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

Indian shares extended recent gains to close at fresh record highs on Wednesday, although overall gains remained marginal ahead of the January derivatives expiry. Today, the start of the F&O series expiry session is likely to be cautious and lots of volatility can be seen with the progress of the trade and as the traders balance their positions to the new series. Traders may get some support with private report stating that waning effects from the GST impact will help push the Indian GDP growth to 7 per cent in FY19. It can be noted that the International Monetary Fund has come out with an estimate of 7.4 per cent growth two days ago. The traders may took some note with report that the government is at the advanced stage of finalising anti-profiteering guidelines for judging parameters whereby benefits of reduced GST rates are passed on to the end consumer. Meanwhile, the Department of Industrial Policy and Promotion (DIPP) on Wednesday notified easing of FDI rules for several sectors, including single-brand retail and construction. Public sector banks (PSBs) may get some support with the government announcing Rs 881.39 billion capital infusion in 20 PSBs during the current fiscal, with IDBI Bank getting the most -- Rs 106.1 billion. Finance Minister Arun Jaitley said his ministry had undertaken a detailed exercise on the amount of capital to be infused into the PSBs. There will be lots of important earnings announcements to keep the market buzzing for the day.

The US markets ended mixed on Wednesday after report showing a bigger than expected pullback in existing home sales in the month of December. The bigger than expected decrease came after existing home sales jumped to highest rate in nearly eleven years in November. Asian markets have a mixed start following the mixed cues overnight from Wall Street. Japanese market edged lower, as a stronger yen weighed on shares of exporters.

Back home, Indian equity benchmarks managed to end the extremely volatile day of trade with modest gains on Wednesday, with frontline gauges holding their crucial 11,050 (nifty) and 36,100 (Sensex) levels. Markets altered between green and red throughout the session and somehow managed to end with slender gains, as traders took some encouragement with former Niti Aayog vice chairman Arvind Panagariya’s statement that India has the potential to achieve 10% growth rate, but it needs major reforms in areas in labour laws and land acquisition. He said Indian economy grew 7.5% in the first three years of the Narandra Modi government, but two major reforms - demonetisation and goods and services tax - brought the growth rate down a little. Some support also came with Prime Minister Narendra Modi showcasing India’s growth story to world leaders and called out for tackling the three major challenges the world faces currently - climate change, terrorism and threat to globalisation. Meanwhile, expressing confidence about the economy’s potential, Finance Minister Arun Jaitley hoped that it would become the third largest economy over the next 25 years. He said, “We have moved from the seventh to the fifth largest economy. Unquestionably in the next 25 years India would perhaps be the largest economy”. However, gains remained capped as traders remained mostly on sidelines ahead of January derivatives expiry on Thursday and ahead of the Union Budget next week. Traders also remained concerned with global rating agency, S&P ratings’ latest report ‘APAC Economic Snapshots, January 2018’, which stated that overall economic risks in India remain low, but risks from higher oil prices have reappeared. International oil prices have been rising which has also led to increased prices of petrol and diesel and a majority of India’s import bill stem from crude oil purchases. Finally, the BSE Sensex gained 21.66 points or 0.06% to 36,161.64, while the CNX Nifty was up by 2.30 points or 0.02% to 11,086.00.