Markets to make a soft start of the penultimate session of F&O expiry

The Indian markets ended modestly in red in last session, the weakness in some Tata group stocks after the latest development weighed on the sentiments. Today, the start of the penultimate day of the F&O October series expiry is likely to be a bit soft and traders will be reacting to some disappointing earnings amid subdued global cues. Axis Bank's quarterly net profit plunged 83 percent in the September quarter; IDBI Bank reported a 53 percent decline in quarterly net profit, while Telecom major Bharti Airtel's Q2 profit slipped 5 percent from a year earlier. Traders will also be concerned with report that despite many efforts India moved up only one position in the International Finance Corporation's (IFC) ease of doing business rankings. Though, the government which is keen to increase attractiveness as an investment destination has said that the string of reform initiatives undertaken by it in the last one year had not been factored in by the World Bank arm. However, there will be some solace for the India Inc as the finance ministry is said to be examining the possibility of cutting corporate tax rate by one to two percentage points in the February budget. Also, the Economic Affairs Secretary Shaktikanta Das has said that the GDP growth will be around 8 percent this fiscal while the agriculture sector is expected to grow over 4 percent. There will be lots of important earnings announcements too to keep the markets in action.

The US markets ended lower in last session as traders reacted to the latest batch of earnings news, with a number of big-name companies releasing their quarterly results. The Asian markets have made a weak start and some of the indices in the region are down by over half a percent in early deals tailing weakness in US markets, as oil prices slumped and Apple Inc.’s results disappointed, also the BoE Governor Mark Carney dashed stimulus hopes.

Back home, Indian stock markets finished the session on a dull note, modestly below the neutral line as investors at large remained reluctant to build on long positions amid weak global cues, as oil prices dipped and after Chicago Fed President Charles Evans said that the Fed could raise short-term interest rates by three quarter-point by the end of 2017.  The session largely remained characterized by choppiness as the aimless indices moved only slowly creeping towards the previous closing levels after the early decline. Sentiments remained subdued with the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 325.13 crore on October 24, 2016. Depreciation in Indian rupee too weighed down sentiments. However, investors got some encouragement with the report that Performance of States in improving the overall infrastructure for facilitating business has gone up, with a majority of them scoring over 80% in the World Bank-Department of Industrial Policy & Promotion ranking of States. The 'Make in India' programme of the government has spurred strong competition among Indian states in improving the ease of doing business in order to attract investments and drive the economies of their regions.  As many as 16 States have scored over 80% in the World Bank- DIPP ranking of States based on 340 parameters on ‘Ease of Doing Business’. Meanwhile, shares of Tata Group companies came under pressure after the board of Tata Sons announced the sudden removal of chairman Cyrus Mistry. In a dramatic development, Mistry was removed as Chairman of India’s largest conglomerate Tata Group and replaced by his predecessor Ratan Tata in the interim. On the other hand, banking stocks rose on the report that there is room for a 50 basis point (bps) rate cut by the Reserve Bank of India (RBI) over the next few months with 25 bps each likely in February and April 2017. Finally, the BSE Sensex declined by 87.66 points or 0.31% to 28091.42, while the CNX Nifty dropped 17.65 points or 0.20% to 8,691.30.