Upcoming derivatives expiry subdue markets (Third Lead)

The upcoming winter session of parliament, derivatives expiry and possibility of extended US rate hikes subdued Indian equity markets on Tuesday.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally closed the day's trade marginally in the red. It was lower by 51 points or 0.20 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) slipped during the day's trade. It closed lower by 15 points or 0.19 percent to 7,835 points.

The S&P BSE Sensex, which opened at 25,785.61 points, provisionally closed at 25,768.83 points (at 3.30 p.m.) -- down 50.51 points or 0.20 percent from the previous day's close at 25,819.34 points.

The Sensex touched a high of 25,901.56 points and a low of 25,703.86 points during the intra-day trade.

Market observers pointed out that investors were reluctant to take positions ahead of the upcoming winter session of parliament and derivatives expiry scheduled for later this week.

"Lack of fresh triggers, caution over the upcoming winter session of parliament and consistent selling by the foreign investors subdued markets and capped investor participation," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

Furthermore, investors were concerned over government's ability to pass key economic legislations during the winter session that begins on November 26 and will run till December 23.

The central government's position seemed to have weakened especially after the Bihar polls outcome. The government needs to get the Goods and Services Tax (GST) bill passed in the upcoming session to meet the April 1, 2016, roll-out deadline.

"Other than the winter session, there were concerns over an extended rate hikes in the US commencing from December after yesterday's US Federal Reserves unscheduled meet," James said.

The US Fed held an 'unscheduled' meet on Monday. The meet precedes the federal reserve policy meet in December, when a rate hike is expected to be announced.

The US central bank has given signs that it might go in for a series of gradual rate hikes starting from December.

However, in the short term, higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India.

Besides a US rate hike, the derivatives expiry slated for Thursday has caused some nervousness, as Securities and Exchange Board of India (SEBI) has reduced the lot size in futures and options (F&O) segment which has resulted in lower volumes.

This has indirectly rubbed on the trading dynamics of the cash segment.

"We expect markets to continue to remain under pressure led by the F&O expiry and uncertainty of the rate hike," Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.