Benchmarks to make cautious start of F&O expiry session

Indian markets ended lower with around a percent cut on Wednesday, with heavyweight Reliance Industries, financials and IT stocks pacing the decliners amid mixed global cues. Today, the markets are likely to get a cautious start ahead of Futures and Options (F&O) contracts’ expiry amid mixed cues from Asian peers. Rising coronavirus cases may dampen sentiments. India has recorded over 52,000 cases in the past 24 hours, taking its total number of Covid-19-positive cases to 1,584,384. The country's death toll has crossed the 35,000 mark. There will be some cautiousness with Former RBI deputy governor Viral Acharya’s statement the suspension of the bankruptcy code for a whole year could be a potential problem for the country. Traders may react to report that the Ministry of Home Affairs (MHA) issued new guidelines for opening up of more activities in areas outside containment zones, as a part of Unlock 3.0, which will come into effect from August 1. The process of phased re-opening of activities has been extended further. Though, some support may come later in the day with the International Monetary Fund’s (IMF) statement that the stimulus measures taken by India are substantial, but there is more scope for such measures even after considering the limited fiscal space. There will be some buzz in the banking stocks with report that Prime Minister Narendra Modi held a meeting with top bankers and said his government is firmly behind the banking system and is ready to take any steps necessary to support and promote its growth. Aviation stocks will be in focus as aviation consultancy firm CAPA India warned that Indian aviation industry is at its breaking point due to massive losses on account of COVID-19. There will be some reaction in telecom stocks with Ind-Ra’s report that telecom industry has lost 8.2 million subscribers during the complete lockdown in April, and Covid-19 pandemic will continue to keep customer additions under pressure. There will be some important earnings announcements too to keep the markets buzzing.

The US markets settled higher on Wednesday after the Federal Reserve kept interest rates at ultra-low levels and repeated a pledge to use its full range of tools to support the economy. Asian markets are trading mixed on Thursday amid reports that the US Federal Reserve left interest rates unchanged.

Back home, Indian equity benchmarks ended Wednesday's highly volatile session in the negative territory following a mixed trend in Asian peers as investors await the US Federal Reserve’s interest rate decision. Markets made a cautious start and traded on gloomy note throughout the session, as fast-rising Covid-19 cases kept sentiments subdued. Sentiments remained down-beat as global forecasting firm Oxford Economics expects India's GDP growth to lose momentum from late third quarter (October-December) of the current fiscal as the push from the initial reopening fades. It further said India fares the worst in its Asia recovery scorecard, implying that the country will likely take the longest among major economies to converge to its pre-coronavirus growth level. Key gauges witnessed selling pressure at higher zones in late afternoon session, as private report stated that the outlook for India's reeling economy has worsened again as business activity slows and COVID-19 infections soar. Traders shrugged off industry body CII’s statement that high frequency indicators are showing a material improvement as compared to multi-year low seen in April, and pointing towards a V-shaped recovery after the economy suffered on account of lockdown amid the coronavirus pandemic. Investors also overlooked Union Minister Nitin Gadkari’s statement that the government is making efforts to attract FDI in infrastructure sector to address liquidity crunch faced by the COVID-19-hit economy. Finally, the BSE Sensex lost 421.82 points or 1.10% to 38,071.13, while the CNX Nifty was down by 97.70 points or 0.86% to 11,202.85.