Markets to make positive start of F&O expiry session

Indian markets declined on Wednesday tracking heavy losses in banking and auto stocks as investors turned jittery over geopolitical uncertainties and global slowdown concerns. Today, the start of F&O expiry session is likely to be in green tracking positive global cues coupled with sharp fall in crude oil prices. However, the expiry day is very much likely to bring in volatility later in the day. Traders will be taking some encouragement with report that easing the regulatory framework for foreign portfolio investors, SEBI has simplified KYC requirements for them and permitted them to carry out the off-market transfer of securities. Besides, the regulator has broad-based the classification for foreign portfolio investors (FPIs) and simplified their registration process. Some support will also come with Employees' State Insurance Corporation’s (ESIC) latest payroll data showing that around 14.24 lakh jobs were created in July, higher than 12.49 lakh in the previous month. Though, some concern may come with report that the United Nations Conference on Trade and Development (UNCTAD) has forecast India’s growth to moderate to 6% in 2019 from 7.4% in 2018 due to lower-than-targeted tax collections and limited public spending. Traders may take note of NITI Aayog CEO Amitabh Kant’s statement that the government is determined to take India back to a high trajectory growth rate of 8-9 percent and the real challenge before the country is to sustain that growth. Meanwhile, SEBI has come out with new norms that make it mandatory for companies to provide details on delayed loan repayments and possible defaults to credit rating agencies amid concerns over banks citing client confidentiality to resist sharing of such information by their borrowers. Public sector banking stocks will be in focus with rating agency ICRA’s report that profitability and return on assets (RoA) of public sector banks (PSBs) are likely to remain low during the current financial year on the back of continued provisioning on existing and fresh bad loans. There will be some buzz in the telecom stocks with Trai’s report that gross revenue of telecom operators slipped 7.13% in 2018, while licence fee and spectrum charges that the government collects from them fell 10.29% and 17.7%, respectively, during the year.

The US markets ended higher on Wednesday on robust US housing data and the notion a strong economy would overcome any investor skittishness over a possible impeachment of President Donald Trump. Asian markets are trading mostly in green on Thursday amid hopes that the US and China may soon end their year-long trade war boosted demand for riskier assets.

Back home, bears dominated Dalal Street on Wednesday’s session, with Sensex & Nifty closing lower by over 1.25% each. The markets made a negative start of the day, as the Asian Development Bank (ADB) lowered India's gross domestic product (GDP) growth forecast to 6.5 percent for the current fiscal (FY20), weighed down by the GDP growth slipping to a six-year low in the April-June quarter of 2019-20. Adding more worries, rating agency ICRA said though domestic apparel exports are expected to remain in the positive zone during rest of the year, there are multiple threats looming which could slow down the pace and make it challenging for exporters. Key indices remained weak for the whole day, amid reports that India's fiscal deficit gap is set to increase by at least 70 basis points to 4 percent of the gross domestic product (GDP) for 2019-20 after Finance Minister Nirmala Sitharaman announced a cut in corporate tax rates on September 20. Market participants overlooked RBI Governor Shaktikanta Das’ statement that the government's recent move to slash corporate tax rate made India a very attractive destination for foreign investment. He said India's corporate tax now becomes very competitive compared to other emerging market economies in ASEAN and other parts of Asia. Finally, the BSE Sensex slipped 503.62 points or 1.29% to 38,593.52, while the CNX Nifty was down by 148.00 points or 1.28% to 11,440.20.