Markets to make a weak start on penultimate session of F&O expiry

The Indian markets lost over half a percent in the last session, showing a dismal performance ahead of Federal Reserve Chair Janet Yellen’s speech. Today, the start of the penultimate session of the F&O series expiry is likely to be in red on weak global cues. On the domestic front, traders will remain cautious with Finance Minister Arun Jaitley’s statement that people may have to face some difficulty initially as the GST is rolled out but in the long run the new indirect tax regime would help cut tax evasion and check price rise. He also said the GST Council will look at bringing real estate within the GST net by next year and revisit taxing of petroleum products under the new regime in 1-2 years. There will be some buzz in the banking stocks, as maintaining its negative outlook on Indian banks, Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of eight Indian banks -- State Bank of India, Bank of Baroda, Bank of Baroda (New Zealand), Punjab National Bank, Canara Bank, Bank of India, ICICI Bank and Axis Bank. Stocks related to Oil sector will get some respite on report that the GST Council may decide to include natural gas in the Goods and Services Tax (GST) regime as a measure to provide some relief to the oil and gas sector.

The US markets ended in red terrain in last session, as the International Monetary Fund lowered its outlook for U.S. economic growth. The Asia markets have made a negative start tracking the weak cues overnight from Wall Street and comments from European Central Bank Mario Draghi that the central bank could pare back stimulus this year.

Back home, Indian equity bourses commenced the fresh week on a depressing note, as the benchmark indices extended previous week's sell-off and sank by over half a percent, as investors maintained conservative approach and remained cautious ahead of Federal Reserve Chair Janet Yellen’s speech later in the day for clues on the outlook for US monetary policy. The broader markets too failed to show any kind of fervor and plunged by close to a percent, underperforming their larger peers by quite a margin. Sentiments were undermined after CRISIL enlightened that the steps taken by Reserve Bank of India (RBI) to resolve NPAs are likely to raise provisioning by a whopping 25% this year as lenders will take up to 60% hair cut while resolving these accounts. Further, the central bank told banks to set aside at least 50% of loan amount for cases referred to insolvency process. The move could take its toll on banks’ earnings. Adding the cautiousness among market participants, Finance Minister Arun Jaitley said that the Centre made a last-ditch effort to get Jammu & Kashmir on board to launch goods and services tax (GST) from July 1 suggesting that the state government had elbow room to convey its concurrence to join the new regime. He cautioned that a failure to launch GST will impact consumers and businesses in the state. Meanwhile, Prime Minister Narendra Modi and President Donald Trump have agreed to strengthen the Indo-US economic partnership in a way that results in a win-win for the two major economies, while amicably working on resolving differences. Going forward in near term, Market is expected to stay choppy ahead of F&O expiry due this week and GST rollout lined up for June 30 midnight. Finally, the BSE Sensex declined 179.96 points or 0.58% to 30,958.25, while the CNX Nifty was down by 63.55 points or 0.66% to 9,511.40.