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Markets to make cautious start of the F&O series expiry week
Oct-26-2020

Indian markets ended higher Friday led by gains in auto, IT and metal stocks amid positive global cues. Today, the start of the crucial F&O series expiry week is likely to be a bit cautious tailing the mixed cues from Asian peers and rising coronavirus cases in the US as well in European countries. Traders will be concerned with the minutes of the monetary policy committee's latest meeting showing that the second wave of COVID-19 remains a threat to the Indian economy, and the central bank believes monetary policy needs to remain accommodative despite inflationary pressures. Though, some support may come later in the day as the Reserve Bank of India (RBI) encourages investment in sovereign bonds as part of liquidity measures. The RBI is making longer-tenor sovereign bonds attractive again.  Traders may take note of report that industry body PHDCCI expects India’s GDP to contract by 7.9 percent in the current financial year and grow by 7.7 percent in 2021-22, assessing that the worst is over and the economy is on the verge of a slow recovery. Besides, there are expectations that in the next stimulus announcement, job creation is likely to be the focus of the government as against the earlier plans to bring in job guarantee in the cities. Meanwhile, the Ministry of Finance has issued operational guidelines for implementation of the interest waiver scheme ahead of the hearing in the matter in the apex court on November 2. There will be some buzz in the coal sector stocks with report that India's coal import rose 11.6 per cent to 19.04 million tonnes in September on account of a recovery in consumption by thermal power plants and other industries as also helped by competitive prices in international markets. Agriculture sector stocks will be focus as Prime Minister Narendra Modi said his government is taking initiatives to strengthen the agriculture sector in the country so that farmers do not have to face any trouble. There will be some reaction in health sector stocks as government think tank Niti Aayog is looking at many reform ideas in the health sector, including aligning traditional and modern approaches for a larger good. There will be some important earnings announcements too to keep the markets buzzing.

The US markets closed mostly in green on Friday after a lackluster session on negotiations between Republicans and Democrats on a stimulus deal. Asian markets are trading mixed on Monday as new coronavirus cases surge in the US as well in countries across Europe.

Back home, in a volatile trade, Indian equity benchmarks traded in green terrain throughout the session and ended with marginal gains on Friday, driven by gains in Auto, Consumer Discretionary, Consumer Durables and Power stocks amid positive cues from global markets. Traders found some solace with NITI Aayog Vice Chairman Rajiv Kumar’s statement that the Indian economy might end up with a lower contraction in the current fiscal than projected by various organisations and also stressed that the next stimulus should focus on short-gestation infrastructure projects. Some optimism also came with Niti Aayog Vice Chairman Rajiv Kumar expressed confidence that money and resources will be in place for a viable and effective vaccination system to fight COVID-19, even as he said it is quite premature to talk about the cost for getting the vaccination. He also expressed hope that the corporate world will also rise up to the occasion and make the vaccination part of their CSR activity. However, gains remain capped as some cautiousness came with a private report stated that with no signs of reprieve from the pandemic in near future and economy yet to show major indications of a revival, India's consumer confidence has declined by 0.3 percentage points in October 2020. Some concern also came as UN expert said that between 150 million and 175 million more people will fall into extreme poverty due to the COVID-19 pandemic. Market participants also took a note of Niti Aayog CEO Amitabh Kant’s statement that if India has to grow, then it will have to look at global markets and become a key exporting nation. He also said no country has become rich without penetrating the US market and India must get into it in a big way. Finally, the BSE Sensex rose 127.01 points or 0.31% to 40,685.50, while the CNX Nifty was up by 33.90 points or 0.28% to 11,930.35.
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