Markets to make a cautious start of the F&O expiry week

The Indian markets remained in consolidation mood in last session and today the start of the F&O expiry week is likely to remain cautious on mixed global cues. Traders will be watching the movement of rupee that has appreciated on Friday, though there is expectation of stability and more strength in the rupee as the actual impact of the last week’s unconventional measures by the Central bank will be felt more in the weeks to come. The power stocks will be in action after the Reserve Bank of India allowed loans to new ultra mega power projects (UMPPs) to be regarded as secured debt even though the site and the plant will be owned by distribution utilities, not the winning bidder. Retail related stocks too will be buzzing as DIPP, to accommodate some demands of global retailers, has circulated the draft of a Cabinet note seeking views of different ministries to ease FDI norms in multi-brand segment. However, there will be cautiousness related to the slow growth in Indirect tax collection. During April-June quarter of current fiscal, the indirect tax collection grew by mere 4.7% to Rs 1.11 lakh crore, mainly on account of decline in excise duty collection.

There will be some important result announcements too, to keep the markets buzzing. Asian Paints, Hindustan Oil, ING Vysya Bank, Just Dial, L&T are among the many to come up with their earnings today.

The US markets witnessed a lackluster trade on Friday on getting some weak earnings from the tech sector heavy weights. The Asian markets have made mostly a positive start of the new week, Japanese Nikkei was trading marginally in green after Japanese Prime Minister Abe’s Liberal Democratic Party and its coalition partner won a majority of upper house seats in the weekend vote.

Back home, Indian equity indices, after garnering gains of over one and a half percent in previous two sessions, witnessed consolidation in a volatile trade on last trading day of the week. Though, both the gauges opened in the green terrain buoyed by firm cues from US markets coupled with positive first quarter results from Tata Consultancy Services (TCS), but failed to hold on to their gains and slipped into the negative terrain in late trade as profit booking picked up in realty, banks, power and capital goods. Sentiments also got hurt on report that foreign institutional investors (FIIs) sold shares worth a net Rs 178.30 crore on July 18, 2013. Supportive cues from US markets provided the much needed support to local markets in early deals and investors’ morale got buttressed after the US initial jobless claim fell sharply in last week, index of regional manufacturing activity in Philadelphia unexpectedly jumped in July. However, disappointing cues from European market took their toll on domestic sentiments and dragged the frontline gauges near their intraday lows at the end. Back home, sentiments also remained dampened after international credit rating agency Moody’s warned that the rupee fall may constrain country’s sovereign credit rating, as it will exacerbate inflationary and fiscal pressures. However, RBI Governor D Subbarao said that the currency’s exchange rate will largely be market-determined but central bank would intervene to prevent disruptions to macro-economic stability. Prime Minister’s forecast of economy growing lower than 6.5 percent in FY14, too spooked investors’ sentiment. Meanwhile, there were concerns among the trader that the Reserve Bank of India (RBI) may not cut interest rates but instead hike cash reserve ratio, the portion of deposits banks kept with RBI. Sentiments also got dented as marketmen offloaded holding in financial space on account of lower-than-expected Q1 earning from HDFC. Finally, the BSE Sensex gained 21.44 points or 0.11% to settle at 20,149.85, while the CNX Nifty lost by 8.85 points or 0.15% to end at 6,029.20.