Trade past week was incredibly unstable, with global markets having an impact on emotions, notably the problems in the banking industry. Once the Government passed the Budget Bill 2023 in the Lok Sabha, domestic equities too came under pressure. The STT on the sale of options and futures has been raised in accordance with the revisions. Clarity regarding the walk is still pending, though.
The bill also called for indexation benefits for debt mutual funds to be eliminated. On Friday, the Nifty opened unchanged and experienced selling throughout the session to close at 16945 levels down 132 points (-0.8%). All industries finished in the negative, with PSU Bank, Metals, and Oil & Gas seeing significant selling. Following a significant decrease in European markets and anxiety around the increase in STT on F&O trades, Indian markets once again experienced last hour selling.
“Next week will see further increase in volatility due to monthly F&O expiry amidst the highest FII short position. Also it would be a shortened trading week due to holiday on Thursday,” says Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.
The global banking sector stress is also likely to weigh on markets, even as we saw on Friday massive selling in the stock of Deustche Bank.
According to Dr. Joseph Thomas, Head of Research, Emkay Wealth Management, The equity markets remained under stress as the transmission of the news of bank failures adversely affected the sentiment.
“The hike in the base rate by the Fed and Bank of England, and the persistence of inflation, and the therefore of the hard money policy, has been viewed as negative for the markets in the immediate term. These factors may continue to influence market movements in the coming week too,” he said.
All in all, brace for some volatility with F&O expiry, truncated week and a fragile banking sector.