‘Fasten your seat belts,’ Ajay Bagga warns of market volatility ahead of key global events

Bumpy road ahead:  Indian stock markets are set to face heightened volatility this week, fuelled by a series of global events and ecomic shifts. Ajay Bagga, a seasoned market investor, advised investors to “fasten seat belts and wait for clarity,” as he can see fluctuating market sentiment in days ahead.

“This is an event-heavy week,” Bagga remarked. “Volatility will be much higher than usual. Waiting on sidelines is a good strategy in such times.” 

Among prominent factors contributing to market uncertainty is US presidential election. With polls oscillating between potential outcomes and prediction markets reflecting equally divided public opinion, election’s impact on investor confidence is palpable. 

“ outcome is very uncertain,” Bagga stated, drawing comparisons to contentious 2000 election, in which legal battles ultimately led to a Supreme Court decision declaring George W Bush victor.

Fed meet decision, oil prices to drive markets

Bagga ted that adding to uncertainty is Federal Open Market Committee (FOMC) meeting scheduled for Wednesday and Thursday, where a 25 basis points (0.25 per cent) rate cut has already been factored in by markets. Meanwhile, oil prices could be buoyed by OPEC+ alliance’s recent decision t to increase production, reversing a previously planned supply boost in light of sluggish demand forecasts.

Warren Buffett has signalled caution as well, raising Berkshire Hathaway’s cash reserves to a record $325 billion while scaling back on share buybacks. “ most successful investor in history is expecting lower US markets ahead,” Bagga pointed out, adding that Buffett’s adjustments are often validated over time.

Bagga also shared that geopolitical tensions are furr weighing on market sentiment. On Saturday, Iran’s Supreme Leader Ali Khamenei issued a stern warning, pledging a “crushing response” to actions by US and Israel. 

"Will Iran act once voting is done? That is a big question confronting markets,” said Bagga.

China’s stimulus measures

China’s ecomy is also in spotlight as 14th National People’s Congress Standing Committee (NPCSC) convenes this week. Bagga ted that investors are expecting a major stimulus pack to shore up Chinese banks, refinance local government debt, and support households amid mounting ecomic concerns. 

“ size and nature of pack should provide an answer,” Bagga commented, adding that China’s policymakers might be bracing for potential fallout if US President Donald Trump, who has proposed steep tariffs on Chinese goods, is re-elected.

In India, market sentiment has been dampened by October’s substantial foreign institutional investor (FII) outflows, which totalled Rs 1.14 lakh crore from secondary markets. Bagga shared that this development has contributed to a “subdued market sentiment” in country.

“t a great set-up for risk markets. Add on Rs 1.14 lakh crores of FII outflows from Indian secondary markets in October, and we have subdued market sentiment going into this week,” added Bagga.