Benchmarks likely to get cautious start of F&O expiry week

Indian markets continued their record-breaking streak and ended higher with marginal gains on Friday led by gains in Banking, IT and metal stocks. Today, the start of futures and options (F&O) expiry week is likely to be cautious amid weakness in Asian peers. There will be some volatility during the week as the December series F&O contracts expire on Thursday, December 26. There will be some cautiousness with Assocham president Niranjan Hiranandani’s statement that the economy is facing a liquidity problem and demand recession, and it requires measures to lift consumption, including reduction in goods and services tax and personal income tax and improved credit flow, to revive. However, some support may come later in the day with report that the foreign portfolio investors seem to have flocked to the Indian capital market in a big way in 2019 with a net inflow of over Rs 1.3 lakh crore, including Rs 97,250 crore in equities -- the highest in last six years. Traders may take note of minister for road transport & highways and MSMEs Nitin Gadkari’s statement that India must increase its share in global trade to 8-10% to become a $5 trillion economy. There will be some buzz in the metal stocks with World Steel Association’s (worldsteel) latest report showing that India's crude steel output fell for the second straight month in November, declining 2.8 per cent to 8.934 million tonne (MT). Telecom stocks will be in focus with Telecom Secretary Anshu Prakash’s statement that India as a destination for telecom is world class and the spectrum auction could be expected to be utilised well by the telcos given India's communication potential. There will be some reaction in infra stocks with report that the government's endeavour for world-class infrastructure will continue unabated with commitment to pump in another Rs 15 lakh crore in the highways sector in this five-year term. Meanwhile, Titan Company, UltraTech Cement, Nestle India will be included in BSE Sensex with effect from December 23. On the other side, Tata Motors, Tata Motors DVR, Vedanta and Yes Bank will be removed from the index.

The US markets ended higher on Friday powered higher by new signs of economic strength that have followed a calming in trade tensions. Asian markets are trading mostly in red on Monday, with subdued volumes, as investors count down to the holiday break.

Back home, Indian equity bourses managed to end Friday’s volatile session at record closing highs, on account of firm cues from other Asian markets. The trading day was started on firm note, as DPIIT Secretary Guruprasad Mohapatra expressed optimism that India will soon break into the top 50 in the World Bank's ease of doing business ranking. Adding some relief among market participants, a private report indicated that it expects the Reserve Bank of India to cut the repo rate to 4.9% by March 2020 and 4.35% by September 2020 if global growth slows, and also said fiscal deficit is anticipated to slip to 3.8% of the GDP this year. But, volatility hit the street in noon deals, after investments through participatory notes (P-notes) in the Indian capital market dropped to Rs 69,670 crore at the end of November. The total value of investments via P-notes in the Indian markets (including equity, debt, and derivatives) declined by Rs 7,103 crore to Rs 69,670 crore by the end of November from Rs 76,773 crore at October-end. Finally, benchmarks settled the day with only marginal gains, as credit rating agency, Fitch Ratings cut India's GDP growth forecast for 2019-20 fiscal year to 4.6 percent on the deterioration in business and consumer confidence. Finally, the BSE Sensex gained 7.62 points or 0.02% to 41,681.54, while the CNX Nifty was up by 12.10 points or 0.10% to 12,271.80.