Markets to make a cautious start, may see some upmove in latter trade

The Indian markets made a choppy start of the F&O expiry and after much of dilly-dallying ended flat with FIIs, domestic investors and high networth clients lapping up the mid-cap and small cap stocks in last session. Today, the start is likely to remain cautious as the global cues are still somber, though some recovery can be seen once after stabilization, traders will be getting some support with the continuous fall in international crude oil prices. Meanwhile, Finance Minister Arun Jaitley will meet industry associations to clear doubts about the four-month window provided to holders of undeclared wealth to come clean. There will be buzz in the markets, as the government has kicked off the process of setting up a new monetary policy committee after it notified key amendments to a law governing the Reserve Bank of India. The will be some action in the pharma stocks, as the government has reduced prices of 42 essential medicines used in treatment of various ailments including tuberculosis, cancer, cardiac diseases, asthma, epilepsy, rheumatoid arthritis and depression have been capped by up to 15 percent.

The US markets slumped in the last session, extending their sell-off reacting to the Brexit referendum and the major averages fell to their lowest closing levels in well over three months. The Asian markets have made mostly a lower start tailing the weakness in overnight US markets, though some indices in the region are recovering on prospect of stimulus packages in Japan and South Korea.

Back home, Indian stock markets commenced the new week on a lackadaisical note as the benchmark equity indices hardly budged from their previous closing levels on Monday.  The key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction amid the persistent worries over global financial stability. While the so-called Brexit was discussed intensely across the world in the run up to the poll, the actual decision by Britain to leave came as a surprise. Global markets were caught off guard and plummeted Friday. However, the sentiments took support from positive developments of monsoon that bounced back emphatically and is on track for a strong run in the weeks ahead.  Increased rainfall has already accelerated crop planting, which expanded 48% to 125 lakh hectare in the past week. Planting of rice more than doubled in a week while area under pulses has trebled, signaling higher output of lentils, which should ease food inflation. Some support also came with Finance Minister Arun Jaitley’s statement 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. Meanwhile, sharp selling witnessed in IT exporters on concerns over demand uncertainty from Europe and volatility in the British pound post the Brexit. However, FMCG shares gained on hopes of higher rural volume growth after the IMD said that the monsoon rains will retreat later than normal. On the global front, Asian markets ended mixed on Monday, while European stock markets fell on Monday. Back home, the local benchmark indices opened on a somber note, as investors were largely influenced by the daunting sentiments prevailing in Asian markets. Finally, the BSE Sensex surged 5.25 points or 0.02% to 26402.96, while the CNX Nifty rose 6.10 points or 0.08% to 8,094.70.