Markets to make a positive but cautious start of the new series

The Indian markets rallied in the last session, snapping the May F&O series on a high note, fuelled by government’s reform agenda and short covering the benchmarks closed at fresh record highs. Today, the start of the new series is likely to be in green but a bit cautious and some consolidation may appear after the big rally of yesterday, though higher rollovers to the new series indicate further bullishness for the markets. Traders will be getting some support with private weather forecaster Skymet's statement that the increase in pre-monsoon showers across the India is hinting at the arrival of monsoon 2017, which is not very far away. The weather forecasting agency predicted that monsoon will make an onset over Kerela by May 29, with a margin of error of three days. Meanwhile, the Reserve Bank of India has said farmers will continue to get short-term crop loan of up to Rs 3 lakh at subsidised interest rate of 7 per cent and the rate could go down to 4 per cent if they repay promptly in 2017-18. Traders will also be getting some encouragement with a report that India retained its numero uno position being the world's top most greenfield FDI investment destination for the second consecutive year, attracting $ 62.3 billion in 2016. There will be some buzz in the telecom sector stocks, as the telecom regulator Trai has directed telecom operators to stop providing discriminatory tariffs to the subscribers of the same category and report all plans to the sector watchdog within seven days of their launch. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets continued their upmove, extending their recent winning streak to six sessions, on getting upbeat earnings news from some big-name retailers and responding positively to the minutes of the Federal Reserve's latest monetary policy meeting. The Asian markets have made a mixed start and some of the indices in the region are in red, heading for a lower finish for the week. Slump in crude oil prices have weighed heavily on the energy stocks.

Back home, the May series futures and options expiry session turned out to be a action-packed event for the Indian equity indices, as they staged a smart intraday rally and even went ahead to conquer the psychological 9,500 (Nifty) and 30,700 (Sensex) levels. Investors continued to build hefty positions across the board as sentiments got a boost after Cabinet approved dismantling of the two-decade-old Foreign Investment Promotion Board (FIPB) and defined a new mechanism to approve overseas investment applications and hasten fund flows. The move will avoid the need for multiple clearances. It also approved the much-awaited strategic partnership policy for defence manufacturing and a new government procurement policy that will give preference to local goods. Besides, fresh spell of buying by foreign investors who were net sellers for several sessions, further recovery in the rupee, and roll over of position in F&O market, also contributed to the gains. The markets paid no heed to the industry body Assocham’s statement 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. Meanwhile, Pharmaceutical stocks have continued their downfall, posting losses for the second consecutive session. In scrip specific development, Lupin hogged the limelight with the stock hitting its lowest level since August 2014 after the company’s quarterly net profit nearly halved to Rs 380 crore in March quarter (Q4FY17) from a year ago. On the other hand, shares of private sector banks were in focus with Nifty Bank and Nifty Private Sector Bank indices hitting their respective record highs after a strong run-up in ICICI Bank, HDFC Bank, YES Bank and IndusInd Bank. Finally, the BSE Sensex gained 448.39 points or 1.48% to 30750.03, while the CNX Nifty was up by 149.20 points or 1.59% to 9,509.75.