Markets to get a soft start of the F&O series expiry session

The Indian markets once again turned lower and after a volatile day of trade ended with cut of over half a percent  in last session. Today, the start of the F&O series expiry session is likely to be soft on tepid global cues, though there will be bouts of volatility ahead of the long weekend. The infra and IT sectors will be in action, as the Union Cabinet approved Central government spending worth Rs 98,000 crore under two new urban missions over the next five years. Sugar stocks will keep moving higher after the government hiked the import duty to 40% and announced withdrawal of DFIA scheme and removal of excise duty on ethanol supplied for blending. There will be some buzz in the banking stocks after the Reserve Bank of India imposed penalty of Rs 1.5 crore each on three public sector banks -- Bank of Maharashtra, Dena Bank and Oriental Bank of Commerce for violation of know your customer (KYC) and anti money laundering (AML) norms. Eight other banks have been cautioned to put in place appropriate measures and review them from time to time to ensure strict compliance of KYC requirements in future.

The US markets extending their consolidation mood ended lower in last session after the release of the weak first quarter GDP data and also on uninspiring Fed statement. US GDP inched up by just 0.2 percent in the first quarter following the 2.2 percent growth seen in the fourth quarter. The Asian markets have made a soft start on uncertainty over US interest rate hike as Fed did not provide any specific guidance about the outlook for interest rates. The Japanese market was witnessing sharp fall after a day of break as the Bank of Japan is expected to keep its stimulus program unchanged, after Thailand unexpectedly cut rates.

Back home, resuming their southward journey, Indian equity benchmarks ended the Wednesday’s trade with a cut of over half a percent as investors opted to remain on sidelines on penultimate day of F&O expiry. Key gauges traded in red terrain for most part of the day’s trade, though attempted recovery in afternoon deals but the recovery proved short-lived and markets ended the session below their crucial 27,250 (Sensex) and 8,250 (Nifty) levels. Continued selling by foreign portfolio investors amid fresh worries on retrospective taxes, and a delay in earnings recovery mainly dragged the markets lower. Sentiments also took a hit after Prime Minister Narendra Modi had to delay a bill that would make farm land acquisition easier, following anger over rising rural distress and the suicide of a farmer in India’s capital Meanwhile, Chief Economic Adviser Arvind Subramanian has said that India is ‘a very frustratingly robust democracy’ where unleashing “big bang” reforms is not easy given the multiple centers of veto power. On the global front, European counters made a cautious start, while Asian markets ended mostly in the red. Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 63.34 per dollar at the time of equity markets closing compared with its previous close of 63.16. Selling in FMCG stocks too weighed down sentiments as weak monsoon forecast is likely to hit rural volumes. On the flip side, stocks related to realty space remained on buyers’ radar after the Cabinet extended time by two years for completion of projects sanctioned till March 2012, under BSUP & IHSDP components of the JNNURM. Meanwhile, banking shares ended higher after private sector lender Axis Bank reported an 18% growth in its net profit for the quarter ended March 31, 2015, led by strong growth in its interest income. Finally, the BSE Sensex dropped by 170.45 points or 0.62% to 27225.93, while the CNX Nifty plunged by 45.85 points or 0.55% to 8,239.75.