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

The Indian markets made a smart bounce back, posting gains of over half a percent in last session. Today, the start is likely to be cautious but lots of volatility can be seen, as the September F&O series will expire today and traders will be adjusting their positions. Some upmove too can be seen with short covering in some specific pockets. Traders will be getting some support with chief economic adviser Arvind Subramanian’s statement that India does not need further fiscal stimulus to revive the economy, despite record low inflation and growth seen at the lower end of an 8.1-8.5 percent target this financial year. Also, Economic Affairs Secretary Shaktikanta Das, while expressing optimism that the growth in the current fiscal will exceed 7.5 percent, has said that the government will not wait for the Budget and will continue with reforms measures to make India an attractive investment destination. However, there will be some buzz in the India Inc, as the RBI has cautioned against over-borrowing by large corporate groups. Though, RBI through a draft framework on External Commercial Borrowings (ECBs), proposed to allow domestic companies to borrow money from pension funds, sovereign wealth funds (SWFs) and insurance funds as part of the ECBs. The power stocks will continue to remain in action, as the Power Minister Piyush Goyal has said that India will provide 24x7 power across the country by 2019 by creating cost effective infrastructure which is sustainable and inclusive of clean energy solutions.

The US markets came off the day’s low but still ended modestly in red in last session. The trade remained choppy amid continued uncertainty about the outlook for US monetary policy. The Asian markets have made a mixed start and while the Chinese market has made some recovery, the Japanese market has plunged coming after a long holiday.

Back home, Indian equity benchmarks staged a smart recovery in second half of trade and ended the session with a gain of over half a percent on Wednesday, supported by short-covering in beaten down but fundamentally strong stocks. Earlier, markets made a gap down start, tracking a global sell-off on weak Chinese factory data. Sentiments came under pressure after the Asian Development Bank (ADB) lowered its growth projections for India for 2015-16 to 7.4 per cent, from the 7.8 per cent earlier, citing weak monsoon, poor external demand and inability of the government to push reforms. Lack of confidence among market participants about prospects of a rate cut by the RBI at its policy meet next week has also dampened sentiment. However, the markets bounced back in second half with investors using the dips to accumulate quality stocks. Sentiment got some support with Finance Minister Arun Jaitley’s statement that we have learnt to live in the era of turmoils and the government is focussing on strengthening the country's real economy and harnessing its true growth potential of 8-9 per cent. Meanwhile, External Affairs Minister Sushma Swaraj, asserting that India offers immense opportunities, has sought investments from the US industry in both public and private sectors in the country for a “win-win” outcome. Markets gained pace after European counters made a firm opening, however, Asian markets declined on Wednesday. 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 with a gain of over half a percent with Sensex and Nifty recapturing their crucial 7,800(Nifty) and 25,800 (Sensex) levels. Moreover, the rupee trimmed some of its early losses and supported the sentiments. Finally, the BSE Sensex surged by 171.15  points or 0.67% to 25822.99, while the CNX Nifty gained 33.95  points or 0.43% to 7845.95.