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

The Indian markets extending their jubilation mood surged to record highs in the last session, with Sensex surging to a fresh life time closing high of over 30000. There was some support with both Finance Minister Arun Jaitley and the NITI Aayog clarifying that the Modi government has no plans to impose any tax on agriculture income, as proposed by the government's think tank in its long term vision document. Today, the start of the F&O series expiry session is likely to be mildly soft tailing the weakness in other global markets. Also, Finance Minister Arun Jaitley has expressed concern over the worrying signs of economic protectionism and has said the continued unpredictability in ties between major powers has brought new uncertainties to the fore. There will be some cautiousness in the banking sector, with Axis Bank’s numbers, the third-largest private sector lender, on Wednesday after the market hours reported a 43% year-on-year (y-o-y) decline in its net profit for the quarter ended March to Rs 1,225.1 crore, as provisions jumped 121% over the previous year to Rs 2,581.25 crore. However, some respite can come with Finance Minister Arun Jaitley's assertion that the government was giving top priority to addressing the issue of bad loans while acknowledging that the problem of non-performing assets was "adversely impacting" the Indian banking system. There will be some important earnings announcements too to keep the markets buzzing.

The US markets made a marginally lower closing in the last session, the major averages pulled back going into the close, ending the session just below the unchanged line. The decline came after officials from President Donald Trump's administration unveiled the president's highly anticipated tax reform plan. The Asian markets have made mostly a lower start, coming off their five days rally as investors assessed a plan to overhaul U.S. taxes, while awaiting policy decisions from the Bank of Japan and the European Central Bank.

Back home, the penultimate day of April series futures and options contract expiry turned out to be a good session for the Indian frontline equity indices as they managed to settle higher for a third straight session, with both Sensex and Nifty closing at fresh record highs, buoyed by better-than-expected quarterly results and positive global cues. Investor sentiments around the globe turned optimistic on possible tax cuts, likely to be announced on Wednesday by President Donald Trump to stimulate the US economy and the outcome of the French election allaying immediate concerns of political uncertainty in the euro zone. On the domestic front, sentiments got a boost after Finance Minister Arun Jaitley asserted that the government was giving top priority to addressing the issue of bad loans, while acknowledging that the problem of non-performing assets was ‘adversely impacting’ the Indian banking system. Besides, Indian rupee appreciating against the dollar to trade at a near 21-month high of 64.07 fuelled the bull run of the bourses. Investors got some confidence from the survey indicating that India continues to remain an economic bright spot despite some bold but disruptive reforms. The FICCI-PwC India Manufacturing Barometer (IMB) survey stated that about 63% of respondents were 'somewhat optimistic' about the prospects of the Indian economy for the coming year, representing a significant jump over last year's 58%.Some support also came with Revenue Secretary Hasmukh Adhia assuring that prices will not increase due to higher incidence of tax and instead, are likely to come down under the Goods and Services Tax (GST) regime. He said that though most services will be taxed at 18% under the GST regime, as against the current 15% service tax, a majority of these will get input tax credit on purchases and the overall tax incidence will remain the same. Finally, the BSE Sensex gained 190.11 points or 0.63% to 30133.35, while the CNX Nifty was up by 45.25 points or 0.49% to 9,351.85.