Markets to make a strong start on the penultimate day of F&O expiry

The Indian markets regaining momentum in the second half managed a modestly positive close in last session. Though, the trade remained choppy but traders were seen lapping up fundamentally strong stocks at attractive valuations. Today, the start of the penultimate day of the F&O series expiry is likely to be good on strong global cues. Traders will also be getting some encouragement with Australian Met Department’s report that the weather system that wreaked havoc in India, Asia and Africa has just ended and will now give way to bountiful rain in the form of La Nina. There will be some buzz in the market and especially the banks as the government has approved the revision in guidelines of the Performance in Credit Rating Scheme, aiming to increase its credibility and effectiveness for both borrowers and banks. The infra sector stocks too will keep buzzing with the government announcing the names of 13 more cities that will be developed under the Centre’s “Smart City Mission.” Each city will receive Central assistance of Rs. 200 crore in the first year and Rs. 100. crore over the three subsequent financial years. State governments and respective urban local bodies will also match the Centre’s contribution.

There will be lots of earnings announcements too, to keep the markets in action. Larsen & Toubro, Tata Steel, Bajaj Auto, GAIL, Ashok Leyland, Apollo Hospitals, Godrej Industries, Ujjivan Financial Services, GSK Pharma, Essar Shipping are among many to announce their numbers today.

The US markets witnessed a sharp surge in last session offsetting the modest losses seen in the previous one. The gains were partly supported by bargain hunting and partly by the release of a Commerce Department report showing a sharp jump in new home sales in the month of April. The Asian markets have made a strong start with many of the indices in the region gaining over a percent in early deals, rebounding from a seven-week low on supportive US cues. Rise in crude and industrial metals have supported the markets in the region.

Back home, after registering losses for four consecutive sessions, Indian benchmark indices managed a modestly positive close on Tuesday, as investors accumulated quality stocks at attractive levels. Though, the session largely remained characterized by choppiness as the aimless indices moved only sideways in a tight band amid lack of triggers. Sentiments got some support after March-quarter earnings mostly meeting street’s estimates despite a slowdown in global growth and tepid demand. Strength in European markets too aided sentiments. Some support came in with the report from private forecasting agency Skymet raising India's monsoon forecast to 109% of the long period average from 105% on the back of a waning El Nino. The agency also said that conditions are favourable for timely monsoon in Kerala. However, fears of an interest rate hike by the US Federal Reserve in June along with decline in crude oil prices and weakness in rupee capped the upside gains. Indian rupee slid for the ninth day as it depreciated 14 paise more to trade at over two and half month low of 67.63 against the dollar at the time of equity markets closing, hit by sustained foreign fund outflows.  Investors also remained concerned with SBI report stating that Credit growth in the country is unlikely to revive ‘materially’ in near term as demand conditions are still acting as a laggard. The yearly SBI Composite Index for May this year declined to 51.6, mainly due to lower credit growth. The monthly index, however, jumped to 50.3 in May from 46.5 in April due to increase in commercial vehicle and consumer durables sales. On the global front, Asian markets ended in red on Tuesday, while European shares rose, shrugging off losses at the start of trading. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, as investors remained on sidelines ahead of the May F&O expiry due on Thursday. Finally, the BSE Sensex gained 75.11 points or 0.30% to 25305.47, while the CNX Nifty rose 17.80 points or 0.23% to 7,748.85.