Markets to get positive start of the F&O series expiry week

Indian markets came off intraday lows and ended flat on Friday as losses in banking heavyweights like ICICI Bank, Axis Bank and State Bank of India were offset with gains in Reliance Industries. Today, the start of the crucial F&O series expiry week is likely to be a higher tailing the positive cues from Asian peers. Investors will be eyeing RBI Governor Shaktikanta Das' address to the CII National Council members later today. Traders will be taking encouragement as terming India as the best destination for foreign investment with high returns, Union Minister Nitin Gadkari urged European investors to invest in India. Also, RBI data showed the country's foreign exchange reserves surged by $1.275 billion to touch a fresh lifetime high of $517.637 billion in the week to July 17. However, rising coronavirus cases may dampen sentiments in the markets. India's daily addition to coronavirus tally has crossed the 50,000 mark, with the country recording over 5,0500 in just 24 hours. The total Covid tally in India now stands at 1,436,019, including over 32,800 deaths. Traders may be concerned with report that foreign portfolio investors (FPIs) remained net sellers in Indian markets in July so far on account of both domestic and global factors, including rising number of coronavirus cases and increasing tension between the US and China. There may be some reaction with a private report that the Indian economy is likely to face inflationary pressures in the near term, as factors like supply chain disruption and lack of low-wage workers are expected to offset the deflationary pressures from subdued demand in the economy. There will be some buzz in the fertilizer stocks with Chemicals and Fertilisers Minister D V Sadananda Gowda’s statement that the government is taking measures for ease of doing business in the fertiliser sector and to ensure smooth supply of soil nutrients to farmers. Aviation stocks will be in focus as India extended the ban on capacity addition and capping of fare by airlines till November 24 amid growing coronavirus cases in the country. There will be some reaction in MSMEs stocks as the finance ministry said banks have sanctioned loans of about Rs 1,30,491 crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector, hit hard by the economic slowdown caused by COVID-19 pandemic. There will be earnings announcements too, to keep the markets in action.

The US markets ended lower on Friday as investors grew anxious about rising tensions with China and a potential stalling of the economic recovery. Asian markets are trading mostly in green on Monday as China’s industrial profits for June soared 11.5% year-on-year, according to the country’s National Bureau of Statistics.

Back home, in a highly volatile session, Indian equity benchmarks pared most of intra-day losses to end Friday’s session on flat note with negative bias. Buying in Energy, IT and TECK stocks lifted the indices in the last hour of trade but couldn't pull the indices out of the red zone. Key indices kicked off session on sluggish note, following weakness in Asian peers amid Sino-U.S. tensions. Traders remained cautious with Economic Affairs Secretary Tarun Bajaj’s statement that the government is unlikely to meet the Budget targets for 2020-21 due to the COVID-19 crisis but contraction in economic growth may not be as severe as being pointed out by the outside world. Selling further crept in with Rajya Sabha MP -- Subramanian Swamy’s statement that India's growth rate may plunge to 6 to 9 percent during the current financial year due to COVID-19 pandemic and may bounce back next fiscal if correct policies were worked out. Markets also retreated on the back of a record jump in daily domestic coronavirus cases and its impact on economic recovery. However, markets reversed most their losses in dying hour of trade, as traders found some support with Finance Secretary Ajay Bhushan Pandey’s statement that tax mop up in first quarter of the current fiscal is very encouraging and indicates that the economy is recovering sooner than what was anticipated at the time of imposition of lockdown. Some support may also come as IHS Markit expects the Indian economy to rebound in the second half of 2020 as the impact of the COVID-19 pandemic subsides, and predicts 6.7% growth in the next financial year. Meanwhile, the finance ministry has requested think tank Niti Aayog to work on a five-year asset monetisation road map as the Centre continues efforts to meet its funding needs. Finally, the BSE Sensex fell 11.57 points or 0.03% to 38,128.90, while the CNX Nifty was down by 21.30 points or 0.19% to 11,194.15.