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Markets likely to get cautious start on F&O expiry session

Indian markets snapped a two-day winning streak in a choppy session on Wednesday, dragged by weakness in financial and oil & gas shares. However, strength in IT names provided some support. Today, the start the session is likely to be cautious ahead of expiry of the October F&O series coupled with the weakness in global markets. Traders may be concerned with report that cooking gas LPG prices may be hiked next week after under-recovery on the fuel widened to over Rs 100 per cylinder. There will be some cautiousness as a report from the Euro-Mediterranean Center on Climate Change (CMCC) said that in India, the decline in rice and wheat yields due to climate change could lead to economic losses between 43-81 billion EUR (or 1.8-3.4% of GDP) by 2050. Besides, foreign institutional investors (FIIs) net sold shares worth Rs 1913.36 crore, while domestic institutional investors (DIIs) net bought shares worth Rs 472.48 crore in the Indian equity market on October 27, as per provisional data available on the NSE. However, some support may come as the CBDT said refunds of over Rs 1,02,952 crore have been issued to the taxpayers during the current financial year. The Central Board of Direct Taxes (CBDT) frames policy for the Income Tax Department. Meanwhile, The Securities and Exchange Board of India (Sebi) has decided to bring in a two-tiered structure for benchmarking of certain categories to standardize benchmarks of mutual fund schemes. Banking sector stocks will be in focus with a private report that Indian banking sector is set to witness a fresh round of consolidation over the medium term - spread over FY22-24 period - primarily driven by large private sector banks. There will be some reaction in energy stocks as Icra in its report stated that solar energy tariff is likely to go up by 20-25 paise per unit in upcoming bids for projects as compared with rates seen over the past six months. This assumes significance in view of India's ambitious target to achieve 450 GW of renewable energy by 2030. Moreover, four stocks - Indiabulls Housing Finance, Canara Bank, NMDC and Sun TV Network - are under the F&O ban for October 28. Meanwhile, Nykaa's initial public offering (IPO) will open today and Nykaa has priced its IPO at Rs 1,085 to Rs 1,125 per share. The company has raised Rs 2,396 crore from 174 anchor investors ahead of its IPO. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended mostly lower on Wednesday as traders looked to cash in on recent strength in the markets in late-day trading. Asian markets are trading mostly in red on Thursday as investors looked to whether central banks may consider tightening monetary policies earlier than anticipated.

Back home, selling which occurred in late trade mainly dragged Indian equity benchmarks lower on Wednesday. After a cautious start, markets managed to trade mostly in green terrain for the day as traders continued to buy beaten down but fundamentally strong stocks. Sentiments remained upbeat after a survey by the National Council of Applied Economic Research (NCAER) showed that as the second wave of Covid-19 eased off, business sentiment in the country hit an over two-year high in the September quarter (Q2) of the current financial year (FY22). Adding optimism, Finance Minister Nirmala Sitharaman said the government’s social protection and economic stimulus packages, along with timely structural reforms in various sectors, have been pivotal in India’s economic recovery process. Meanwhile, the government is planning to come up with a semiconductor design-linked incentive policy to promote domestic manufacturing as well as attract global electronic chip companies to the country. However, traders booked profit in last leg of trade which mainly dragged key gauges lower. Traders turned anxious after Chairman of the 15th Finance Commission -- N K Singh has said the International Monetary Fund’s (IMF's) decision to revise India's potential growth forecast downwards to 6 per cent citing the coronavirus pandemic is a gross under estimation and observed that calculations of growth potential are always problematic. He mentioned the issue of our medium term growth potential projected by the IMF last week by recaliberating it from 6.25 per cent to 6 per cent, in my view, is gross under estimation. Finally, the BSE Sensex declined 206.93 points or 0.34% to 61,143.33 and the CNX Nifty was down by 57.45 points or 0.31% to 18,210.95.        

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