Markets To Remain Volatile Next Week, Global Markets Remain Key

Markets were extremely volatile this week, following the US Fed indication that interest rates in the US maybe hiked two times by the end of 2023. The Sensex shed 130 points during the week and broke a 4-week winning streak.

In fact, the midcap index fell even sharper by 3%, even as several Adani stocks from the midcap space came falling down.

Gold, commodity and stocks all dropped in trade this week. In fact, on Friday, the Dow Jones fell as much as 1.58% in the sharpest fall seen recently. Bond prices which had rallied following the US Fed announcements also gave-up gains.

Gold prices in the international markets saw its worst ever week in a year. In India, volatility increased and the metal index tanked 7%. Some of these stocks have tripled in value in the last one year. Metals prices fell during the week as China said it will release state stockpiles of copper, aluminum, and zinc to reign in prices. This sent share prices some of the metal stocks tumbling.

"Global cues were weak as investors accommodate to the US Fed's hawkish decision. Domestically, Nifty witnessed huge volatility on Friday before ending the day unchanged. Weak global cues and China's efforts to curb commodity prices led to selling pressure. Metal stocks tumbled after China announced plans to release its state reserves of copper, aluminum and zinc to ensure stable prices of commodities," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

"Domestic Market may consolidate for some-time before resuming its rally. Technically too, the trend remains intact for an up move towards 16k mark. Globally, investors would cautiously track what action does other Central Banks take following Fed hawkish announcement. Domestically, RBI's step forward, monsoon, opening up of the economy in a phased manner and the pace of vaccination going forward would decide the further direction of the market. Traders should be cautious and adopt stock specific approach as markets get volatile. On the other hand, long term investors can take advantage of this volatility and adopt buy on dips strategy," he further adds.

Stocks have risen sharply in the last few quarters and the Sensex is just 1.5 per cent away from record highs. It is advisable to avoiding placing large sums as the markets are at a peak. A buy on declines would be a better strategy.

The currency also seems to display volatility, which could add to further restlessness, especially among FPIs.