F&O Expiry To Keep Investors On Toes
Indian Equities remained highly volatile yesterday ahead of many important macro data announcements on global front. While the most important was US Federal Meet announcement about GDP growth and QE taper, even Spain was supposed to announce its GDP Growth figures. Further as F&O expiry happens today, Indian equity market was supposed remain volatile. Rather we had categorically stated that profit booking will continue at in the early hours of trade. As expected the indices opened in red. However towards the fag end of trading sessions indices turned positive mainly guided by positive data from Spain. Spain GDP growth Stood at 0.60% in Q2which was above the street estimates and was also the fastest growth rate since 2007.
As a result the Indian equities bounced back sharply and entered a positive zone. While the Sensex closed above the 26000 mark Nifty also closed near the psychological mark of 7800. Sensex closed at 26048 (Up 96 points) Nifty Closed at 7791 (Up 43 points).
While this was the scenario on the domestic front, US stocks were little changed as data showing better-than-forecast economic growth was offset by weaker earnings and the Federal Reserve’s decision to keep trimming asset purchases. The Standard & Poor’s 500 Index climbed less than 0.1 percent to 1970.07. The Dow Jones Industrial Average slid 31.75 points, or 0.2 percent, to 16880.36.
Yesterday the Commerce Department report showed gross domestic product expanded at a 4 percent annual pace in the second quarter, confirming the US Fed’s view that a first-quarter contraction was transitory. Consumers, whose spending accounts for 70 percent of the economy, have grown more confident as the labor market improves and rising share prices boost wealth.
Apart from that the Policy makers tapered monthly bond buying to USD 25 billion in their sixth consecutive USD 10-billion cut, staying on pace to end the purchase program in October. Fed officials led by Chair Janet Yellen are stepping up a debate over when to raise interest rates for the first time since 2006 as unemployment falls faster than expected and inflation picks up toward their 2 percent goal. We feel the Fed move was on expected line and hence is unlikely to make any great impact on the global equities.
As for the Asian equity markets, while Nikkei is trading in green with gains of 0.40%, Straits Times is also trading in positive zone with gains of 0.50%. However all other indices are trading in red with marginal loss.
SGX Nifty is also showing negative indications as it is down 10 points (0.12%). We are of the opinion that the Indian equity indices are likely to open in negative zone and then remain volatile on account of F&O expiry today. There are quite a few positives like finance minister planning to revisit the GAAR regulations and some better than street estimates quarterly results. Further the revival of monsoon has also added to positivity. However, we expect the indices to open in red and then remain under profit booking pressure on account expiry.