Indian markets to extend the gaining momentum on F&O expiry day

The Indian markets surged in last trading session on Tuesday and escaped the decline what other global markets suffered in last session on economic growth concern. Today is the expiry of the November F&O series and the markets are likely to show some volatility, though the series has been a flat one but the rally on the penultimate day of expiry has given a sense of short covering and the markets may remain upbeat today, aided by supportive global cues. Also, the political uncertainty has eased and the Parliament is likely to work as the government is looking all set to agree on a discussion and vote on FDI in retail. Markets will also be reacting to OECD’s 4.4 per cent economic growth forecast for India in the current fiscal, though the Planning Commission Deputy Chairman, Montek Singh Ahluwalia has termed OECD’s growth forecast ‘completely wrong’. There will be some buzz in the telecom sector too, as the Empowered Group of Ministers on telecom, headed by Finance Minister P Chidambaram, will meet today in the backdrop of lukewarm response to recently concluded 2G spectrum auction.

The US markets made some recovery on hopes of government reaching a budget deal, though the economic news remained mixed as the new single-family home sales fell slightly in October, while the auto manufacturers get set to report extremely strong numbers for October. The Asian markets have made a positive start with most of the indices trading in green on affirmative cues from the US and Europe, also there was hopes of more stimulus from Japan as leaders of opposition party have called for unlimited policy easing.

Back home, jubilation returned to the Indian markets a day ahead of the F&O November series expiry. All the major indices coming out of the consolidation phase posted humongous gains and the major indices went to the level last seen on November 21. There were supportive global cues complemented by the soothing political environment that led the market rally to a new high. Major indices gained over one and half a percent with Sensex and Nifty re-conquering their crucial psychological levels of 18,800 and 5,700 respectively. Though, the markets remained cautious in the last session as an all party meet remained inconclusive, but today the trade started with new vigor with Prime Minister Manmohan Singh meeting Congress allies to end deadlock over FDI in Parliament and UPA coordination committee meeting to discuss the provision of voting. The government got its much needed respite from its ally DMK, who was initially demanding vote on the FDI issue, said that it will vote in favour of the government. The development raised optimism that the government will be able to clear reforms announced in September, which were aimed at reviving growth and staving off a credit rating downgrade. The local equities were also supported by the global markets, while the Asian markets made a mixed closing, the European markets made an all green start. Back home, the mood of the markets remained jubilant since morning and after a gap-up start the major indices kept strengthening till last, only to stop with the closing bell. There were broad based buying and blue-chip stocks that remained dormant in last session, actively participated in trade today, taking the markets higher. Market-men got another source of encouragement with Global ratings agency Moody's retaining India’s sovereign Baa3 ratings stable in its annual credit analysis on the country, supported by credit strengths which include a large, diverse economy, strong GDP growth as well as savings, and investment rates that exceed emerging market averages. Sectorally the day was of rate sensitive realty and Consumer Durables (CD) which surged by over 3%. However, the euphoria of the aviation sector was missing today and they suffered profit booking after two successive sessions of huge gains. There was buzz in the telecom sector after RBI relaxed ECB norms for the successful 2G spectrum bidders. Both Bharti Airtel and Idea Cellular surged by over 5% for the day. Finally, the BSE Sensex surged 305.07 points or 1.65% to settle at 18,842.08, while the S&P CNX Nifty climbed by 91.55 points or 1.62% to end at 5,727.45. The Indian markets remained closed on Wednesday on account of a public holiday.