Markets to get a soft start on the penultimate day of F&O expiry

The Indian markets after a decent start lost their way in the final hours to close lower for yet another day in the last session. Traders opted to book profit on political concerns despite supportive global cues. Today, the start is likely to be cautious, though some volatility too can be expected in late trade as it is the penultimate day of March F&O series expiry. There is some positive news that could support the markets, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has said that India's Current Account Deficit (CAD) for 2012-13 is likely to be around 5 percent of the GDP. Rangarajan said CAD is likely to come down in the fourth quarter of the current fiscal, ending March 31 after touching a record high of 5.4 percent of GDP in the July-September quarter. There will be buzz in the media stocks,  as the Telecom Regulatory Authority of India (TRAI) has notified the "Standards of Quality of Service (Duration of Advertisements in Television Channels) (Amendment) Regulations, 2013", though Broadcasters have slammed the orders. Telecom companies too are likely to remain under pressure as tweaking the quality of service regulations TRAI has proposed penalty of Rs 100,000 per week for any delay in the submission of the audit and action taken reports by the service providers.

The US markets made a soft start of the new week and the major indices ended lower by over a quarter percent, as the early enthusiasm on news that Cyprus has secured a 10 billion euro bailout from the European Union, the European Central Bank and the IMF, faded on concern about the economic impact of the new bailout agreement. The Asian markets have made a mixed start and many of the indices are trading lower. The Chinese market has fallen the most, dragged by slump in brokerages and material producers.

Back home, Monday was another down day for the Indian markets and the major disappointment was losing direction in the final hours after a gap-up start. Traders booked profit at the high point of the day fearing further decline owing to F&O series expiry and political uncertainty. Earlier the markets made a solid start of the day after a bad run last week, supported by gains in regional peers as Cyprus reached an agreement for an international bailout. The gains in US markets ahead of the weekend too aided the sentiments. But some political jitters in late trade led to the reversal of gains for the markets as DMK after snapping ties with the Union Government, in a key party executive meet held in Chennai decided not to give support to the government from outside. Meanwhile, paving the way for 10 billion euros ($13 billion) of emergency loans Cyprus agreed an aid package to stave off the threat of default. The development gave a reason to cheer to the European markets, with majority of them making a gap up start. But their gains failed to support the domestic markets and they lost traction in the latter part of the trade. Back home, the chance of recovery was thwarted due to some sector and scrip specific profit booking, traders took the opportunity at higher levels as the market has been witnessing a lull since last six straight sessions. The day was likely to be good on supportive global cues but on the same time volatility too was expected, as it being a holiday shortened F&O March series expiry week, with no trading on March 27 and March 29.  Markets in initial trade moved higher as Finance Minister P Chidambaram in an effort to bridge the widening current account deficit decided to ease restrictions for foreign institutional investors in government and corporate bonds next month, for FII investment in corporate bonds and long-term infrastructure bonds will be merged effective from April 1. However, the finance minister also mandated that the total FII investments in borrowing should not be above 5 percent of the total as recommended in the Raghuram Rajan Committee report. Meanwhile, Capital Goods along with rate sensitive and high beta auto, metal and banking stocks took a beating, though realty, power and oil & gas led some support to indices from slipping further. There was a buzz in the oil & the gas sector since the morning after the state-owned oil marketing companies announced a hike in diesel prices last week and on report that the government will give an additional cash subsidy of Rs 25,000 crore to PSU OMCs to make up for the losses suffered by them on selling fuel at subsidized rates. Finally, the BSE Sensex lost 54.18 points or 0.29% to settle at 18,681.42, while the CNX Nifty declined by 17.50 points or 0.31% to end at 5,633.85.