F&O series expiry session to see a flat-to-cautious start

The Indian markets extended gains in last session, with major benchmarks adding about another half a percent and the rupee hitting a 17-month high to breach the 65-mark against the dollar on strong capital inflows as the much-awaited GST Bill discussion started in the Lok Sabha. Today, the start of the F&O series expiry session is likely to be a bit soft to flat tailing weak global cues. However, market may recover soon as the Lok Sabha passed all four GST Bills to make India's new tax regime effective from July 1. The four GST Bills were passed after an eight-hour marathon debate in the Lower House. Markets may see volatility towards the series expiry with traders rolling over their positions to the next series.Meanwhile, chief economic adviser Arvind Subramanian has said that the twin balance sheet problem - over-leveraged companies and bad-loan-encumbered banks - is perhaps India’s top macroeconomic challenge at the moment and how much of haircut the banks will have to take is at the core of the problem. The auto stocks will continue to reel under pressure after the Supreme Court banned sale and registration of BS-III vehicles from April 1. Refusing to extend the March 31 deadline, the apex court observed that the health of the citizen is more important than the commercial interests of the automobile industry.

The US markets once again showed a lackluster trade and made a mixed closing in last session. Traders seemed reluctant to make any significant moves amid continued uncertainty about President Donald Trump's policy agenda following the failure of the Republican health care bill. The Asian markets have made a weak start and some of the indices are down by about half a percent, the Japanese market too was lower despite the yen weakening and crude holding on to last day’s surge.

Back home, after trading in tight range for most part of the session, the Indian equity benchmarks have snapped the day with about half a percent gains. Sentiments remained upbeat with Finance Minister Arun Jaitley terming the GST bill revolutionary and hoping all the political parties would pass the related bills through consensus in the current session of Parliament. Allaying apprehension of spike in prices of goods and commodities after the roll out of the GST, Jaitley said the tax rates will be kept at the current levels so as not to have any inflationary impact. Further, the rupee strengthened to a 17-month high of 64.95 against the dollar, which also helped improve the risk appetite. Adding optimism among investors, Minister of State for Planning Rao Inderjit Singh said that long-term strategic plans are being prepared for overall development of the country and consultations with states and other stakeholders have been completed with respect to these proposed initiatives. Some support also came with the report that foreign portfolio investors (FPIs) bought shares worth a net Rs 6415.38 crore on March 28, 2017. However, gains remained capped with the report that Reserve Bank of India is likely to keep policy rates on hold this year but there are risks tilted towards a hike in 2018. According to the report, inflation is likely to remain within the RBI's target range of 2-6%, but India is still some time away from bringing inflation to its 4% target sustainably. Meanwhile, shares of major automobile majors took a hit as investors turned cautious of the Supreme Court's verdict on BS-III vehicles. A bench of justices Madan B Lokur and Deepak Gupta said that health of millions of citizens was more important that commercial interests of manufacturers and directed the government not allow registration of polluting BS-III vehicles after March 31. Finally, the BSE Sensex surged 121.91 points or 0.41% to 29531.43, while the CNX Nifty was up by 43 points or 0.47% to 9,143.80.