Greece crisis may keep Indian markets volatile in near term, feel analysts

MUMBAI: The ongoing imbroglio in the eurozone after Greece rejected an extension of its bailout programme may keep stock investors on the edge in the near-term. Though European shares turned around and edged higher on Tuesday despite the uncertainty over Greece, analysts said volatility across financial markets will heighten if the issue is not resolved.

The Indian stock market was shut on Tuesday, but Nifty futures listed on Singapore Exchange fell as much as 40 points, or 0.5%, though they recouped all the early losses. On Monday evening, talks between Greece and the eurozone counterparts over managing the country's debt crisis broke down.

"Market participants are likely to remain on tenterhooks, while volatility may get amplified over Greece uncertainty," said Ajay Bodke, head -investment strategy and advisory at Prabhudas Lilladher.

Analysts said if the current talks conclude without some kind of a new accord in place, the new Greek government will find it tough to make debt repayments looming in March. This could force Greece to exit the eurozone.

"The atmosphere remains tense but the subsequent Eurogroup statements provide us a clear framework on how the Greek crisis will progress over the next few days and weeks," said George Saravelos, strategist at Deutsche Bank.

Analysts are advising caution at this juncture. "I would advise investors to remain cautious going forward because there is abig disconnect between global markets and the Indian market's performance," said Tirthankar Patnaik, chief strategist and head of research, India, Mizuho Bank. "I remain hopeful that some conclusive talks regarding Greece bailout will emerge going ahead but till then investors need to remain vigilant."

Jim Rogers, chairman of Rogers Holdings, in a recent interview to ET, said, "Greece's pullout (of the eurozone) will not be good as there will be turmoil in the stock markets. But over the longer period, it will be good for world stock and currency markets."

Optimists are hoping that expectations of a pro-business Budget may help markets cushion shocks. "Markets may show some resilience ahead of the government's full-fledged Budget. It may focus on accelerating economic policy measures to boost growth," said Bodke.