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

Indian markets gave up all of their early gains to settle in red territory for the third straight session on Thursday, as global growth worries persisted. Markets were dragged down mainly by metal, power and banking stocks. Indian markets remain closed on Friday on account of Gurunanak Jayanti. Today, the markets are likely to make positive start of the Future and Options (F&O) series expiry week, following firm trade in other Asian markets coupled with sharp fall in crude oil prices. Traders will be getting encouragement with the Organization for Economic Cooperation and Development’s (OECD) statement that India’s economy will grow close to 7.5% in 2019 and 2020. India’s gross domestic product (GDP) grew 6.7% in 2017-18. Traders also will be getting some support with SBI Research report stating that following decline in oil prices, the country’s current account deficit (CAD) is expected to touch 2.6% of GDP in the current fiscal against an earlier expectation of 2.8%. Traders will be reacting to the Reserve Bank of India’s (RBI) report that the country’s foreign exchange reserves rose by $568.9 million to $393.580 billion in the week to November 16, mainly due to a spurt in foreign currency assets. Traders may take note of a private report that the RBI is expected to keep the key policy rates unchanged at its ensuing policy review meet next month, amid easing global crude oil prices and robust agriculture production. Meanwhile, the Union Cabinet is expected to consider this week the proposed agriculture export policy, which aims at doubling outbound shipments of farm products and increasing their share in the world market. There will be some reaction in aviation industry stocks with a report that the Goods and Services Tax (GST) Council is likely to bring in two petroleum products - natural gas and aviation turbine fuel (ATF) - under the ambit of the new indirect tax system soon. There will be some buzz in the gems and jewellery sector related stocks with Commerce and Industry Minister Suresh Prabhu’s statement that he has taken up with the finance ministry the issue concerning credit to the gems and jewellery sector to ensure adequate availability of funds for them.

The US markets slipped on Friday as oil prices tumbled to their lowest levels in more than a year, dragging shares of energy companies lower. Asian markets were trading mostly in green on Monday, though investors were cautious as plunging oil prices fanned worries about a dimming outlook for the global economy.

Back home, southward rally continued on Dalal Street on the last trading day of the week, with the Sensex and Nifty finishing in red for the third straight session. The markets made a positive start of the day, supported by the private report stating that the Reserve Bank’s move to extend the deadline for meeting the capital conservation buffer (CCB) norms by one year would help increase lending capacity of banks by over Rs 3.5 lakh crore. The additional amount will help provide much-needed fund for micro, small and medium enterprises (MSMEs) and non-banking financial companies (NBFCs) that are facing cash crunch. The street took note of a report that European Union has unveiled a 'strategy paper' outlining the broad roadmap for stepping up cooperation with India in a range of key sectors, including trade, investment, Defence and security, innovation, and on dealing with various global challenges. Meanwhile, India is keen to ink a trade agreement with Mauritius before Mauritian prime minister’s visit in January next year. Negotiations are under way at present and Mauritius wants duty cuts on its exports of textiles and marine products to India. However, in the second half of the session, the indices erased all of their losses to dive in red terrain,  as Reserve Bank of India (RBI) has revealed that the top 20 defaulters of public sector banks account for Rs 2.36 lakh crore, or 20%, of total bad loans in India, though it is yet to reveal their names. The total bad loans in the Indian banking system are Rs 10.2 lakh crore as of March 31, 2018. Domestic sentiments also got hit with a private report that India could see two rate hikes in the initial monetary policies of next financial year. The market participants failed to get any sense of relief with a private report showing that India is now the second-fastest growing innovator after China among major Asian countries, with patent publication nearly doubling in a decade. In late noon deals, traders even overlooked Commerce and Industry Minister Suresh Prabhu’s statement that the government is preparing an integrated logistics plan to fast-track movement of goods and cut transactions cost of businesses. Finally, the BSE Sensex plunged 218.78 points or 0.62% to 34937.98, while the CNX Nifty was down by 73.30 points or 0.69% to 10526.75.