Markets likely to make a cautious start on F&O series expiry

The Indian equity markets despite some recovery in second half closed lower in last session, there were no fresh triggers to hold up the gains of the markets and traders opted to book profit at the higher levels. Today, the start is likely to be cautious  but the volatility cannot be ruled out as today the September F&O series will expire, so far it has been a very good series with both Nifty and Sensex gaining over six percent. There will be exclusion of 51 stocks from the F&O segment and that may turn the trade choppy. Meanwhile, there is more good news for foreign investors as India has made it mandatory for all foreigners to furnish a tax residency certificate of their home country to claim benefits under the double taxation avoidance agreement. Also, RBI has said that non-residents including NRIs can make investment in an Indian company at the face value of shares or debentures subject to compliance with FDI scheme. Though, ratings agency Moody's Investors Service expects India's fiscal deficit to exceed 5.1% and has said that recent reform measures won't improve India's credit profile. Traders will also be eyeing for some global cues after the opening of the European markets, as uncertainty over Spain bailout has dented sentiment.

The US markets continued their slide on Wednesday, with major indices losing another about half a percent. Markets lost their initial momentum on renewed upheaval in the euro zone over financial bailouts after anti-austerity violent protests in Madrid. However, there was some support from domestic front as prices of new US single-family home sales vaulted to their highest level in more than five years in August. The Asian markets have made a positive start with Chinese market taking the lead as decline in industrial profits has again raised speculation that its central bank will take measures to support economic growth.

Back home, Indian equity indices resumed their southbound journey after a day of halt as investors opted to take some profit off the table on the penultimate day of F&O September series expiry amid weakness in global markets. The gauges witnessed sharp kneejerk selling pressure in the mid noon trade breaching their crucial 18,600 (Sensex) and 5,650 (Nifty) levels. Though some damage control in dying hours ensured that the key bourses recover some part of the ground lost, however, it was not enough to pull the frontline indices back into the positive terrain. Meanwhile, traders got some respite from Chief Economic Advisor Raghuram Rajan’s statement that India’s recent reforms measures has changed international perception about the country for the better and is likely to reverse the downward trajectory of economic growth and could help avert a credit ratings downgrade. But, sentiments got hampered after some mobile carriers like Bharti Airtel, RCom and Idea Cellular fell sharply as competitiveness in the sector is expected to increase with the widely expected entry of Reliance Industries into the sector, although the energy conglomerate has not confirmed its intentions. The sharp drag down in stock markets in mid noon trades was witnessed due to subdued global cues as European counters traded in the red in early deals, with stocks in Spain leading the fall, as anti-austerity protests in Spain served as a reminder of impediments faced by the region's leaders in quelling the debt crisis. Some amount of pressure also came in from metal space and stocks like Sterlite Industries, Tata Steel, SAIL, Sesa Goa, National Aluminium Company and Hindalco edged lower as global growth jitters cast doubt on future demand for commodities.  However, the downside in local bourses was limited as FMCG stocks surged on favourable outlook for Rabi or winter crops due to the moisture available in the soil following wide-spread rains in August and September. At the same time, realty stocks too aided the sentiment to some extent as hopes of controversial Land Acquisition, Rehabilitation and Resettlement Bill seeing the light of the day cheered investors’. The BSE Sensex lost 62.24 points or 0.33% to settle at 18,632.17, while the S&P CNX Nifty declined by 10.45 points or 0.18% to close at 5,663.45.