Markets to get a good gap-up start of F&O expiry week

The Indian markets went for a big rally in last session on supportive global cues, today the start of the holiday truncated F&O expiry week is likely to be a gap-up one and the markets will extend their rally mood. Traders apart from the solid start of the regional peers will also be getting some encouragement with global rating agency Moody's statement that India's credit profile will be unaffected by a small slippage in fiscal deficit target, as it expects the government to continue fiscal consolidation and target lower deficits every year despite headwinds from global slowdown. Also, Finance Minister Arun Jaitley urging private sector to give up caution and make investments, has said that it has become absolutely imperative to add to the credibility of the Indian economy, with the world looking up to the country as a bright spot amid global headwinds. Meanwhile, industry body Assocham has said that the Indian economy is expected to improve in six months but private sector investments will be a matter for concern due to sluggish capacity utilisation and pressure on corporate earnings. Infra stocks are likely to see some action, as the Finance Minister has said that India is taking steps to address problems in the infrastructure sector and multiple institutions are required to meet the funding requirements in this space. Also there will be lots of result announcements to keep the markets in action.

The US markets ended higher in last session on increased risk appetite and buying interest, along with rise in crude prices. All the Asian markets have made a jubilant start, while the Japanese market has taken the lead, the Chinese shares too opened higher after first weekly advance in 2016, as bets central banks will come to the rescue of turbulent financial markets fuelled a rebound in global stocks.

Back home, Indian equity indices staged a blockbuster performance on the last day of the week by vehemently rallying close to a two percentage points in the session and recaptured their important psychological levels. Indian markets posted their biggest single-day percentage gain since October, as hints of more stimulus measures from the European Central Bank lifted global markets, but still marked a third weekly fall. Global markets sentiments improved after oil prices rose 5 per cent on Friday. Although higher crude prices are not good for India's current account balance, they are helping shore up risk sentiment in global assets. On the domestic front, sentiment got a boost after Finance Minister Arun Jaitley said India is gradually transforming most of its taxation laws for a greater degree of stability and predictability, stressing that the proposed Goods and Services Tax (GST) is a major step in this direction. The net impact of the GST, once it is put into force, is that there will be a seamless transfer of goods and services across the country. Some support also came with a private report that India's GDP growth rate is likely to accelerate gradually and inflation is expected to remain below 5 per cent over the next two years. Furthermore, adding to the optimism United Nations world economy report said that the India will be the world's fastest growing large economy at 7.3 per cent in 2016, improving further to 7.5 per cent in the following year. Investors overlooked the report that that RBI Governor Raghuram Rajan shot down Niti Aayog chief Arvind Panagariya's suggestion to raise the central bank's inflation target, while pointing out that the country's macroeconomic fundamentals were stable. He said the current global market turbulence may owe much to central banks persisting with stimulus programmes for too long. On the global front, Asian markets ended higher after the ECB signaled stimulus hopes. Back home, the benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the frontline indices slowly but steadily started gathering more steam and surged by around one and half a percent by late morning trades. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. Finally, the BSE Sensex surged by 473.45 points or 1.98% to 24435.66, while the CNX Nifty gained 145.65 points or 2% to 7,422.45.