Indian Stock Markets May Face Volatility in September, Says Expert Ajay Bagga
As September begins, the Indian stock markets may experience a period of volatility driven by global and domestic factors. Experts predict that the US Federal Reserve will start its rate cut cycle in September, which historically has not been favorable for equity markets.
The expected volatility is also linked to the release of August payroll data for the US, which will include revised figures for the previous two months. This data, due at the end of the week, is anticipated to be a significant market mover.
Ajay Bagga, a banking and market expert, stated, “September starts with the Fed rate cuts imminent and volatility expected around the event. For Indian markets, we expect a minor correction as 12 record-breaking days of continuous positive moves will see some profit-taking setting in. We expect a flat to slightly lower market this week, mostly due to some reversion to mean after 12 record-breaking continuously positive moves.”
On the foreign investment front, data indicated that net foreign investment in August in the Indian equity market declined to Rs 7,320 crore, marking the lowest monthly investment in the past three months. This drop is stark compared to July, where foreign portfolio investors (FPIs) had invested Rs 32,365 crore, according to the National Securities Depository Limited (NSDL).
However, a significant shift occurred on Friday, August 30, when FPIs made a record net investment of Rs 14,518.14 crore in a single day, turning the overall monthly investment positive. Despite this, the overall sentiment of the Indian markets remains positive, with potential new investments balanced against profit-taking.
On Friday, both the indices Sensex and Nifty touched fresh record highs and later closed 0.3 percent higher each at 82,365.77 points and 25,235.90 points, respectively, marginally below their record highs.
Doubts Revealed
Volatility -: Volatility means that the prices of stocks can go up and down a lot in a short period of time. It makes the market unpredictable.
US Federal Reserve -: The US Federal Reserve is like the central bank of the United States. It helps control the money supply and interest rates in the country.
Rate cut cycle -: A rate cut cycle is when the central bank, like the US Federal Reserve, lowers interest rates several times over a period. This can make borrowing money cheaper.
Equity markets -: Equity markets are places where people buy and sell shares of companies. In India, the main equity markets are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Payroll data -: Payroll data shows how many people are working and how much they are earning. It helps understand the health of the economy.
Ajay Bagga -: Ajay Bagga is a person who knows a lot about the stock market. He gives advice and predictions about how the market will behave.
Correction -: A correction is when the stock market goes down a bit after going up a lot. It’s like taking a small step back after running fast.
Foreign investment -: Foreign investment is when people or companies from other countries put their money into Indian stocks. It can help the market grow.
