining huge ground.
Volatility is expected to increase next week for the Indian markets, as we head into two key events - the first is the US Fed Reserve and the second is the British Referendum on whether to stay in the Euro. While the referendum is slated for the subsequent week and not the next week, it could increase volatility for the Indian markets.
The US Federal Reserve is largely expected to keep interest rates steady in its policy meet which begins on June 14. This is largely anticipated by the markets and hence may not make any significant difference to the Indian and the global markets.
The other key event, which could lead to volatility next week, would be the Referendum on whether Britain stays in the euro. Online polls have suggested a 50:50 chance of a British exit. However, this could have a cascading effect on global markets, as a British exit may lead to other countries looking at an exit and a gradual disintegration of the EU.
This is not going to be a happy event for the Indian and the global markets. As of now one cannot be sure which way the vote is headed, but, it could lead to increased volatility for sure.