Markets to recover some ground on supportive global cues

The Indian markets went for a toss on F&O expiry day, losing over a percent as sentiments turned awry about reform measures from the government coupled with the deteriorating monsoon condition and fear of draught. Today, the start of the markets is likely to be in green and the indices may recover some lost ground in early trade tailing positive global cues. There is likely to be jubilation in export related stocks as the government is confident that exports will meet the 20 per cent growth target set for the current financial year. The government is looking at exports of $360 billion in the current fiscal against $303 billion in 2011-12 on the back of policy initiatives announced by commerce minister. Meanwhile, the retail stocks too are likely to get some support with Trade Minister Anand Sharma saying that the government is committed to opening its retail sector to foreign investment and will not reverse its stance. However, the banking stocks may remain cautious with the government issuing a drought alert and worries that farm loan repayments will be hit. The Centre has set Rs 575,000-crore agriculture credit target for banks this fiscal year.

There will be lots of result announcements too, to keep the markets buzzing. Alstom T&D, Bank of India, Central Bank, CESC, Dena Bank, Gujarat Pipavav, ICICI Bank, HCC, IRB Infra, Jindal Saw. MRPL, Mcleod Russel and NTPC are among the many to announce their numbers today.

The US markets went for a rally on Thursday and major indices saw their best day in about a month on getting positive news from the unemployment claims front and as assurance came from European Central Bank President Mario Draghi saying his bank is ready to do whatever it takes to preserve the single currency. Asian markets have made an all green start with some of the indices gaining over one and half a percent in early trade after Draghi said policy makers will do whatever is required to preserve euro.

Back home, expiry day of July series futures and options (F&O) contract proved a bumpy ride for Indian equity markets, as bourses grinding lower for the entire day of trade, concluded near the day’s low.  Losses of over 2% were registered by the markets (both Nifty and Sensex) in the July F&O series, as traders were reluctant to roll-over their position to fresh month F&O contract, sensing lack of political reform even after vice-presidential polls on August 7. Traders also adapted a cautious approach ahead of crucial Reserve Bank of India’s mid-quarterly monetary policy review on July 31, wherein ‘status quo stance’ would not emerge as a bolt out of blue. On the expiry day of July month’s F&O series, trade of over Rs 2.50 lac crore was done in terms of volume turnover. Benchmark 30 share index, Sensex, offloaded over a percent, to conclude below the 16700 level. Similarly, the widely followed index, Nifty, descended over 50 points, to finish sub 5050 bastion. Additionally, sharp selling activity was witnessed in midcap counters on rumors that operators were dumping stocks after margin calls were triggered. These stocks included Tulip Telecom, Everonn Education, Parsvnath Developers, Radico Khaitan, Glodyne Techno, Pipavav Defence, SRS and Nitin Fire. Both Midcap and Small cap index, ended with nasty laceration of over two percent. None of the sectoral space on BSE ended in green, however, stocks from Realty, Capital Goods, Public Sector Undertaking and Banking counters suffered the major brunt of profit booking. On the F&O front, July series Nifty and Sensex staged a sluggish performance by losing 2% each, after surging over 5% in June series. Moreover, the broader markets outperformed their larger peers by a fat margin, as by the end of series the Mid Cap and Small Cap garnered around 1.9% and 0.5% respectively. Sectorally, the finance, metals and capital goods space witnessed good rollover, while automobile, infrastructure and oil & gas stocks observed relatively low rolls into the August series. The BSE Sensex shaved off 206.23 points or 1.22% to settle at 16,639.82, while the S&P CNX Nifty plunged by 66.60 points or 1.30% to close at 5,043.00.