Markets to start the F&O series expiry week on a cautious note

The Indian markets paring all their early gains ended modestly in red in last session. Today, the start of the F&O series expiry week is likely to be cautious and trade may see bouts of volatility. While the regional cues are mixed, there are no major cues to support the markets. Traders will be concerned with Reserve Bank of India (RBI) Governor Raghuram Rajan's statement that India should restrain itself from being “too ambitious” at a time when the world is full of uncertainties and instead focus on sensible policies to ensure a sustainable economic growth. Rajan has also said that Indian economy has certainly picked up pace in growth, but certain sectors are still under stress, making the economic recovery uneven. There will be some spurt in IT stocks with Union minister Ravi Shankar Prasad stating that the Centre will continue to take up the issue of hike in visa fees for Indian software professionals working in the US at the highest level with that government. Some action can be seen in the aviation stocks too, as the Directorate General of Civil Aviation (DGCA) has reported that the number of passengers flown by the Indian airlines stood at 81.09 million in the January-December period last year, a jump of 20.34 percent from 67.38 million they had flown in 2014. There will be some buzz in the auto stocks with Union Transport Minister Nitin Gadkari stating that the draft of the much-awaited policy is ready and would be put in public domain soon, he believes it will help raise turnover in the industry to Rs 20 lakh crore from Rs 5 lakh crore at present.

There will be lots of earnings announcements to keep the markets in action. Archies, BPCL, Tata Power, Dish TV, TTK Prestige, Aban Offshore, HSIL, Jyothy Labs, Welspun Corp, Chennai Petro, Heritage Foods,Tara Jewels and Sonata Software etc will report their numbers.

The US markets ended higher in last session, bargain buying mainly led the gains on the street, while there was some upbeat economic report that too supported the markets. The National Association of Realtors reported that existing home sales rose for the second consecutive month in April. The Asian markets have made a mixed start with some indices trading in red led by the Japanese market which is down by over a percent in early deals as dollar retreated against major currencies, on the same time the weakness in oil weighed on the energy stocks across the region.

Back home, Indian benchmarks extended their southbound journey for yet another session on Friday, as investors remained wary on hopes of an interest rate hike by the US Federal Reserve in the month of June. On the domestic front, sentiments remained dampened with the market regulator Sebi taking its fight against black money and money laundering to another level and announcing steps to stop suspected illegal money flowing into the country by making issuers of securities known as offshore derivative instruments register their customers. Depreciation in rupee value against the US dollar too weighed down sentiments. However, losses remained capped with strength in Asian & European equities and uptick in crude oil prices. Some support came with Moody's Investors Service, forecasting Indian economy to grow 7.5 percent in the current and next year and statement that the expansion is primarily driven by rising consumption and sustained improvement in private investment was needed to maintain the momentum. The ratings agency also said India has benefited from lower commodity prices as it is a net importer of commodities and a low exposure to trade has also helped. On the global front, Asian markets ended mostly higher on Friday as investors restored calm a day after worries about the Fed's rate hike signals prompted sell-offs. William Dudley, one of the influential members of the US Fed, believes the current sound economic fundamentals warrant a rate hike by the US Fed in June or July. Back home, after getting cautious start, Indian benchmark indices traded in the tight range near neutral line, altering between positive and negative territory, for most part of the session, but sharp selling in final hour of trade dragged the indices to lowest point of the session. However, a mild short covering in dying moments of trade ensured that the key indices shut shops off the intraday lows. Finally, the BSE Sensex ended lower by 97.82 points or 0.39% to 25301.90, while the CNX Nifty dropped 33.70 points or 0.43% to 7,749.70.