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

The Indian markets after dilly-dallying in the second half of last session, made a modestly lower closing ahead of the weekend's French presidential election. Today, the start of the crucial F&O series expiry week is likely to be a bit cautious tailing the global cues. Traders however will be getting some encouragement with Finance Minister Arun Jaitley’s statement that Indian economy will grow at a clip of 7.5 percent this fiscal, up from 7.1 percent in the previous year, and it remains resilient with low inflation, fiscal prudence and low deficit. Also, the Prime Minister's Office (PMO) has asked all the ministries and departments to modify enabling framework and regulations in tune with the liberalised FDI policy with a view to attracting more foreign investment. Meanwhile, Prime Minister Narendra Modi and state chief ministers have considered a new approach in policy planning that aims to give states a greater say in determining national priorities-including in internal security and defence-set out in a 15-year vision and a draft three-year short-term action plan ending 2019-20. The IT sector will be in focus, as the Finance Minister has taken up the vexed issue of the Trump administration mulling curbs in H-1B, with the American authorities during his ongoing visit, though the US has accused top Indian IT firms TCS and Infosys of unfairly cornering the lion's share of H-1B visas by putting extra tickets in the lottery system. Traders will also be eyeing some important earnings announcement including that of Reliance Industries.

The US markets ended marginally lower in the last session, despite the release of bullish economic data and an update from President Donald Trump on his tax reform plan. The uncertainty surrounding the outcome of the French Presidential election offset bullish economic data. The Asian markets have made a mixed start with some of the indices in the region trading in red led by the Chinese market. The euro jumped the most in a month while the yen retreated and volatility ebbed as Macron and far-right nationalist Marine Le Pen won the first round of voting in France.

Back home, Indian equity markets concluded the week on a sluggish note as the benchmarks showcased an unenthusiastic performance on Friday and settled with moderate cuts of around two tens of a percent. Sentiments remained subdued with the minutes of the RBI's April 6 policy meeting suggest that the next move of the central bank will likely be a hike in key policy rates. All members expressed concern about stickiness in core inflation and believed that the disinflationary effect of demonetisation will be transient. The minutes of the MPC meeting was made public yesterday. Further, investors continued to keep an eye on developments in France following news that a policeman was shot dead in Paris in a suspected terrorist attack just days before the presidential election. The polls show a nail-bitingly close race between four candidates, setting the stage for heightened volatility. Investors ultimately expect victory from the centrist Emmanuel Macron but are fretting over the likelihood of a strong showing by either far-Right candidate Marine Le Pen or far-Left candidate Jean-Luc Mélenchon. Both Marine Le Pen and Jean-Luc Melenchon, say they want to tear up agreements that bind together the 28 European Union nations. A victory of either could drive a 5 to 10% selloff of European equities. Other contenders seen as more supportive of EU membership include Francois Fillon, a conservative former prime minister, and Emmanuel Macron, a former banker and economy minister. On the domestic front, inventor sentiments got undermined after deputy governor of RBI, SS Mundra said that the Indian government and the Reserve Bank of India had not yet reached an agreement on a new plan to clean up the record troubled debt accumulated at the country's lenders. Meanwhile, sugar stocks edged higher after the Uttar Pradesh government asked sugar mills to clear cane dues of farmers within next 14 days, while assuring their delegation that it will give all facilities to establish new mills in the state. Finally, the BSE Sensex declined 57.09 points or 0.19% to 29365.30, while the CNX Nifty was down by 17 points or 0.19% to 9,119.40.