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

Indian equity markets ended higher on Friday, supported by positive sentiment in global markets. Today, the start of the F&O expiry week is likely to remain cautious, as traders will be concerned about a report that foreign investors have pulled out over Rs 14,500 crore from the Indian capital markets this month so far, primarily due to global trade war and hawkish commentary by the US Federal Reserve. As per the data available with the depositories, the latest outflow has taken the total net withdrawal by foreign portfolio investors (FPIs) from the capital markets (equity and debt) to more than Rs 46,600 crore in this year so far. Also, there will be negative reaction on a private report stating that a year into implementation, the Goods and Services Tax (GST) has not delivered on the promised formalisation of the economy as yet. It also said that the glitches in the ‘one-nation-one-tax’ regime increased the demand for cash. Meanwhile, India Meteorological Department (IMD) data has revealed that less than 25% of the country received normal or excess rains till now, with the weatherman saying that monsoon activity has revived over the weekend and is making a steady advance. There will be buzz in the power sector related stocks with report that the Reserve Bank of India (RBI) rightly put its foot down on giving lenders forbearance for stressed power-generating assets.

The US markets ended mostly higher on Friday, as investors tried to shake off jitters concerning trade tensions between the US and China. Asian markets were trading mostly in red on Monday, as investors shrugged off the positive lead from Wall Street as well as the surge in crude oil prices on Friday amid worries about US-China trade tensions.

Back home, Friday turned out to be a fabulous day of trade for Indian equity benchmarks where frontline gauges erased all of their early losses to end the session with a gain of three fourth of a percent, as traders opted to buy beaten down but fundamentally strong stocks in last leg of trade. Markets started the session on pessimistic note as sentiments remained downbeat with union minister Suresh Prabhu’s statement that India was seeing real challenge at World Trade Organsation and in the global trading system itself. He stated that because, first time, countries are putting roadblocks and it is going to be real, real issue. However, markets reversed all of their early losses in second half of the day as sentiments turned optimistic with report stating that exports from special economic zones (SEZs) grew by 38% in May to Rs 29,236 crore. The major sectors contributing to the growth include biotech, chemicals, pharmaceuticals, computers, electronics, non-conventional energy, plastic, rubber, trading and services. Some support also came with private report stating that India fared well on its early warning indicators (EWI) index showing no signs of domestic or financial risks during the last three years. On the other hand, economies of China, Hong Kong, Japan, Canada and Australia threw up several warning signals between 2015 and 2017. But it was buying in last leg of trade, which mainly helped bourses to end near intraday highs with traders got encouragement with Prime Minister Narendra Modi calling for targeting double-digit GDP growth for breaking into the $5 trillion economy club and said India's share in world trade has to more than double to 3.4%. Sentiments got buoyed with World Bank’s data report that India continued to be the world’s top recipient of remittance from its diaspora, gathering $69 billion in 2017, nearly 1.5 times India’s defence budget for 2018-19, an increase of 9.5% from the previous year. Finally, the BSE Sensex gained 257.21 points or 0.73% to 35,689.60, while the CNX Nifty was up by 80.75 points or 0.75% to 10,821.85.