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

A sharp recovery in the dying hours of the day mainly helped the Indian markets to end Tuesday’s volatility session near intra-day high levels, helped by value buying in banking and FMCG stocks after recent heavy losses. Today, the markets are likely to extend previous session’s gains on penultimate session of F&O expiry following firm Asian markets. Traders will be getting some encouragement with Finance Minister Arun Jaitley’s statement that the new insolvency law, indirect tax regime and demonetization will help drive India’s growth rate and sustain it at 8%. Traders will take note of the government’s data showing that fiscal deficit touched 94.7% of the FY18 estimate at end of August, marginally better than 96.1% at the same point last fiscal. In absolute terms, fiscal deficit at end of August was Rs 5.91 lakh crore. Meanwhile, the commerce and industry ministry has said that the government’s export promotion measures, implementation of minimum standards for imports, and continued healthy inflow of remittances by non-resident Indians will help control the country’s rising current account deficit (CAD). There will be some buzz in the banking sector stocks with Union finance minister Arun Jaitley’s statement that non-performing assets (NPA) of public sector banks (PSB) are on the decline as recoveries have picked up, but it's a challenge to loan growth. Finance minister said recoveries have not just picked up because of National Company Law Tribunal (NCLT) resolutions, but also borrowers are paying up in anticipation of losing companies. Also, there will be some reaction in energy sector stocks with Moody’s report that the share of renewable energy in the country’s electricity generation mix is likely to rise to around 18% by 2022, from 7.8% at present, owing to the continuous focus on capacity addition from solar and wind.

The US markets ended mostly lower on Tuesday as rising interest rates hurt stocks that pay big dividends and higher oil prices pushed transportation and shipping companies lower. Asian markets were trading mostly in green on Wednesday, shrugging of tepid close on the Wall Street.

Back home, Snapping five days of losing streak, Indian equity benchmarks ended the Tuesday’s trade in green terrain with frontline gauges recapturing their crucial 36,600 (Sensex) and 11,050 (Nifty) levels. Soon after a cautious start markets gained traction and entered into green terrain mid-morning deals with traders taking encouragement with report that rising imports from China have taken a heavy toll on the employment-generation potential of the manufacturing sector, especially among the micro, small and medium enterprises (MSMEs). Key gauges pared all of their gains and entered into red terrain in late noon session as sentiments turned pessimistic with private report stating that India’s current account deficit (CAD) is expected to be widened by 0.20% to 2.8% of GDP for fiscal year 2018-19. The widening current account gap is one of the major concerns which is putting pressure on the rupee, which has depreciated 13% against dollar this year. Sentiments also weighed down with World Bank’s report that India’s current trade in goods with its neighbouring countries in the South Asian region is a mere 30.65% of the potential trade of $62 billion, which can be boosted if certain restrictions on the current trade, like tariffs, port restrictions and other non-tariff barriers can be eased. Some anxiety also came with a private report that India’s crude oil demand is forecast to grow to 500 million tonnes per year by 2040, but persistent increase in oil prices might act as a dampener for the rate of growth. But, rally in last leg of trade helped markets to end near intraday high levels. Sentiments turned positive with PHD Chamber of Commerce and Industry Vice President D K Aggarwal’s statement that India is approaching towards $100 billion FDI inflow per annum by 2022 as volumes of foreign direct investment are increasing year after year. Meanwhile, the Central Board of Direct Taxes (CBDT) has postponed the deadline for filing income tax returns (ITR) as well as reports of Audit to October 15, 2018, from September 30 for financial year 2017-18. It had received representations from stakeholders seeking extension of the last date for filing of returns by taxpayers whose accounts have to be audited. Finally, the BSE Sensex surged 347.04 points or 0.96% to 36,652.06, while the CNX Nifty was up by 100.05 points or 0.91% to 11,067.45.