Markets to see some recovery on the F&O expiry day

The Indian markets ended lower in last session, reversing all their early gains on sluggish global cues, today the start of the F&O series expiry session is likely to be in green on positive global cues. Traders will also be getting some support with government in its bid to support the initiative ‘Make in India’ and easing the flow of foreign capital into the country, dismantling the Foreign Investment Promotion Board (FIPB), which currently vets FDI proposals requiring the government approval. FIPB will be replaced by a new mechanism under which the proposals will be approved by the ministries concerned as per the standard operating procedure approved by the Cabinet. There will be some cautiousness too, with industry body Assocham stating that implementing GST from July 1 will be a challenge for the industry and the government should consider relaxing penal provisions for a couple of quarters to help it comply with the new tax regime. There will be some buzz in the sugar stocks, as the Cabinet Committee on Economic Affairs (CCEA) has decided to increase fair and remunerative price (FRP) of sugarcane by Rs 25 per quintal to Rs 255 for 2017-18 season beginning October, though the FRP for the ongoing 2016-17 season has been kept unchanged at Rs 230 per quintal. There will be lots of earnings announcements to keep the markets in action.

The US markets extended their gains in last session and the S&P 500 reached a new record closing high. The gains came following the release of the minutes of the Federal Reserve's latest monetary policy meeting, which noted that growth in economic activity had slowed, although the Fed members agreed that the slower growth during the first quarter was likely to be transitory. The Asian markets have made mostly a green start supported by the gains in oil prices which reached a one month high ahead of the key meeting from crude producing countries. The Japanese market was up by over half a percent as yen declined.

Back home, Indian benchmark indices ended the session on a negative note, dragged by fall in midcaps as well as escalating cross border tensions. Pakistani fighter jets flew near the Siachen Glacier today, according to a media report, but Indian Air Force sources said there was no violation of India's air space. Also, Pakistan's Air Force chief warned that his forces will respond to any aggression by the enemy in a manner that their future generations will also remember it. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted in to the negative territory as investors turned cautious ahead of the F&O expiry of May series due tomorrow. Market participants also awaited the minutes of US Federal Reserve's May policy meeting due later in the day for clues about its next interest rate hike. Sentiments remained dismal on the report that weak investment activity, as reflected in the slow output growth in capital goods and infrastructure, is likely to depress Indian gross value added (GVA) growth to around 6.6 per cent in the fourth quarter ended March.  The report also indicated that the transition to Goods and Services Tax (GST) is also likely to create some disruption and impact the short-term sales volume across businesses. However, losses remained capped with Prime Minister Narendra Modi's statement that our aim is that India must be an engine of growth as well as an example in climate friendly development in the years to come. Finally, the BSE Sensex lost 63.61points or 0.21% to 30301.64, while the CNX Nifty was down by 25.60 points or 0.27% to 9,360.55.