Markets to get a cautious start ahead of F&O series expiry

The Indian markets extended their gains for the third straight day in last session despite some volatility. Today, the start of the F&O expiry session is likely to be a bit cautious and major bourses may remain range bound in early trade tailing global cues, however action can be seen in the second half and with position covering ahead of the series expiry and the heavy February series which is already up by over two percent may see some more improvement by the end. Today, there will be some buzz in the banking sector as the Standard & Poor's Ratings Services expects weakness in ‘Indian’ banks asset quality to persist for the next year because economic recovery is likely to be tepid. However, the new banking license hopefuls may remain upbeat as the Reserve Bank of India moved closer to granting new banking licences as a panel headed by former RBI governor Bimal Jalan finalized a list of firms for the central bank to consider. There will be some buzz in the markets related to development in the commodity exchanges, as the commodity markets regulator Forward Markets Commission (FMC) has allowed commodity exchanges to impose different transaction charges for contracts. The move is intended to promote competition in commodity market, bring in greater efficiency and lower transaction costs to market participants. There will be some action in the urea stocks too, as the government may insist on bank guarantee of Rs 300 crore from fertiliser makers charting investments under the new urea policy.

The US markets ended the lackluster trading session with modest cuts and traders avoided any major bets ahead to the release of some key economic data later in the week, while the consumer confidence index fell to 78.1 in February from a downwardly revised 79.4 in January and weighed the sentiments negatively. The Asian markets have made mostly a lower start, though the losses are marginal but the regional indices are concerned that the world’s second-largest economy China is slowing as financial stresses increase.

Back home, key domestic benchmarks managed to keep their head above water on penultimate day of February F&O expiry, prolonging gaining streak for the third straight day. The bourses went through volatility where benchmarks after making a gap-up opening, slipped into red for a couple of times during the session. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped them to regain their crucial 6,200 (Nifty) and 20850 (Sensex) bastion. Overall, sentiments remained up-beat on the back of latest survey of National Council of Applied Economic Research (NCAER), which said that after a slide in the second quarter of the current fiscal, higher exports, enhanced farm produce and moderation in inflation improved business confidence during the October-December period. The Business Confidence Index (BCI) rose by about 21.8 percent to 122.3 points from 100.4 in July-September quarter, 2013-14. Also, the Reserve Bank of India (RBI) Governor Raghuram Rajan has said that the central bank’s focus is to bring down inflation to boost investor confidence. On the global front, supportive cues from US markets provided some support to local markets, while the Asian markets ended mixed. However, disappointing start of European markets took their toll on domestic sentiments and capped the gains on the up-side. Back home, gains also remained capped as investors offloaded positions in metal stocks tailing the weakness in the Chinese market where the currency tumbled the most in more than a year on speculation the central bank wants an end to the currency’s steady appreciation. Market participants also turned cautious as international rating agency Moody’s expects only marginal increase in Indian economic growth at 5.5 percent during FY15 citing that the forthcoming elections will delay the reform process and hurt growth. However, NBFC stocks traded with traction on reports that the Jalan committee, which is scrutinizing applications for new bank licences, will submit its report. Stocks related to realty sector too remained on buyers’ radar on report that PE investments in the country’s real estate sector during 2013 registered a 13-per cent increase to Rs 7,000 crore ($1.2 billion), over the Rs 6,200 crore ($1.1 billion) done in 2012. Finally, the BSE Sensex gained 41.03 points or 0.20%, to settle at 20852.47, while the CNX Nifty added 13.95 points or 0.23% to settle at 6,200.05.