Markets to make negative start of F&O expiry session

Indian markets snapped three-day winning streak and settled lower on Wednesday with cut of around half a percent each, led by declines in banking, auto and metal shares, amid weak global cues. Today, the start of the F&O series expiry session is likely to be negative amid subdued cues from Asian peers. There will be some cautiousness as India Ratings lowered the country's growth forecast to six-year low of 6.7% for the current fiscal from an earlier estimate of 7.3% on account of slowdown in consumption and moderation in industrial growth among other factors. This would be the third consecutive year of subdued growth. Traders will also be concerned with a private report indicating that the Indian economy likely expanded at its slowest pace in more than five years in the April-June quarter, driven by weak investment growth and sluggish demand. However, some support may come later in the day as to boost the ailing economy, the government on relaxed foreign direct investment (FDI) rule for foreign single-brand retailers and also permitted foreign investment in contract manufacturing and coal mining. In the first decision, the cabinet has allowed online retailing under single-brand retail and relaxed rules for complying with the mandatory 30% local sourcing norms by foreign single-brand retailers. In the second decision, 100% FDI in contract manufacturing under automatic route has been allowed and 26% FDI has been allowed in digital media. There will be some reaction in metal stocks with the World Steel Association's report that India's crude steel output increased by 1.7% to 9.215 million tonne in July 2019 as compared to  9.059 MT during the same month a year ago. Sugar stocks will be in focus as the government approved Rs 6,268 crore export subsidy for 60 lakh tonnes of sugar. A lump sum export subsidy of Rs 10,448 per tonne will be given to sugar mills in the 2019-20 marketing year (October-September), costing the exchequer Rs 6,268 crore as a subsidy.

The US markets ended in green on Wednesday amid light trading as investors awaited new developments in the increasingly unpredictable Sino-American trade war. Asian markets are trading lower on Thursday as investors continue to watch the yield curve in US Treasuries, which inverted further overnight.

Back home, Indian equity bourses snapped 3-day gaining streak to close on lackluster note, with the Sensex and the Nifty losing around half a percent each. The start of the day was a cautious, impacted with Moody's Investors Service’s statement that the economic measures announced by Finance Minister Nirmala Sitharaman are unlikely to provide some form of confidence and improve business sentiment and consumer sentiment. Moody's, which has lowered India's gross domestic product (GDP) forecast to 6.4% for FY20, said there is significant uncertainty in terms of the growth prospects both because of domestic as well as external factors. Market participants rolled-over their positions ahead of the August Futures & Options (F&O) series expiry due on Thursday. Weakness continued over the street in the second half of the session, on the back of mixed cues from global markets. Domestic sentiments remained pessimistic, as India Ratings and Research (Ind-Ra) revised India's gross domestic product (GDP) growth in current financial year downwards to 6.7 per cent -- marking a six-year low -- from its earlier forecast of 7.3 per cent. The agency expects FY20 to be the third consecutive year of subdued growth pushed by a slowdown in consumption demand, delayed and uneven progress of monsoon so far, decline in manufacturing growth, inability of Insolvency and Bankruptcy Code to resolve cases in a time-bound manner and rising global trade tension adversely impacting exports. Finally, the BSE Sensex lost 189.43 points or 0.50% to 37,451.84, while the CNX Nifty was down by 59.25 points or 0.53% to 11,046.10.