Markets to make a cautious start of the F&O expiry session

The Indian markets surged in the last session on short covering and good global cues. Today, the start of the F&O expiry session is likely to be cautious taking cues from the global development and lots of volatility can be expected in latter part of the trade. Meanwhile, Finance Minister Arun Jaitley has said that India has the capacity to grow at 8-9 per cent and good governance would make economic expansion “more exuberant.” Today there is likely to be buzz in the real estate sector stocks, with the government easing rules for foreign investment in the construction sector by allowing inflows into projects spread over a smaller area. The minimum floor area requirement for construction and development has been reduced from 50,000 square metres to 20,000 square meters. On the other hand some somberness can be seen in the banking stocks on a report that banks are seeing their deposits growing at a faster pace than credit, putting pressure on net interest income. The International rating agency Moody's has retained its negative outlook on the domestic banking system, citing high leverage in the corporate sector.

There will lots of important result announcements too, to keep the markets buzzing. ACC, Ambuja Cements, Andhra Bank, Bharti Airtel, Ceat, Castrol, Century Ply, Gillette, Glenmark Pharma, GTL and HCC  etc are many to announce their numbers.The US markets ended lower in last session after the Federal Reserve judged the US economy strong enough to end its asset-purchase program. Also, the Fed repeated its pledge to keep interest rates at record lows for a “considerable time” but said rates may rise sooner than markets expect. The Asian markets have made a mixed start with some of the indices trading marginally in red after the Fed’s decision that led the dollar moving higher.

Back home, extending their previous session’s rally, Indian equity benchmarks staged an enthusiastic performance on Wednesday, by rallying over three fourth of a percent and breaking lots of psychological levels in their northward rally on the penultimate session of October F&O expiry on sustained buying activities by funds and retail investors ahead of the outcome of Fed’s two day meeting. Sentiments remained up-beat since start as key bourses opened with huge gap on up-side and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength, as investors continued their hunt for fundamentally strong stocks. Supportive cues from US markets provided the much needed support to local markets initially, while good earnings and better than expected economic data lifted the markets higher. Asian markets too ended higher, while buying got intensified in domestic markets on the back of positive opening in European counters. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle near intraday high levels with Sensex and Nifty ended just shy of their crucial 27,100 and 8,100 levels respectively. Slight recovery in Indian rupee too supported the sentiments. The rupee was trading at 61.30 per dollar at the time of equity markets closing as compared to Tuesday’s close of 61.32, tracking gains in domestic equity markets. Meanwhile, auto stocks edged higher on buzz of strong sales during the Diwali festive season. Additionally, stocks related to realty surged ahead of Cabinet’s decision of the proposal of relaxing foreign direct investment (FDI) norms in construction sector. Finally, the BSE Sensex surged by 217.35 points or 0.81%, to 27098.17, while the CNX Nifty soared by 62.85 points or 0.78% to 8,090.45.