Indian markets erased all its morning gains and turned negative. The benchmark Sensex and Nifty, which had risen as much as 0.7 percent each in morning trade, erased all its gains. At closing, the benchmark Sensex dropped 0.53 percent or 310 points to 58,774 while the Nifty lost 0.47 percent or 82 points to 17,522.
Analysts said markets have factored in an aggressive rate hike from the Federal Reserve and moved forward. Nevertheless, it may remain volatile ahead of the monthly expiry, they added.
"Amidst fragile global sentiments, FII buying is providing support to the market though investors are staying on the sideline ahead of monthly F&O expiry on Thursday and are cautiously awaiting the outcome of Jackson Hole symposium meeting and US GDP data, due later this week. While the headline indices continued to consolidate, the broader market is seeing action in midcaps and smallcaps where the valuation is still attractive. Thus momentum is likely to gather pace in them with lot many stock specific action", said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Here are the few reasons why markets remained volatile.
1: Jackson hole: Investors are cautious ahead of the Federal Reserve chair Jerome Powell's Jackson Hole speech on the economic outlook on Friday, where he may clarify on the recent Fed commentary and to reset expectations for the future pace of rate hikes. Investors will be listening for information on the central bank’s monetary tightening trajectory as it looks to rein in inflation, and whether interest rate cuts are in sight at the end of the current cycle.
2. RIL AGM: The much anticipated annual general meeting of oil-to telecoms conglomerate Reliance Industries Limited (RIL) will be on August 29 and investors are awaiting a slew of announcements. Analysts said the company is expected to update on the progress in new energy segment, 5G spectrum auction and pricing, oil-to-chemical (O2C), IPO for telecom arm, and retail verticals.
3. India's GDP data: Investors also avoided long positions ahead of key macro economic data due later this week. India will announce gross domestic product on August 31. While SBI predicts the growth to be over 15 percent, ICRA economists said it could be 13 percent, helped by the low base of last year when the Covid-19 pandemic hurt economic growth. Fiscal deficit and core sector data for July will also be out on the same date. Apart from these, monthly PMI and auto data will also be under watch.
4. Brent crude: Brent crude oil surged past the $100-per-barrel mark, on concerns that the U.S. will not consider additional concessions to Iran in its response to a draft agreement that would restore Tehran's nuclear deal - and potentially the OPEC member's crude exports.
5: DII selling: Domestic investors continued its selling spree in August, selling around Rs 6,539 crore after foreign investors resumed buying in equity markets. DIIs were buyers for only two days this month -- August 2 and August 18. Apart from these two days, they remained net sellers. FIIs turned buyers and bought $5.5 billion in equities.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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