Markets to get a flat-to-positive start on the F&O expiry day

The Indian markets went through some profit booking and traders remained concerned with assembly elections not bringing in any major positive for the ruling party in the centre. Today, the December F&O series expiry day is likely to be a bit volatile, the markets may get a positive start although there will be mainly stock specific movements. There is some solace for the government struggling to keep the fiscal deficit under control, the direct tax collections during April-November of this fiscal rose 5.67 percent to Rs 3.29 lakh crore over the same period a year ago. Also, pitching for a rate cut by the Reserve Bank, Chief Economic Adviser Arvind Subramanian has said that there is a need to boost investments to achieve the potential economic growth rate of 7-8 percent in the next few years. Industry body, Ficci too has said that interest rate reduction will boost investment cycle. There will be some buzz in the stocks related to health device manufacturing, as the Union Cabinet is expected to consider liberalising foreign direct investment (FDI) policy for the cash-starved medical devices sector.

The US markets made a mixed closing on Tuesday on getting similar kind of economic news flow. While, Commerce Department reported stronger than previously estimated third quarter GDP growth, it also showed unexpected decreases in durable goods orders and new home sales. The Asian markets have mostly made a positive start led by the Japanese market, which is up by over a percent in early deals on yean weakness.

Back home, Tuesday turned out to be a disappointing session for the Indian equity indices which got pounded by over half a percentage point as investors opted to book profit ahead of December F&O expiry due tomorrow. Earlier, markets made a positive start supported by firm global cues with key indices surpassing their crucial 27,800 (Sensex) and 8,350 (Nifty) levels in morning deals, but a sharp fall in second half of the trade dragged benchmarks lower to end near intraday low levels, as domestic sentiment was hit after poll trends indicated that the Modi-led BJP will not have majority in Jharkhand or in Jammu and Kashmir. Selling by foreign institutional investors continued unabated and they were net sellers in Indian equities worth Rs 335.24 crore on Monday, as per provisional stock exchange data. Some cautiousness also crept in after international credit ratings agency Moody’s statement that high fiscal deficits constrain India’s rating now. Meanwhile, the winter session of Parliament ended today after passing a record number of 18 legislations, including amendment bills on amending coal mines allocation and labour laws, in 22 sittings. During the session, progress on key reform proposals, particularly the Insurance Laws (Amendment) Bill that would have enabled the insurance industry to have up to 49% foreign investment, failed to meet market expectations. On the global front, European counters were mostly in the green in early deals, while Asian markets ended mostly in the green. Back home, depreciation in Indian rupee too dampened the sentiments. Rupee were trading at 63.38 per dollar at the time of equity markets closing compared with its previous close of 63.24 as month-end dollar demand from oil companies hurts the Indian unit. Meanwhile, selling in software and technology too hit the sentiments as after TCS, HCL Tech too have raised concern over earnings on dollar strength and there are reports that global banks may remove IT allocations from their annual budget. Weakness in global commodity prices kept the metal shares under pressure. Finally, the BSE Sensex plunged by 195.33 points or 0.71%, to 27506.46, while the CNX Nifty dropped by 57.00 points or 0.68% to 8,267.00.