Markets to make a positive start on the penultimate day of F&O expiry

The Indian markets showed huge round of volatility after the RBI unexpectedly hiked the policy rates, though the central bank governor’s assertion that the hike will set the economy securely on the disinflationary path and it could be probably the last hike if inflation remains in control, soothed the sentiments and markets closed with modest loss in last session. Today, the start of the penultimate day of F&O expiry is likely to be cautious but in green and markets may stabilize after three straight days of drubbing. Traders will be taking some support with the Reserve Bank of India survey that though the business confidence in the economy is still weak but is on track. However, the real estate and banking stocks are likely to remain under pressure as the move of RBI to hike the repo rate will raise the cost of fund and put pressure on margin. The infra stocks too are likely to remain in action, as the road ministry is set to modify its exit policy and make it easier for new investors to enter and replace existing ones. Traders will also be watching the movement of rupee as other emerging markets currencies too have stabilized ahead of the Fed’s monetary policy announcement.

Today is a result heavy day and lots of major companies will be announcing their numbers today. Aditya Birla Money, Bharti Airtel, Crompton Greaves, Gail India, Godrej Properties, ICICI Bank, Nalco, Shriram Transport Finance, Titan , TVS Motor and VIP Industries are among many to announce their numbers today.

The US markets recovered from their two days slump on getting good economic data and some encouraging earnings announcements. Consumer confidence index climbed to 80.7 in January from a downwardly revised 77.5 in December, also there was good home price data. The Asian markets have mostly made a green start, taking cues from the Turkey’s central bank decision to more than double interest rates to arrest a currency slide that roiled global markets.

Back home, stock markets in India went through a turbulent day of trade on Tuesday as the frontline equity indices managed to end with marginal cut, shrugging off repo rate hike. Earlier, markets made a positive opening and traded in fine fettle in morning deals following firm Asian cues but took a turn for the worse in late morning trades. The frontline equity indices showed a sharp kneejerk reaction and the wave of selling pressure hit the shores of domestic markets after Reserve Bank of India (RBI), in its third Quarter Review of Monetary Policy Statement 2013-14, much against the street’s expectation went ahead and hiked key repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 8.0% from 7.75%. However, markets managed to pare most of their losses, with market participants anticipating that there would be no hike in policy rate in near term after RBI’s policy stance indicated that further policy steps would be data dependent. Sharp appreciation in Indian rupee against dollar too aided the sentiments. Positive opening in European markets provided much needed support to the domestic markets, Asian counterparts too ended mostly in the green. Back home, sentiments got some support after the government allaying investors worry over declining value of the rupee and falling stock markets said that country’s economic fundamentals are ‘very strong’ and there is no cause for concern. Some support also came from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that India is committed to structural reforms to boost growth and any change in the government after the next elections is unlikely to have a major impact on the country’s economic reform policy framework. On the flip side, the software and technology remained the top laggards in the sectoral space with a cut of over a percentage point on account of appreciation in rupee. Finally, the BSE Sensex plunged by 23.94 points or 0.12%, to settle at 20683.51, while the CNX Nifty lost 9.60 points or 0.16% to settle at 6,126.25.