Markets to start the F&O expiry week on a positive note

The Indian markets have rebounded in last two sessions and the start today is likely to be a follow up. Though, volatility too is likely to emerge as it is the August F&O series expiry week.  Traders will also show some cautiousness ahead of the first quarter GDP data slated to be announced on Friday. The rupee movement too will be eyed after it made a huge surge in last session. Meanwhile, the Planning Commission deputy chairman Montek Singh Ahluwalia has said that the government should use the foreign exchange reserves of a little under $280 billion to deal with a possible shortage and said that the rupee is over depreciated. Marketmen will also be keeping an eye on the FII activities as they have sold stocks worth about $700 million in the last week and if the trend continues, the market may come down further. Though, the rate sensitive realty and auto sector will be getting some respite with Finance Minister P Chidambaram saying that there is no need for excessive and unwarranted pessimism. He met top bankers and overseas investors over the weekend and discussed fund-raising plans apart from allaying the fears of FIIs over capital control. Finance minister has also said that the recent liquidity control measures taken by the Reserve Bank to reduce volatility in forex market and quell speculation would be revisited with return of stability. There will be some buzz in the power sector too, as the Power Minister Jyotiraditya Scindia  has reportedly said that as many as 94 hydro power projects are languishing due to tardy progress at various levels in granting them clearances.

The US markets recovered in last session as weak home sales data eased some concern about Fed tapering its stimulus soon. The Asian markets have mostly made a good start taking cues from the US markets, with some of the indices trading higher by close to a percent.

Back home, extending last session’s euphoria, Indian equity benchmarks snapped Friday’s session with a gain of over a percentage point, recapturing their crucial 5,450 (Nifty) and 18,500 (Sensex) bastions, buoyed by supportive global cues coupled with appreciation in Indian rupee against dollar. After an initial volatility, domestic bourses gained strength as investors opted to invest in battered down but fundamentally strong stocks. Some support also came in from Fitch statement that the rupee depreciation would not trigger a change in its ratings and will maintain a ‘Stable Outlook’ on India’s sovereign rating at ‘BBB-’, mainly on the back of the country’s sizable forex reserves, fiscal deficit management and structural reforms. Meanwhile, sentiments remained calm to some extent after Finance Minister P Chidambaram, who in a bid to allay investors’ fears about the rupee falling 5.5 per cent in five days, said that though the currency is undervalued and has overshot appropriate levels, there is no need for excessive and unwarranted pessimism. Supportive cues from US markets too provided support to local markets in early deals. Rally in most of the Asian markets also boosted the traders’ moral with Japanese Nikkei surging sharply over two percent with the yen declining against the US dollar. Back home, appreciation in Indian rupee against dollar remained the major reason for jubilation in domestic markets. Metal stocks continued to remain on the buyers’ radar on a report showing that China’s manufacturing unexpectedly expanded in August. Some support also came in from buying in index heavyweight Reliance Industries (RIL) which rose over one and a half percent after the company announced a new gas condensate discovery off the east coast of India in the Cauvery basin. Moreover, software stocks continued to edge higher on recent steep slide of the rupee against the dollar. The BSE Sensex touched a high and a low of 18,546.60 and 18,210.75, respectively. The BSE Mid cap index was up by 0.91% and Small cap index was up by 0.74%.