Markets likely to start F&O series expiry week on positive note

Indian markets ended lower with losses of over one and half a percent following across-the-board selling on Friday amidst fear of another global pandemic wave being fanned by the surging COVID cases in China. Today, start of F&O series expiry week is likely to be positive tracking gains in global peers. Traders will be taking encouragement as noting that the achievement of $5 trillion economy is a short term aspirational goal, former RBI Governor C Rangarajan said even after that India will still be known as middle income country with per capita income $3472. Also, Prime Minister Narendra Modi said that this year, the country had become the world's fifth largest economy. Some support will come with a report that foreign investors have infused a net Rs 11,557 crore in Indian equities in December so far despite a market correction and increasing concerns over re-emergence of COVID in China and some other parts of the world. Traders may take note of the International Monetary Fund’s (IMF) statement that India needs a more ambitious fiscal consolidation roadmap to ensure medium-term debt sustainability amid growing risks to its growth outlook and shrinking fiscal space. However, there may be some cautiousness with a private report that India's exports may have touched an all-time high of USD 422 billion in 2021-22 but recession in key western markets and geo-political crisis due to the Russia-Ukraine war are expected to impact the growth of the country's outbound shipments in 2023. Traders may be concerned as the Reserve Bank of India’s (RBI’s) foreign exchange reserves declined for the first time in five weeks to $563.50 billion in the week ended December 16. There will be some buzz in gems and jewellery industry stocks with report that India's gems and jewellery industry has achieved its annual export target of USD 48 billion till the last quarter of the current financial year. Aluminium industry stocks will be in foucs as industry body Assocham sought reduction in basic customs duty and correction of inverted duty structure on critical raw materials for the aluminium industry as high import duties is a huge disadvantage for the sector heavily dependent on imported raw materials. There will be some reaction in retail industry stocks as Retailers Association of India (RAI) said India's retail industry saw a 19 per cent rise in sales over pre-pandemic levels during the April-November 2022 period riding on the back of strong performance of segments such as quick service restaurant and footwear.

The US markets ended higher on Friday as investors digested a deluge of economic data ahead of the Christmas holiday long weekend, capping a week fraught with worries over the Fed’s restrictive monetary policy and related recession fears. Asian markets are trading mostly in green on Monday in thin holiday trade tracking Friday’s gains on Wall Street.

Back home, Indian equity benchmarks continued to remain under selling pressure for the fourth day running and settled with losses of over one and half percent on Friday, in tandem with weak Asian market trends as investor’s sentiment remained muted in view of the Covid-19 surge in some countries. After the gap-down start, markets gradually inched lower amid fears of economic growth slowdown. Traders continued to remain concerned with former Niti Aayog Vice Chairman Arvind Panagariya's statement that cutting trade with Beijing at this juncture would amount to sacrificing India's potential economic growth amid demands for snapping trade ties with China for its transgressions on the border. Instead, he suggested that India should try to enter into free trade agreements (FTA) with countries such as the UK and the European Union to expand its trade. Key indices extended losses to end near day’s low points as sentiments remained negative with RBI Monetary Policy Committee (MPC) member Jayanth R Varma’s statement that India's economic growth is now 'extremely fragile' and needs all the support that it can get, as private consumption and capital investment are yet to pick up. Varma further said out of the four engines of growth for the economy, exports and government spending supported the Indian economy through the pandemic, but other engines need to pick up the baton now. Traders took note of a private report that amid a slowdown in demand for Indian goods in developed countries, India can focus on 18 products, such as insecticides, construction material, chemicals, and iron and steel, to boost its exports to developing countries where the country meets only 2.5 per cent of the demand at present. Finally, the BSE Sensex fell 980.93 points or 1.61% to 59,845.29 and the CNX Nifty was down by 320.55 points or 1.77% to 17,806.80.