Markets to get gap-down opening of F&O series expiry week

27 Jan 2020

Indian markets ended higher for the second straight session on Friday, tracking rally in banking stocks amid recovery in global equities. Today, the markets are likely to get a gap-down opening of the crucial F&O series expiry week tacking sell-off in the global markets. Also, there will be some cautiousness ahead of Union Budget 2020 to be presented later in the week. There will be some concern with a private report indicating that the country's fiscal deficit for 2019-20 is expected to widen to 3.8%and the upcoming Budget may set a target of 3.5% for 2020-21. There will be some cautiousness with report that India plans to increase import duties on more than 50 items including electronics, electrical goods, chemicals and handicrafts, targeting about $56 billion worth of imports from China and elsewhere. However, some support may come later in the day with report that foreign portfolio investors (FPI) have infused a net sum of Rs 1,624 crore into the Indian capital markets in January so far, buoyed by the signing of the first phase of the US-China trade deal. Also, IMF chief Kristalina Georgieva has said growth slowdown in India appears to be temporary and she expects the momentum to improve going ahead. Traders may take note of report that the government is likely to soon decide on permitting Indian companies to list their equity shares overseas. There will be some buzz in the infra stocks with Union minister Nitin Gadkari’s statement that the government plans to complete three of the 22 expressways and green corridors in the next three years, including the flagship Delhi Mumbai Expressway being built at a new alignment. Fertiliser stocks will be in focus with report that the government may consider cut in import duty on raw material used in the fertiliser industry in the forthcoming budget with a view to boost domestic manufacturing in the country. There will be some reaction in jewelry stocks with the commerce ministry data showing that gold imports fell 6.77% to $23 billion during the April-December period of the current financial year. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended lower on Friday after the Centers for Disease Control and Prevention confirmed the second case of the Chinese coronavirus in the US. Asian markets are trading in red on Monday on growing concerns over the scope of a China virus outbreak.

Back home, Indian equity bourses sustained their gaining rally on Friday, with Sensex & Nifty ending higher by around 0.55% each. The start of the day was on a cautious note, amid a private report that government's tax revenue shortfall for FY20 is estimated to be at around Rs 2 lakh crore. The revenue shortfall from direct tax sources is being pegged at around Rs 1.5 lakh crore to Rs 1.8 lakh crore, while that from indirect sources is estimated to be at around Rs 30,000 crore to Rs 60,000 crore. But soon, indices staged sharp recovery, as RBI raised the investment limit for foreign portfolio investors in government & corporate bonds. Key benchmarks remained in green terrain with strong gains for the most part of the trading session, on the back of firm cues from the global markets. Traders got encouragement, with  a private report stating that deal activity by private venture investors grew by 28 per cent to $48 billion in 2019, propelled by infrastructure bets, but will slow down to under 20 per cent in 2020. Some support also came with reports that the government think-tank Niti Aayog will develop a national data and analytics platform to make all government data accessible to stakeholders in a user-friendly manner. Finally, the BSE Sensex gained 226.79 points or 0.55% to 41,613.19, while the CNX Nifty was up by 67.90 points or 0.56% to 12,248.25.

Puchho Befikar
SEBI Registered: Investment Adviser - INA000013323
Research Analyst - INH000000719