Markets to make cautious start of F&O expiry session

Indian markets ended higher on Wednesday led by gains in banks, auto and IT stocks. Today, the start of the F&O series expiry session is likely to be cautious amid mixed cues from Asian peers. Investors will also track the GST council meeting as well as the annual general meeting of Tata Sons. Rising coronavirus cases is likely to weight down on market sentiments. India has recorded its worst-ever single-day spike of 75,995 coronavirus cases, taking its total past 3.3 million. India's tally now stands at 3,307,749. With 1,017 fatalities reported on Wednesday, the country's death toll has breached the 6000-mark. There will be some cautiousness with a private report stating that general government debt -- which is the combined liabilities of the Centre and states -- is likely to hit a record 91 per cent of GDP this fiscal. However, some support may come later in the day with Commerce Secretary Anup Wadhawan’s statement that the department of commerce is proactively engaging with state governments to promote exports. Traders may take note of report that the Reserve Bank of India (RBI) will rationalise regulations for overseas direct investment (ODI) in order to make them simpler and more principles-based. Meanwhile, the commerce ministry's investigation arm DGTR has recommended imposition of anti-dumping duty for five years on 'choline chloride', a chemical imported from China, Malaysia and Vietnam, to guard domestic players from cheap inbound shipments. There will be some buzz in the hospitality industry related stocks the Federation of Hotel and Restaurant Associations of India (FHRAI) said it has urged the government and the Reserve Bank of India to an extend moratorium for additional three months. Telecom stocks will be in focus after the Telecom Regulatory Authority of India (TRAI) said that the industry lost over 5.6 million wireless subscribers in May amid the nationwide lockdown. The overall telecom subscriber base for wireless connections stood flat at 1.14 billion in May, compared to 1.14 billion crore in April. there will be some reaction in tobacco industry related stocks as a parliamentary panel recommended permitting regulated foreign direct investment in the tobacco sector and establishing export-only tobacco farms to boost outward shipments.

The US markets ended higher on Wednesday amid optimism about the outlook for the economy after a report from the Commerce Department showed durable goods orders spiked by much more than expected in the month of July. Asian markets are trading mostly in red on Thursday as investors await upcoming comments from US Federal Reserve Chairman Jerome Powell.

Back home, extending their gaining streak into the fourth session in a row, Indian equity benchmarks ended Wednesday’s session with gains of over half percent. Late hour buying in Energy, Auto and Banking stocks helped benchmarks stage a sharp up move and close near the intraday highs. Benchmark indices made slightly positive start as traders took support with Moody's Investors Service stating that India, China and Indonesia will be the only G-20 emerging economies to post a strong enough pick up of real GDP in the second half of 2020, and retained its projection of 3.1 percent growth contraction for India in 2020. After that, key gauges oscillated between the positive and negative territory for some part of the session, as traders got wary with the Reserve Bank of India (RBI) in its annual report for 2019-20 stating that the Country's headline inflation is expected to firm up further in the coming months largely due to disruptions in food and manufactured items' supply chains. Some concern also came with rating agency ICRA’s report that the economy is expected to contract by 25 per cent each in the first quarter of FY'21 both in terms of GDP (gross domestic product) as well GVA (gross value added). However, strong buying in the last hour of the trading session helped the indices to close higher, taking support from Finance Minister Nirmala Sitharaman’s statement that the government is open to further tweaking the Rs 3 lakh crore credit guarantee scheme for providing collateral-free loans to small businesses. Some optimism also remained among traders with Union Expenditure Secretary T V Somanathan’s statement that the government may look at introducing a second set of fiscal stimulus measures once the COVID-19 infections abate and the psychological fears in people's minds ebb. Meanwhile, the Finance Ministry said banks have sanctioned loans of about Rs 1,55,995 crore under the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under the slowdown caused by the coronavirus pandemic. Finally, the BSE Sensex rose 230.04 points or 0.59% to 39,073.92, while the CNX Nifty was up by 77.35 points or 0.67% to 11,549.60.