5 Factors That Could Keep Market Volatile Next Week

After dramatic losses throughout the week, the Indian stock market indices ended with gains on Friday. BSE's Sensex closed 835 points higher to 37,388.66 while NSE's Nifty 50 ended 244 points higher at 11,050.

For the week ahead, there are expectations of continued volatility in the stock markets.

1. Possible Stimulus Package from the Indian government

A Moneycontrol report citing unnamed government sources said that the Narendra Modi government is only weeks away from announcing another round of stimulus measures to push demand and create employment.

The report said that these measures would be announced before the start of the upcoming festive season and could include a Rs 35,000 crore urban jobs scheme, a massive infrastructure initiative with an emphasis on 20-25 big projects, among others.

This report on Friday was one of the major factors that caused the recovery in Indian markets at the end of the week.

2. Verdict on interest on interest during the moratorium

On 28 September, the Supreme Court is scheduled for the next hearing on the loan moratorium and interest waiver case. At the last hearing, the apex court provided 2 weeks time to the government to file appropriate documents, decisions after consultation with banks, RBI.

3. RBI Monetary Policy Meeting

The Reserve Bank of India's next monetary policy committee (MPC) meeting is scheduled for 29, 30 September and 1 October. Amid higher than the targeted inflation rate, markets expect the central bank to keep interest rates unchanged.

Stocks of the financial service sector may see movement after announcements from the MPC meeting as well as the verdict from the Supreme Court on interest waiver.

4. WHO says COVID-19 deaths could double

On 18 September, the World Health Organization had said that the coronavirus is "not going away," noting that it's still killing about 50,000 people a week. "That is not where we want to be," said Dr. Mike Ryan, executive director of the WHO's health emergencies program.

These comments coupled by signs of a second wave in Europe caused market turmoil at the start of this week.

This Friday, that is on 25 September, addressing the fact that global death toll from COVID-19 is approaching 1 million, the organisation said it is "not impossible" for that number to double.

"It's certainly unimaginable, but it's not impossible, because if we look at losing 1 million people in nine months and then we just look at the realities of getting vaccines out there in the next nine months, it's a big task for everyone involved," Dr Ryan said.

"The real question is: Are we prepared, collectively, to do what it takes to avoid that number?" he added.

As for vaccines, at present many companies are conducting their final-stage clinical trials. Any signs of success would likely boost sentiment in the markets.

5. Global Cues

Global markets, especially the US markets, are expected to be volatile in the upcoming week when US Elections could become the central topic as the first presidential debate takes place between President Donald Trump and former vice president Joe Biden on Tuesday night.

Further, expectations of a stimulus package in the US are also low, causing economists to lower their forecasts on growth in the last quarter of 2020 for the American economy.

Also, September US jobs data will be out on Friday and will be watched closely for signs of recovery in employment levels.

European markets closed lower on Friday as investors continued to monitor coronavirus developments in the continent, denting hopes of fast economic recovery.