Markets to get a cautious start of F&O expiry week

The Indian markets came into consolidation mood before going for a long break, though managing to end on a positive note in the last session. Today, the start of the F&O March series expiry week is likely to be cautious but in green, traders will be reacting to the revised GDP numbers of the US and will be building a 25 basis points cut in interest rates by the Reserve Bank of India (RBI) in its forthcoming policy review on April 5. However, there will be some political concern that could weigh on the trading sentiments, with the Centre imposing President’s rule in Congress-ruled Uttarakhand, which could impact the functioning of the second half of the budget session and hinder passage of any crucial Bill. There will be some buzz in the gold and jewellary stocks, as the Finance Minister Arun Jaitley has offered to walk the extra mile to ensure that small traders were not harassed but made it plain that luxury items cannot go untaxed. He has said that gold and other jewellery will be part of the Goods and Services Tax (GST) regime which will subsume the 1 percent proposed excise levy, as there cannot be a situation where essential items are taxed and luxury items like gold are left out. The telecom stocks too will be in action, on report that the Department of Telecom is looking to commence the auction for spectrum, including in 700 Mhz band, around mid-July, which may fetch the government a whopping Rs 5.36 lakh crore. The Telecom Commission, an inter-ministerial body is scheduled to meet today to discuss the next round of spectrum auction.

The US markets ended with modest gains in the last session before going for a long weekend. Meanwhile, data showed that the US economy expanded 1.4 percent in the fourth quarter compared with a previously estimated 1 percent. The Asian markets have made a mixed start with some of the indices trading lower, though the Japanese market has surged, as the yen fell for a seventh day after data showed the US economy grew at a faster pace than previously estimated.

Back home, after making sluggish start, Indian equity markets managed to eke out some gains by the end of trade on Wednesday, as the benchmark indices clawed back into the green terrain in the last leg of trade on getting some supportive leads from the European markets. Sentiments got a boost with a report that the current account deficit which narrowed in the October-December quarter of 2015 is likely to shrink further in the March quarter of this year. According to the report, the monthly run rate for the trade deficit is tracking well under $10 billion in 2016, which should shrink CAD further in the March quarter. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1,095.44 crore on March 22, 2016. However, market participants were cautious for most part of the session ahead of a long weekend and amid geopolitical concerns after militants targeted Brussels airport and a city metro station on Tuesday.  Also, the global rating agency Standard and Poor's report that the Indian banking sector might continue to face tough times over next 12 months as their asset quality and capitalisation remain under pressure, too weighed on the sentiments. According to Standard and Poor's, the asset quality is likely to remain under pressure due to tepid domestic industrial activity, and subdued profitability and high leverage in some corporate sectors. Meanwhile, metal shares gained across the board following signs of revival in China's housing market and supply cuts by firms like Glencore and Freeport McMoRan which is likely to lift the copper prices higher, while weakness in global crude oil prices weighed on oil explorers like ONGC, Cairn India and Oil India. On the global front, Asian markets were largely quiet on Wednesday, while the European stocks rose in early trade. Back home, the benchmark began on a cautious note tracking sluggish cues from the Asian markets which opened on a tepid note on the back of weak leads from overnight US markets. Thereafter, the key indices failed to show any kind of fervor due to lack of any encouraging leads. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses go home with some gains. Finally, the BSE Sensex gained 7.07 points or 0.03% to 25337.56, while the CNX Nifty rose 1.60 points or 0.02% to 7,716.50. Indian markets remained closed on Thursday and Friday on account of Holi and Good Friday.