Markets to get a cautious start on the penultimate day of F&O expiry

The Indian markets corrected in last session and both the major indices witnessed cut of over half a percent each. Today, the start of the penultimate day of F&O series expiry is likely to be cautious; however some upmove can be expected in the latter part of the trade. Traders are likely to remain concerned with ratings agency Icra in its latest report saying that the Indian economic growth may have slowed to 5 per cent in the July-September quarter due to a low kharif harvest, a slowdown in exports and muted government spending. Meanwhile, Finance Ministry Arun Jaitley is likely to argue with Reserve Bank of India (RBI) Governor Raghuram Rajan to lower interest rates when the two meet ahead of an RBI interest rate decision, in view of slowing growth. Official GDP data for the second quarter of the current fiscal year ending March is due for release this Friday. Cigarette and tobacco companies are likely to remain under pressure, as there may soon be a ban on sale of loose cigarettes in India after the government accepted a new tougher framework for tobacco sale. The PSU oil marketing companies too may come under pressure as the Union Minister of State for Petroleum and Natural Gas Dharmendra Pradhan has said that the government had no immediate plan to remove the subsidy on Liquefied Petroleum Gas.

The US markets made a flat closing in last session, although the GDP growth came better than expected. Trade was weighed down by report of deterioration in consumer confidence in the month of November. The Asian markets have made mostly a positive start, though the Japanese market was marginally in red amid a stronger yen.

Back home, markets gave the glimpse of volatility of the F&O series expiry week and after surging to their fresh record highs suffered severe profit booking on Tuesday with benchmarks losing over half a percent for the day. In the very early hours sharp selling dragged the Nifty and Sensex below their crucial 8500 and 28500 mark respectively and after that there was no revival. The early enthusiasm generated by report that US investors have been moving money into exchange-traded funds that focus solely on India, backed by the optimism about India's economy and booming stock market, faded with traders largely concentrating on domestic developments where the government’s plan to get important legislations passed in the winter session of Parliament seemed running into trouble with opposition getting united. Meanwhile, deadline of submitting report by select committee of Rajya Sabha, which was expected to submit its recommendations early enough for the government to get parliamentary approval, was extended till December 12  from November 28. The global cues too were not very supportive and despite a flat but positive close of the US markets, the Asian markets remained cautious and some of the major indices even ended in red, though the Japanese stocks rallying after a holiday gained about half a percent for the day. Back home, market also seemed reacting negatively to SEBI’s alignment of norms for issue of Offshore Derivative Instruments or P-Notes with foreign portfolio investors regime amid concerns about possible misuse. Traders even ignored the recovery in rupee which after initial fall moved higher in second half. There was sharp selling pressure in the second half taking the major indices to their intraday low, though final hour witnessed some recovery that helped the markets to cover up some of their losses. On sectoral front, Telecom, IT and media stocks were under pressure as the Centre finalised the broad outline for appointing a new super-regulator governing these sectors. The cigarette and tobacco stocks witnessed sudden slump after the Ministry of Health & Family Welfare said that an expert panel constituted by it had, inter alia, recommended prohibition on sale of loose or single sticks of cigarettes. Finally, the BSE Sensex plunged by 161.49 points or 0.57%, to 28338.05, while the CNX Nifty dropped by 67.05 points or 0.79% 8,463.10.