Markets to get a soft to cautious start of the F&O expiry week

The Indian markets slumped in last session, losing the momentum completely in the latter half of the trade. Today, the start of the crucial F&O expiry and holiday shortened week is likely to be soft to cautious, with IT and pharma stocks likely to be in focus, after Donald Trump took a protectionist tone in his first speech as U.S. President. Marketmen will also be concerned with a major central revenue body asking Finance Minister Arun Jaitley not to implement Goods and Services Tax (GST) in a hurry and threatened to take legal recourse in case their concerns are not addressed, claiming that demonetisation has affected country’s growth. However, there will be some support with the BRICS nation's National Development Bank chief K V Kamath’s statement that India will continue to grow on the back of its consumption-driven economy. He also said that the demonetisation move in India would have only a 'short-term blip' after which India should be back on a clear growth path. Meanwhile, the Union Minister of State for Labour and Employment, Bandaru Dattatreya has said that the government has set a target to create employment opportunities to one crore youth by 2020 through a skill development scheme under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY). There will be buzz from the primary market too with BSE, Asia’s oldest stock exchange launching its IPO in a price band of Rs 805-806 starting today. There will be lots of important earnings announcements too, to keep the markets buzzing.

The US markets ended modestly higher in last session, with the Dow snapping its five days losing streak and traders seemed focused on President Donald Trump's inaugural address after he was officially sworn in as the 45th president. The Asian markets have made a mixed start with some indices, led by the Japanese market in red as the dollar declined against yen after Donald Trump in his first days in office offered little news on his plans to boost growth.

Back home, Friday’s session turned out to be an awful day of trade for Indian equity markets, where frontline indices tumbled below their crucial 27,100 (Sensex) and 8,350 (Nifty) levels. After getting a negative start, market never looked confident throughout the session and ended near the intraday low levels, as sentiments remained dismal ahead of inauguration speech of Donald Trump as US President. For most of his campaign and after the election, Trump vowed to make sweeping changes to US trade and immigration policy, threatened to impose steep tariffs on Chinese imports and proposed hefty tax cuts. On the domestic front, sentiments were undermined by the report that India's economy lost momentum in the final three months of 2016 after Prime Minister Narendra Modi's ban on high-value notes hurt consumption and businesses. Having posted growth of above 7% for six consecutive quarters, India's gross domestic product is expected to have expanded just 6.5% in the October-December quarter - the weakest in nearly three years. Besides, discouraging earnings by some blue-chip companies too weighed on sentiments. Adani Power reported a net loss of Rs 478.39 crore for the quarter ended December 31, 2016 (Q3FY17) as compared to net loss of Rs 30.24 crore for the same quarter in the previous year. MindTree reported 26% Y-o-Y drop in its consolidated net profit at Rs 103 crore due to poor performance of its US and Europe subsidiaries. Meanwhile, IT stocks came under selling pressure on the report that two powerful US Senators announced they will introduce a legislation, which if passed by the Congress, would give preference to foreigners studying in American universities, a move that will tighten the noose around the H-1B visa programme and could hurt Indian IT firms. Furthermore, several Cement stocks edged lower after the Competition Commission of India (CCI) imposed penalties aggregating to almost Rs 207 crore on seven major cement companies for rigging of bids and cartelisation to get tenders in Haryana government orders. Finally, the BSE Sensex declined by 274.10 points or 1% to 27034.50, while the CNX Nifty dropped 85.75 points or 1.02% to 8,349.35.