Markets to make cautious start of F&O expiry session

Indian markets ended higher with modest gains for second straight session on Wednesday, backed by firmness in banks and metal stocks. Today, the start of the F&O series expiry session is likely to be cautious amid mixed cues from global markets. There will be some cautiousness with Telecom Minister Ravi Shankar Prasad’s statement that foreign direct investment (FDI) in the Indian telecom sector dropped by around 43 per cent to $2.6 billion in fiscal year 2018-19. However, traders may take some support later in the day with a private report that as it looks for means to push growth, the government can look at issuing infrastructure bonds via a special purpose vehicle (SPV), which could mop up over Rs 95,000 crore or 0.5 percent of GDP. Some support may also come with Arvind Panagariya’s statement that the escalating trade war between the US and China is an opportune time for India to attract the large multinationals looking for alternative locations outside the Communist country. Meanwhile, the Reserve Bank of India (RBI) has issued guidelines for setting up of financial benchmark administrator (FBA) for administering significant benchmarks in the markets for financial instruments. Benchmarks administered outside India do not fall under the scope of the guidelines. There will be some reaction in Micro Small and Medium Enterprises (MSME) sector stocks with report that the U K Sinha Committee, set up by the RBI on MSME, has recommended financial support of Rs 15,000 crore to the MSME sector, which contributes significantly to employment generation and has as a hefty share of over 40 percent in exports. It added that the contribution of the sector in the economy is currently constrained due to several challenges affecting growth in the sector. There will be some buzz in the metal stocks with report that India's finished steel exports in May fell to their lowest in three years as shipments to traditional markets in the European Union (EU) and Nepal shrank.

The US markets ended mostly lower on Wednesday as investors waited for developments on a trade deal with China. Asian markets are trading in green on Thursday despite US President Donald Trump gave mixed signals on US-China trade negotiations.

Back home, Indian equity indices sustained their gaining rally for the second straight session on Wednesday, with Sensex and Nifty closing higher by around 0.40% each. The markets made a negative start of the day, amid Former RBI deputy governor Rakesh Mohan’s statement that manufacturing growth is not consistent with India’s overall Gross Domestic Product (GDP) growth figures. He noted that the country cannot grow at 8 percent without manufacturing sector posting 10 percent growth. But soon, markets staged recovery, taking support with exporters body Federation of Indian Export Organisations’ (FIEO) statement that exports are likely to touch $1 trillion in the next 3 years with the help of the government's focus to improve logistics, ease of doing business and modern trade infrastructure. Key indices remained positive for the most part of the session to end in green terrain, as the Employees' State Insurance Corporation's (ESIC) gross payroll data showed that Job creation was slightly up at 10.88 lakh in April as compared with 10.77 lakh in the year-ago month. Gross new enrolments in 2018-19 stood at 1.49 crore, indicating that these many jobs were created in the financial year. Traders were also positive, as the Vice President Venkaiah Naidu made some suggestions to the Finance Minister with regard to the upcoming Budget. Among others, he stressed the need to take steps to protect agriculture and introduce structural changes. Naidu also suggested to the minister to undertake a review of the Import-Export Policy and protect the interests of the farming community. Finally, the BSE Sensex gained 157.14 points or 0.40% to 39,592.08, while the CNX Nifty was up by 51.10 points or 0.43% to 11,847.55.