India in Strong Footing Amid Global Volatility :: Edelweiss

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->

Crude, Eurozone Turbulence Drive Volatility; But India Remains Preferred Market In The Long-Term

Not since the 2008 financial crisis have the global markets seen the level of volatility it is witnessing currently. Already, in the first few trading sessions of 2015, steep corrections have been seen in the global and domestic markets, with US, EU and Asian markets falling nearly 3% in last 5 sessions. The Eurozone economic slowdown, the impact of the ECB’s expected decision (later this month) to announce a QE-style monetary policy action, uncertainty over Greece elections that could potentially throw the EU-led bailout plan out of gear, US 10-year government bond yield falling below 2%, and perhaps most significantly for India, the crude oil price free-fall, are all factors that point to an anticipated increase in short-term volatility.

The impact on Indian markets has been seen over the last few days with FIIs cutting down on risk and emerging as key sellers of Indian equities. According to stock exchange figures for Tuesday, FIIs were net sellers having sold a net of Rs.1,570.76 crore, while domestic institutional investors were net buyers at Rs.1,189.65 crore. The repercussions of global volatility could cause some turbulence in the domestic market and it is prudent for short-term traders should remain cautious till this volatility in the currency/credit markets reduces.

That said, fundamentally, India is more stable and less vulnerable to external shocks than we were a year ago. Therefore corrections led by international triggers may offer excellent entry levels in domestic markets. Historically, a fall in Indian markets owing to global pressures have proved to be an ideal buying opportunities for buying into preferred themes and picks with a time horizon of more than a year. Hedging long portfolios may help in countering the expected surge in volatility and sharp price declines.

So what is the outlook for these global conditions, are these falls sustainable, and how do they affect India?