Markets likely to get negative start of F&O series expiry week

Indian markets tumbled for a third consecutive session on Friday on fears of a possible global recession. Today, the start of the crucial F&O series expiry week is likely to be negative, continuing their losing streak, amid weakness in global peers. Deprecation in rupee likely to dent sentiments in domestic markets. The rupee slipped below the 81-mark against the dollar for the first time, adding to concerns over a slowdown in portfolio inflows. Traders will be concerned after infusing more than Rs 51,000 crore last month, foreign investors have slowed down the pace of equity buying in India in September so far, as they invested a little over Rs 8,600 crore, on sharp depreciation in rupee. However, some respite may come later in the day as Finance Minister Nirmala Sitharaman said the rupee has held back very well when compared to other currencies against the US Dollar. She added that the Reserve Bank and the Finance Ministry are keeping a very close watch over the developments. Some support will come as the government said India is on track to attract $100 billion foreign direct investment (FDI) in the current fiscal on account of economic reforms and ease of doing business. In 2021-22, the country received the highest ever foreign inflows of $83.6 billion. Besides, the latest data released by the Reserve Bank of India (RBI) showed credit growth in the banking system was at a multi-year high of 16.2 per cent year-on-year (YoY), for the fortnight ended September 9. There will be some buzz in defence industry stocks as the government said defence exports have grown by 334 per cent in the last five years and India is now exporting to over 75 countries due to collaborative efforts. Insurance industry stocks will be in focus as data from insurance sector regulator Irdai showed non-life insurers registered a 12 per cent yearly growth in their gross direct premium income during August this fiscal at Rs 24,471.95 crore. There will be some reaction in agriculture industry stocks as according to the agriculture ministry, paddy planting continued to lag behind as sown area under this crop fell 5.51 per cent from last year to 401.56 lakh hectare so far, as sowing of kharif (summer) crops almost comes to an end. Telecom stocks will be in limelight as raising concerns regarding the 5G rollout, the Directorate General of Civil Aviation (DGCA) has written to the Department of Telecom (DoT) on likely interference of the spectrum with aircraft, a media reported on Friday. A radio altimeter provides direct-height-above-terrain information to several aircraft systems. Meanwhile, Harsha Engineers will debut on stock exchanges on Monday. The Rs 755-crore public issue was bought 74.7 times by participants, and despite uncertainty in the equity markets.

The US markets ended lower on Friday as fears grew that a central bank prescription of raising interest rates to tame inflation will drag major economies into recession. Asian markets are trading mostly in red on Monday as negative sentiment continues to weigh in on markets.

Back home, extending their decline for the third day, Indian equity benchmarks ended with heavy losses of over one and half percent on Friday, amid an overall bearish trend in global markets after the Fed announced a widely-expected rate hike and reiterated its commitment to keep up increases into 2023 to fight red-hot inflation. US Fed’s aggressive stance has increased recessionary fears on global front and created nervousness on domestic markets as well. Markets started the session on pessimistic note and extended their fall later on after ASSOCHAM said India Inc is bracing itself for yet another policy rate hike by the RBI Monetary Policy Committee in the range of 35-50 basis points as the move seems unavoidable in the wake of the global monetary tightening to limit the impact of inflation. Besides, weakening of the domestic currency makes investments into Indian securities less attractive for foreign portfolio investors (FPIs). They sold equities worth Rs 2,509 crore on Thursday, and Rs 461 crore on Wednesday. Market participants overlooked Union Finance Minister Nirmala Sitharaman’s statement that the government was making efforts to keep inflation under 4 per cent and steps were being taken to ensure people get essential goods at fair price and on time.  Meanwhile, Capital markets regulator Sebi has allowed emerging investment vehicles, Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT), to issue commercial papers. Selling got intensified in afternoon session after Russian President Vladimir Putin signaled annexation of parts of Ukraine adding to geopolitical concerns. In last trading hour, markets touched their intraday low point as traders remained unenthusiastic amidst unpleasant economic outlook and a surging dollar. This was because of increase in policy rate by the US Fed and Bank of England, and escalation in geopolitical tensions between Russia and Ukraine. Finally, the BSE Sensex fell 1020.80 points or 1.73% to 58,098.92 and the CNX Nifty was down by 302.45 points or 1.72% to 17,327.35.