Global markets will react to the Italian referendum next week, which plans to overhaul the political system in the country. There are reports that a change in the political system will make the Italian political system more nimbler.

However, at this stage to talk of that would be a little far-fetched. What is certain though is that if there is a rejection of the referendum it could certainly lead to a global sell-off in equities.

Indian markets have already been badly hit by a sustained outflows from Foreign Portfolio Investors. Had it not been for the support from domestic institutions, we would have seen an even worse fall in the markets.

Going ahead there are several key factors that would influence the markets until the end of the year. This includes the RBI Monetary Policy on December 7. It is widely expected that the Reserve Bank of India would cut interest rates in its policy meet. This should provide some boost to rate sensitives like banks, real estate and auto stocks. However, it is highly likely that the Italian referendum would be key to the markets. It is highly possible that there could be a "no" to the referendum.

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