Mumbai: Indian markets are likely to remain volatile ahead of expiry of June futures and options contracts, and amid escalating trade tensions between US and other major world economies. Moreover, movement in oil prices will also be keenly watched after Opec members agreed on a modest increase in production.
“International news flows are quite active to which the markets will react. However the market will react to the outcome of the Opec meeting as crude oil will dance for a while...Markets are expected to oscillate without any meaning full direction,” said Jimeet Modi, CEO and founder of Samco Securities & StockNote.
Last week, US President Donald Trump threatened a 20% tariff on cars imported from the European Union unless the bloc removes import duties and other barriers to US goods, escalating a global trade war the EU warned could endanger $300 billion in commerce. The global trade war is about to get worse, as the rules-based system of international commerce is poised to revert to an environment where the strong impose their will upon the weak, according to an internal memo circulated among European Union governments.
Meanwhile, crude oil prices will be crucial after the Organization of Petroleum Exporting Countries (Opec) meeting last week. Opec decided to endorse a nominal output increase of 1 million barrels a day which would add 600,000 to 700,000 barrels a day of crude to the market over about six months.
According to Devendra Kumar Pant, chief economist and senior director, India Rating and Research, while crude supply is likely to increase actual supply increase would depend on how quickly oil supplies especially from oil producing countries such as Venezuela, Libya and Iran will come back to normal and will have impact on prices. “The trade war between US and China if results in China sourcing crude from Iran, the global crude oil supply-demand balance will may balance out. The crude oil prices has already reacted in last couple of days in expectation of supply increase post 22 June meeting,” he said.
Back home, biggest initial public offering (IPO) so far in this financial year 2019 will open for subscription on Tuesday. The auto component maker Varroc Engineering Ltd is aiming to raise Rs1,955 crore through the share sale with a price band of Rs965-967 per share. The public offer will close on 28 June. According to analysts, the issue is a reasonably valued.