Markets likely to get a cautious start of the F&O December series expiry day

The Indian markets gained pace in last session, moving higher after a flat start. There were lots of shorts being covered on the penultimate day of F&O December series expiry. Today, the start is likely to be flat again, lacking any major supportive global cues, though volatility is likely to enter the markets once it starts approaching the expiry. So far it has been a quiet series and the market wide rollovers of about 60 percent. Traders will remain cautious as the Planning Commission is likely to seek the National Development Council's nod to lower the average annual growth rate for the 12th Plan period to 8 per cent from 8.2 per cent to make it more realistic. However, there is likely to be buzz in the export oriented stocks, as the Government has announced a number of measures to boost exports including extension of 2 per cent interest subsidy for another year till March 2014, and additional incentives on incremental exports. There is one new listing too; PC Jewellers will list its shares on bourses, the issue price of this IPO has been fixed at Rs 135 per share, the upper price band.

The US markets extended their decline after Christmas break due to ongoing worries over the looming "fiscal cliff" and traders pessimism about the negotiations, which even overlooked Standard & Poor’s report showing the strongest annual rate of growth in home prices in over two years. Most of the Asian markets have extended their jubilation with a modest green start, Chinese markets is witnessing some profit booking after three straight sessions of gains.

Back home, buoyed by firm global cues, Indian equity indices snapped the day’s trade with a healthy gain of about a percent on the penultimate day of December series Futures and Options contract expiry. Frontline gauges, after a flat-to-positive start, extended their northward journey and ended the session above their crucial 5,900 (Nifty) and 19,400 (Sensex) bastions. Gains in the domestic market were mainly triggered by reports that US President Barack Obama plans to return early from his annual vacation to take part in talks to avert the fiscal cliff of austerity measures, which is due to take effect at the start of the year. Sentiments also remained sanguine after Asian markets ended on a positive note after Japan’s ex- Prime Minister Shinzo Abe, whose Liberal Democratic Party won a landslide victory in the December 16 election, was appointed as premier. Back home, domestic bourses made a cautious start as traders remained on sidelines in the early trade on report that India’s foreign direct investment (FDI) inflows into the services sector increased by a mere 5 per cent to $3.6 billion during the April-October period of this fiscal. But, later on, the gauges picked up the pace supported by banking shares which led the gains on hopes of easing liquidity as the Reserve Bank of India (RBI) continued with cash injection measures and on expectations of a rate cut in January. Rally in realty stocks too supported the sentiments. Stocks like DLF, Unitech, HDIL, Indiabulls Real Estate and Anantraj Industries surged on report that realty prices have seen an increase of about 10 percent in the last one year. Some support to the frontline indices also came in from Pharma stocks like Cipla, Glenmark Pharma, Sun Pharma and Ranbaxy Laboratories which edged higher as the Planning Commission has set a target for the pharmaceutical industry to reach $100 billion by 2020 and account for five per cent share of the global drug industry in the next five years. Capital goods space too rallied by over one and a half percent led by Bharat Heavy Electricals and Larsen & Toubro (L&T) which rose after the government extended interest rate subsidy for some exporters. Shares of textile firms viz. Vardhman Textile, Arvind, Century Textiles and Industries, Aarvee Denims & Exports, S Kumar Nation and Alok Industries also edged higher as the government is expected to announce measures on December 26, 2012, to boost India’s exports. Finally, the BSE Sensex gained 162.37 points or 0.84% to settle at 19,417.46, while the S&P CNX Nifty rose by 49.85 points or 0.85% to end at 5,905.60.