Cautious start likely to December F&O series

Analysts expect volatility to remain high in December, with the Nifty 50 facing resistance around 8,000 levels

Markets are likely to start the December F&O series on a cautious note, as they eye the outcome of the US Federal Reserve’s policy meeting on December 15 – 16 for a possible rate hike in nearly a decade.  The Reserve Bank of India (RBI) is also scheduled to meet on December 01 to review its monetary policy stance.

At 7am Indian Standard Time (IST), the SGX Nifty was trading at 7,945, up 0.14% or 12 points.

On Thursday, the markets scaled higher on the last day of November derivatives series due to strength in energy and metal shares. The Sensex closed 183 points higher at 25,959 and the Nifty gained 52 points to end at 7,884.

“Nifty started the November series around 8,100 levels. It witnessed selling pressure for most of the series as it tested 7,750 on the downside. Last week of the series witnessed consolidation in the range of 7,750 - 7,900 as the PCROI also fell below 0.80. Stock specific action was seen throughout the month," said Sahaj Agrawal, Associate Vice President- Derivatives, Kotak Securities in a note.

"We expect volatility to remain high in the month of December with resistance seen around 8000. Overall trend remains negative as we expect selling pressure at higher levels of the index. On the downside support is seen at 7750 and 7550.  One can look at initiating a 7900 straddle for the Dec series,” he adds.

GLOBAL MARKETS

Asian shares held firm and US stock futures edged higher in early trade on Friday as expectations of additional stimulus from the European Central Bank (ECB) underpinned appetite for riskier assets, while the euro hovered near seven-month lows.

Benchmark share indexes in Japan, South Korea and Australia rose around 0.2%, though the broadest index of Asia-Pacific shares outside of Japan was almost flat due to the dollar's strength.

US stock futures rose 0.4% to their highest level since November 9 after a market holiday on Thursday for Thanksgiving Day.

The European Central Bank meets next Thursday and most in the market expect it to expand its asset purchase programme and lower its deposit rate, the rate at which banks park excess funds with it. Traders are now speculating that the ECB could cut rates more than the previous market consensus of a 0.10 percentage point cut.

OIL PRICES

Oil prices edged lower, with US stockpile data published on Wednesday doing little to ease concerns about a supply glut. US crude futures fell 1.1% to $42.57 a barrel as traders also unwound some of buying they had made after Turkey had shot down a Russian warplane earlier this week.


with Reuters inputs