Indian stock market is expected to witness volatility as traders roll over positions in the futures & options (F&O) segment, while movement in crude oil prices linked to the Iraq unrest and the progress of monsoon will set the tone this week.
Some of the other factors that are likely to impact stock market movement include, trend in global equity markets and investment activity of foreign institutional investors. On Friday, the Sensex ended at 25,105.51 and the Nifty at 7,511.45 -- both values being respective two-week lows.
"The derivative expiry of June month F&O contracts is scheduled in the coming week so volatility would continue to remain on the higher side. Traders are advised to avoid over leveraged positions and high beta counters," Religare Securities President-retail distribution Jayant Manglik said.
The near-month June 2014 F&O contract expires on Thursday, 26 June, 2014.
Meanwhile, trading could also be influenced by the progress of monsoon as rains holds key for food production. Concerns are rife that that poor rains this year will send prices higher and add to the problems faced by the government.
"The monsoon has covered half of the country four days behind the usual schedule. All India seasonal rainfall from 1 to 18 June 2014 was 45 per cent below long period average and below than average monsoon is a key concern for the markets going ahead," Manglik added.
Kotak Securities, Head- Private Client Group Research, Dipen Shah, said the monsoon progress and the budget, expected in mid-July, are going to be the two most important triggers for the markets going ahead.
"We feel that, a progressive budget as well as other reform initiatives will likely lead to continued out-performance of Indian indices v/s emerging market peers. However, if there is a continued rise in crude price, it will be a negative from the CAD, rupee and inflation perspective," Shah added.
Supply concerns due to ongoing violence in Iraq has pushed up oil prices with Brent variety trading near USD 115/barrel mark, triggering macroeconomic worries for India which imports the majority of its crude oil needs.
In US next week, the macroeconomic calendar includes releases on durable goods orders for May, the Conference Board's Consumer Confidence Index and several important housing indicators, including new home sales, existing home sales and the Case-Shiller Home Price Index.
For second successive week, the benchmark sensitive indices -- Sensex and Nifty -- ended in the negative zone as caution prevailed over the