Indian markets are set for another volatile month in October - ZENMoney

Indian markets are set in for another volatile month in October amid a host of global and domestic issues. The deadlock over the US debt ceiling issue and concerns about any potential spending cuts on the economy will weigh on markets in the near term. The market will be awaiting the two day FOMC meet at the end of October which will decide on tapering measures.

The key trigger for the market this month would be the start of the Q2 earnings season from the second week of the month. Going by the poor corporate income tax collections as well as excise duty collection in Q2, corporate results are likely to remain subdued. Stock specific action will be witnessed based on the outcome of the results.

The market will also be eyeing the the monthly inflation and IIP numbers which will be announced in the second week of the month.

With Consumer Price Inflation (CPI) set to become the main guide for monetary policy from now on, all eyes will be on the CPI figures which have remained high since the last one year on rising food and oil prices. The IIP numbers too have been volatile in the recent months. However, improved core sector growth in August have led to expectations of an improvement in the IIP numbers this month.

The RBI meet on the 29th Oct will be another important trigger for the market. After the surprise increase in policy rates last month, expectations of further tightening have gone up after the RBI's indications that stabilizing the rupee and controlling the headline inflation remains it's key priority, over growth, at least in the near term.

Tightening global liquidity has already affected the FII flows in the last couple of months. Although FIIs invested over Rs 12000 crore in indian equity market in September, the volatility is expected to remain high in the coming months on the back of weak domestic macros and gradual tightening of global liquidity in the next few months.

Source : Equity Bulls

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