At a time when global markets are roiling over Brexit fears, the resilience that domestic markets showed is impressive. Hopes of an above average monsoon and widening consensus among political leader on GST implementation kept the spirits high on the domestic front. However, the monsoon hasn't knocked the doors yet and Tamil Nadu Chief Minister Jayalalitha is still not on board on Goods and Services Tax (GST) bill, EU referendum day is also round the corner.
Below is a round-up of these three immediate events, followed by another three key risks that will keep the market on tenterhooks in the coming months:
1) Delayed monsoon triggers jitters
India Meteorological Department (IMD) on Wednesday said the onset of the southwest monsoon over Kerala, which signals the arrival of monsoon over the Indian subcontinent, will be delayed by a week. This has resurfaced the concerns rain Gods may not favour the country this year yet again.
2) Will GST bill become law in the monsoon session
Investors have been awaiting GST law for long haul now. While the Lok Sabha has approved the GST Bill, it is still pending before the Rajya Sabha.
Finnace Minister Arun Jaitley recently said virtually all states have supported the idea of GST except Tamil Nadu which has "some reservations". However, many believe GST will see the light of the day this monsoon session.
3) Brexit fears
India doesn't have to fear much in an event of Brexit, but stock market and currency may turn volatile in the short run.
"Fundamentally, India has nothing to do with Brexit. Even if the event occurs, India is relatively immune, considering very less dependence on UK as a foreign investor," said brokerage IIFL in a research note.
"Regardless of the outcome of British referendum, emerging market capital flows are indisputably headed towards India in the medium to long term horizon," added the report.
4) US elections
US presidential may not have been catching investors' eyes for now but soon will become focus of attention as the election date approaches. If indeed Republican candidate Donald Trump wins and brings in tougher regulations for visa, then there may be a sudden drop in IT company stocks. In February Trump had blamed India for taking away jobs from Americans, pledging to bring them back if elected president.
In case there is no majority in the US elections, there may be volatility in the US markets, which will rub off in Indian market as well, but for a short while.
5) FCNR (B) deposit redemptions in September
The foreign-currency non-resident (FCNR) scheme for non-resident Indians matures in the month of September. A fresh INR liquidity shortage may emerge then if they redeem their deposits instead of rolling over.
In its last monetary policy review in June, the RBI highlighted a possibility of rupee volatility during September-November on account of maturity of the same, but maintained that Rupee liquidity would continue to be supplied as and when required.
6) Prospects of Fed hike in CY16
The US Federal Reserve kept interest rates unchanged on Wednesday and signalled it still planned to raise rates twice in 2016, though it said slower economic growth would crimp the pace of monetary policy tightening in future years.