Nervousness may grip markets ahead of GST roll out, derivatives expiry

Live mint By Nasrin Sultana Mon, Jun 26 2017. 10 37 AM IST

Auto, auto ancillaries, real estates, cements, financial services and FMCG all are bound to correct in the near term, say experts

Analysts also see the markets to be in corrective phase after the super rally. Photo: Mint

Mumbai: This week, the markets are likely to focus on June series Futures and Options expiry, Prime Minister Narendra Modi’s US visit and the goods and service tax (GST) roll out.

PM Modi is on a three-nation tour to Portugal, the US and the Netherlands which is expected to boost bilateral ties. The highlight of the tour is his high-level meeting with US President Donald Trump for the first time on 26 June in Washington. “My USA visit is aimed at deepening ties between our nations. Strong India-USA ties benefit our nations & the world,” Modi had earlier tweeted.

Analysts expect the Modi-Trump meeting could see discussions on the H1B visa programme which have been hurting Indian technology companies.

Vijay Singhania, founder-director, Trade Smart Online said, “H1B talks could yield a “win-win formula” for both the sides. We could also discussions on government’s decision to cap prices of heart stents and other life-saving drugs to make them more affordable. Global medical device makers have protested the new cap; with some saying it would force them to sell below cost.”

On Sunday, Modi interacted with a group of CEOs of top 20 US firms and said that India has now emerged as a business-friendly destination, more so with the upcoming implementation of landmark goods and services (GST) beginning next month, according to a PTI report.

Meanwhile, the markets are expected to be volatile due to derivative expiry on Thursday and nervousness hitting business sentiment ahead of crucial GST implementation from 1 July.

“We expect the markets may remain volatile as traders roll-over positions in the futures & options (F&O) segment from the near month June 2017 series to July 2017 series. Other factors will continue to play on market sentiments includes progress of monsoon rains, global macroeconomic data, the movement of rupee against the dollar and crude oil price movement,” Singhania added.

Nagaraj Shetti, technical research analyst, HDFC securities said that the Nifty seems to have started inherent weakness which could be considered as a red flag signal for the broader uptrend. “The Nifty holding above the key lower levels support of around 9550-40 could mean chances of minor upside bounce back and a decisive downside breakout of the support could open up the possibility of sharp weakness for near term,” he said.

Analysts also see the markets to be in corrective phase after the super rally. Jimeet Modi, CEO, SAMCO Securities said, “The excess froths that were created in the ongoing bull market from last six months will now begin to correct. Auto, auto ancillaries, real estates, cements, financial services and FMCG all are bound to correct in the near term. The pendulum had swung too far on the optimism side and therefore the same should return back to normal before any meaningful rally restarting.”

In the primary markets, telecom equipment maker Tejas Networks Ltd will be listed on exchanges on 27 June. with a price band of Rs250-257 per share, the issue was open for subscription from 14-17 June. The Bengaluru-based company was eyeing to raise Rs450 crore.

The company’s initial public offering (IPO) was oversubscribed 1.88 times, with the portion for qualified institutional buyers (QIBs) getting oversubscribed 2.16 times, while categories for non-institutional investors and retail investors getting oversubscribed 48 and 3.10 times.

IPO of Jaipur-based AU Small Finance Bank Ltd will be open for subscription from 28-30 June. With a price band of Rs355-358 per share, the company which serves low and middle-income individuals and businesses is aiming to raise Rs1,900 crore through the issue.

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