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

The Indian markets got pummeled further and deposed another over a percent in last session with major benchmarks declining for the seventh straight session and losing their crucial support levels. Today, the start of the F&O series expiry session is likely to remain cautious with India Ratings’ report that India’s GDP growth estimate for the ongoing financial year 2017-18 is likely to come down to 6.7 per cent from 7.4 per cent earlier as “the combined effect of demonetisation and introduction of goods and services tax (GST) is proving to be more disruptive for the economy than was expected earlier. Traders will also be concerned with the rupee continuing its bear run and plunging to its lowest level in six-and-a-half months. Markets may see some recovery in the latter part of the trade as the traders will settle their positions and cover shorts going to new series. Also, there will be some support with Prime Minister Narendra Modi’s statement that traders across the country are 'positive' about GST and accepting the new taxation arrangement but they need 'handholding' so that their problems can be resolved. He urged the chief secretaries to use the district administration in this regard, so that small traders are facilitated to access and adopt the new system. Niti Aayog vice chairman Rajiv Kumar too has said that the economic downturn which began in the last two years of UPA II regime has bottomed out and the growth will improve in the next two quarters. There will be some buzz in the telecom sector, as the Communications Minister Manoj Sinha has said that  the telecom industry is expected to generate revenue of $38.25 billion by 2017-end, registering a compounded annual growth rate of 5.2 percent between 2014 and 2017.

The US markets showed some recovery and ended higher in the last session with the tech heavy Nasdaq outperforming its other counterparts, in a positive reaction to the release of a Republican tax reform plan, which calls for a reduction in the corporate tax rate to 20 percent. The Asian markets have once again made a mixed start with some indices trading in red, as investors began to assess the implications of the much-anticipated tax proposal. The Japanese market was though trading in green as the yen weakened against dollar on optimism over the health of the U.S. economy.

Back home, Wednesday turned out to be a daunting day of trade for Indian equity benchmarks where frontline gauges clobbered out of shape, tumbling below their crucial 31,200 (Sensex) and 9,750 (Nifty) levels, as traders opted to remain on sidelines on penultimate day of September F&O expiry. Markets failed to take any advantage of positive start and soon entered into negative terrain. Afterwards, market never looked confident of recovering and gradually extended its losses till end to close near intraday lows, as sentiments remained dampened on report that collections under goods and services tax declined to Rs 90,669 crore for August from a revised figure of Rs 94,063 crore for July. Of the tax collected, Rs 14,402 crore have come in as Central GST, Rs 21,067 crore as State GST and Rs 47,377 crore as Integrated GST, which is levied on inter-state movement of goods and imports and Rs 7,823 crore as compensation cess. Some cautiousness also crept with report that the Asian Development Bank (ADB) expecting the RBI to go for another round of rate cut in the latter part of 2017-18 in view of sluggish economic activities but does not see possibility of any major fiscal stimulus. Markets extended losses in last leg of trade on report that India slipped one place to rank 40th in Global Competitiveness Index out of 137 countries surveyed, while Switzerland, the US and Singapore were ranked as the top three countries. Meanwhile, the Indian Army has conducted another surgical strike at Naga Insurgent Camp, Myanmar border. There was no casualty to Indian forces during surgical strike but there are heavy casualties at Naga Insurgent camp in Myanmar border. Traders overlooked Niti Aayog Vice Chairman Rajiv Kumar’s statement that the extra fiscal stimulus will help the economy do well and there is no harm in relaxing the fiscal deficit target to allow for more capital expenditure in order to lift the slowing Indian economy. Finally, the BSE Sensex declined 439.95 points or 1.39% to 31,159.81, while the CNX Nifty was down by 135.75 points or 1.38% to 9,735.75.