Markets to make a positive but cautious start of the F&O expiry week

The Indian markets picked up pace in the final hours of last session to make a positive close. Today, the start of the F&O series expiry week is likely to be mildly in green with reports that Finance Minister Arun Jaitley will meet his counterparts in states to discuss proposed amendments to the GST Bill on Tuesday, with the likely listing of GST Bill in Rajya Sabha this week. Meanwhile, the government has asked the states to remove all local taxes on essential food items, like pulses and edible oils, among other steps to ensure supplies at affordable prices. Traders will however be concerned about International Monetary Fund (IMF) listing out as many as six core areas that need further reforms in India. It has warned that headwinds from weaknesses in the country’s corporate and bank balance sheets, decelerating pace of reforms and sluggish exports may weigh on its economic growth. Also, a recent study by the UN University in Kuala Lampur suggests India could lose 3.2 per cent of its GDP by 2030 due to reduced working hours and loss in productivity.  The steel stocks will see some action with report that domestic steel companies are well short of meeting their export obligations under the Export Promotion Capital Goods (EPCG) scheme and they have sought relaxation in norms.

There will be lots of important earnings announcements that will keep the markets buzzing. Canara Bank, Bajaj Corp, Eveready, Greenply Industries, GHCL, JK Paper, Merck, State Bank of Mysore, Info Edge and Tata Sponge are among many to announce their numbers today.

The US markets ended higher in last session making their fourth straight week of positive gains, trade was supported by some strong earnings from a pair of telecom giants. The Asian markets have made a mixed start, with some of the indices trading modestly in red, as investors looked toward central bank meetings this week in the US and Japan, though the Japanese market was up again on a better than expected trade data and a weaker yen.

Back home, after showing a feeble trade for most part of the morning session, domestic benchmarks managed to negotiate a close in the green terrain on Friday, as investors showed renewed buying interests in frontline blue chip counters. Sentiments got a boost after the reports suggested that the Goods and Services Tax (GST) constitutional amendment bill has been listed for discussion in the Rajya Sabha next week. The GST bill, touted as the single biggest indirect taxation reforms that will simplify and harmonise the indirect tax regime in the country, has been approved by the Lok Sabha and is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. Some support also came with report of a good monsoon season so far, raising hopes of a revival in farm output as well as income. Investors also got some comfort with a private poll stating that India's economy will hum along at a solid pace for the remainder of this fiscal year provided structural reforms are passed, while above-target inflation means the Reserve Bank of India will only cut rates once more this year. However, gains remained capped with the private report stating that India has ranked a low 110 out of 149 nations assessed on where they stand with regard to achieving the Sustainable Development Goals, according to a new index which is topped by Sweden and shows all countries face major challenges in achieving these ambitious goals. On the global front, selling was witnessed across the Asian markets, while European stocks traded mixed in early deals. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, as investors remained influenced by the daunting sentiments prevailing in Asian markets. After trading with moderate cuts through the morning session, the key indices gradually crawled into the green territory. Short covering intensified in late hours of trade which stoked the bourses to the highest point in the session. Finally, the BSE Sensex surged by 92.72 points or 0.33 % to 27803.24, while the CNX Nifty rose by 31.10 points or 0.37% to 8,541.20.