BUSINESS

Short-term market volatility is possible

Given the increasing volatility index, economists predict that markets will become turbulent soon.

The increasing VIX is a sign of possible volatility, according to V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The short-term volatility of the market may become quite extreme.

FPIs sold Rs 1726 crore in debt and acquired Rs 1156 crore in equities over the two trading days in May.

The Fed’s move, he said, suggests rate reductions that were much less than anticipated earlier in the year. The US economy seems to be slowing down, despite the fact that inflation has become more tenacious at lower levels. As a result, rate cuts may be required.

The fact that wages increased by less than 4% also indicates a contracting labor market. This is positive news from the standpoint of the stock market, which is why the US markets rose significantly on Friday,” he said.

Above all, FPIs will react to fluctuations in the rates on US bonds. They will become active purchasers if US bond rates fall and the Indian economy and markets do well, he said.

According to HDFC Securities’ Senior Technical Research Analyst Nagaraj Shetti, the Nifty’s short-term trend seems to have turned around. At the swing high of 22794 levels on Friday, the bullish pattern’s higher top was most certainly completed, and the short-term downward correction is anticipated in the next sessions. The next levels to monitor on the downside are around 22120, with immediate resistance around 22600.

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