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

The Indian markets supported by some late hour buying ahead of the weekend, posted decent gains in the last session. Today, the start of the F&O expiry week is likely to remain cautious amid sluggish global cues, though some good earnings during the weekend will support the market from any major fall. Meanwhile, Finance Minister Arun Jaitley has said demonetisation and GST will make cash transactions a lot more difficult and lead to greater compliance as well as expansion of tax base.  The banking sector will keep buzzing, as RBI Deputy Governor Viral Acharya has said the cleaning of banks' balance sheet is the 'number one priority' for the central bank. Last month, he had said that targeted interventions like reducing standard asset provisions for home loans, which will make them cheaper, will help revive the sagging growth rather than rate cuts. The aviation stocks will be in action on reports that domestic air traffic were up 20% in June. Domestic airlines flew 95.86 lakh passengers in June, registering a growth of 20 per cent over the 79.75-lakh passengers flown during the same month in the previous year. Port and Shipping’s stocks too will be buzzing, as the Major Port Authorities Bill, introduced in Parliament, seeks to convert 11 of the 12 ports owned by the Centre from trusts into authorities, as part of a compromise plan drafted by the Nitin Gadkari-led Shipping Ministry. There will be lots of important earnings announcements that will keep the markets in action.

The US markets ended marginally in red in the last session, mainly reacting to some weak earnings by big names, while the Asian markets have mostly made a soft start ahead of a Federal Reserve interest-rate decision later in the week. Japanese market was down by about a percent as the yen rose for a fifth day.

Back home, buying in final hour of trade helped markets to end the session with gain of around half a percent, with frontline gauges recapturing their crucial 32,000 (Sensex) and 9,900 (Nifty) bastions. Markets started the day on optimistic note with traders taking some encouragement with an Asian Development Bank’s (ADB) supplement report stating that India is expected to achieve the projected growth rate of 7.4% in 2017 and further up 7.6% next year on strong consumption demand, with South Asia leading the growth chart in Asia and the Pacific. Upbeat earnings from market heavyweight Reliance Industries too aided sentiments with company reporting a consolidated quarterly net profit increase of 28%, helped by higher-than-expected refining and petrochemicals margins and a one-time gain. Net profit rose to Rs 9,079 crore in the quarter ended June from Rs 7,077 crore a year earlier. Revenue rose to Rs 92,661 crore, an increase of 25.5% from Rs 73,829 crore a year ago. Markets in the second half took U-turn and entered into red terrain, as anxiety spread among the investors with ADB’s statement that the goods and services tax is expected to boost growth in the medium term, however there may be some teething pains as firms adjust to the new system. Domestic bourses even went to test psychological 31,800 (Sensex) and 9,850 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trim their losses from thereon and ended near intraday high levels, as investors continued hunt for fundamentally strong stocks. Some support also came with the private report stating that strong import growth in June points to continued recovery in India’s domestic demand and highlighted that economic expansion will accelerate from the April-June quarter. Finally, the BSE Sensex surged 124.49 points or 0.39% to 32,028.89, while the CNX Nifty was up by 41.95 points or 0.42% to 9915.25.