Markets to get a soft start of the F&O expiry week tailing sluggish cues

The Indian markets, were massacred along with other global markets in the last session, in a knee-jerk reactions to UK’s referendum results, though the major bourses recovered considerably, still there were major cuts at last. Today, the start of the F&O expiry week is likely to remain soft and the Brexit impact will continue to play its role, though Finance Minister Arun Jaitley has said that the impact of the Brexit vote on India would not be significant, as the underlying fundamentals of the economy were robust. Jaitley however, noted that Indian companies with significant operations in the UK would have to tailor their businesses accordingly to deal with the fallout. Markets may see some recovery in latter part of the trade and will be supported by some reports that India may soon roll out a long- term multiple-entry comprehensive visa by merging tourist, business, medical and conference visas into one to attract more visitors and boost trade. Also, the Finance Minister has said that India needs over $ 1.5 trillion in investment in the next 10 years to bridge infrastructure gap as the government intends to connect seven hundred thousand villages with roads by 2019 as part of a massive modernisation plan. The pharmaceuticals, defence and single-brand retail related stocks will keep buzzing, as the government has notified changes in the Foreign Direct Investment (FDI) policy in these sectors.

The US markets plunged in last session, with all the major indices witnessing steep losses for the day, reacting to the surprise vote in favor of Britain leaving the European Union on Thursday. The Asian markets have mostly made a weak start, extending their sell-off, though some indices have recovered and were in green too, led by the Japanese market which is up by over a percent on yen weakness.

Back home, stock markets in India ended the week on a disappointing note with the benchmark equity indices collapsing over two percent and slipping below crucial levels. The frontline indices got off to a gap down opening and tumbled to day’s lows in late morning session, but witnessed a strong recovery through the session. Sentiment suffered a jolt following a meltdown in global equities after referendum result indicated Britain would leave the European Union, triggering all-round selling, dragging down the key indices from their crucial levels. Shares of Indian companies having operations and exports to the European Union like pharma and information technology along with auto component manufacturers were among the most impacted. Depreciation in rupee against the dollar also dented sentiments. Indian rupee was trading at 67.92 per dollar at the time of equity markets closing as compared to 67.25 per dollar level on Thursday. However, market participants got some comfort with Reserve Bank of India’s (RBI) Governor Raghuram Rajan’s statement that RBI would provide liquidity to allow orderly adjustment in the local market following Britain's exit (Brexit) from European Union creating ripples across global markets, while he expects India's strong fundamentals would help it to remain largely immune from the shock. The governor added that India's limited short term liability to the international markets leads to moderate participation, and therefore the impact would be limited. He also said that a good monsoon can lift sentiment and activity should pick up. Some support also came with Finance Minister Arun Jaitley’s statement that India’s macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation. Global cues remained somber as majority of the Asian equity indices finished in the red-zone, while the volatility started in currencies and spread to markets from Asian to European. Back home, finally the BSE Sensex was lost 604.51 points or 2.24% to 26397.71, while the CNX Nifty declined 181.85 points or 2.20% to 8,088.60.