Indian stock markets will probably remain unstable this week as the markets may witness bouts of profit-booking ahead of the GDP data, which is due on Friday; and due to the Coalgate scandal that has paralysed Parliament's monsoon session.
Market observers are of the view that selling pressure will prevail in markets amid worries that pace of economic reforms will slow down further as the Opposition led by BJP is still aggressively pursuing Prime Minister Manmohan Singh's resignation over the coal block allocation scandal.
The Prime Minister's Economic Advisory Council (PMEAC) has already slashed rate of economic growth for the fiscal year of 2013. Moreover, sentiment is low following the Reserve Bank's annual report, which declared that combating inflation is the central bank's priority, and the report did not provide any hint on rate cut.
Dipen Shah, chief of PCG Research at Kotak Securities, said, "Fiscal reforms are awaited by the markets . However, markets are yet to see any concrete initiatives being taken up, though efforts are being made to arrive at a consensus."
While monsoon deficit has dropped, many other concerns have surfaced. Brent crude is trading at around $114 a barrel and food inflation and retail fuel prices remain high. Soaring consumer price index inflation has hit expectations about interest rate cuts very hard.
CNI Research Chairman Kishore Ostwal believes that stock markets will remain highly volatile due to the expiry of derivatives on Thursday this week.
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