Dalal Street ahead: Volatility, rupee biggest worries in expiry week of June

MUMBAI: Indian equities are expected to be on the edge after the global rout on Friday following Britain’s decision to leave the European Union. Investors will watch the currency markets for cues as volatility is set to heighten ahead of the expiry of the June derivatives series on Thursday.

“Given the success of the UK referendum, the possibility of another vote on the EU membership has increased. The risk premium will be high for a while,” said Paul Danis, chief strategist at Canadabased BCA Research.

“The rise in political and economic uncertainty around the overall European continent has negative implications for global risk assets like equities, including emerging market equities,” he said.

The direct trade impact of the UK on India is limited but the prevailing risk-off sentiment globally following Brexit may prompt foreign investors to shift positions away from emerging assets like India given the fears that other EU countries will go for a similar referendum have increased.

Also, strength in the US dollar is expected to outweigh the factor of reduced prospects of another rate hike from the US Federal Reserve this year. “Market will move according to what is happening across the globe. If there is more pain coming from global markets then Indian markets will also fall,” said Piyush Garg, CIO, ICICI Securities.