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Markets likely to remain volatile

Analysts see volatility ahead of the expiry of December derivatives contracts; rebound in global commodities to boost markets

Tulemino Antao  |  Mumbai 

Rebound in global commodities boost markets; Dec F&O expiry eyed

Benchmark share indices ended over one per cent higher in the truncated week helped by a rebound in global commodities, while renewed buying interest by foreign funds also improved sentiment.

In the week to December 24, the S&P BSE Sensex ended up 1.3 per cent at 25,839 and the Nifty50 ended up 1.3 per cent at 7,861. In the broader market, the BSE Midcap index ended up 0.9 per cent while the Smallcap index ended up 1.7 per cent.

“The short-term pressures are now shifted to the Budget with the winter session of Parliament ending this week. Meanwhile, markets are likely to remain range-bound with some volatility seen mostly in large-caps ahead of the December F&O expiry, while FII interest in mid-caps are likely to keep stock prices in check,” says Kunj Bansal, ED and CIO, Centrum Wealth Management.

During the week, the government introduced the Insolvency and Bankruptcy Code 2015, or the bankruptcy Bill, in the Lok Sabha on Monday. The Bill has been introduced as a money Bill, which means it will not have to be passed in the Rajya Sabha, where the government has struggled to get legislative work done. Meanwhile, the winter session of Parliament ended on Wednesday.

India’s current account deficit (CAD) narrowed to $8.2 billion (1.6 per cent of gross domestic product) in the September 2015 quarter from $10.9 billion (2.2 per cent of GDP) in the year-ago quarter.

Markets likely to remain volatile
Two new stocks — Adani Ports and Special Economic Zone (APSEZ) and Asian Paints — were included in the S&P BSE Sensex, replacing Vedanta and Hindalco Industries. However, Vedanta surged nearly nine per cent, while Hindalco jumped 6.5 per cent tracking a rebound in global commodities.

Oil explorers flared up after global crude oil prices staged a recovery after hitting 11-year lows. ONGC gained nearly five per cent after the Cabinet Committee on Economic Affairs (CCEA) gave its approval for investment of Rs 5,000 crore by ONGC into the equity share capital of ONGC Videsh (OVL) by conversion of existing loan of equivalent amount into equity. Cairn ended nearly six per cent higher.

GAIL was the top Sensex gainer up 6.5 per cent. GAIL India has extended last date of bidding for its $7 billion tender for hiring nine newly built ships for ferrying LNG from the US by over two months to allow Indian shipyards to tie up technology for building the specialised vessels.

Steel stocks strengthened after the government decided to slate a minimum import price (MIP) for steel in order to prevent cheap imported steel from flooding the market. JSW Steel, Jindal Steel, Tata Steel and SAIL gained between 1.3 per cent and three per cent each.

Telecom stocks perked up after the government decided not to take any coercive action against telecom service providers for call drops till January 6. Bharti Airtel surged six per cent. Idea Cellular ended up nearly five per cent after it announced the launch of fourth generation (4G) services in all four telecom service areas of South India on Wednesday ahead of the launch of Reliance Jio.

Select state-owned banks eased after the Reserve Bank of India (RBI) criticised the dividend distribution policy of PSU banks in its latest Financial Stability Report (FSR) report. PNB, Bank of Baroda, Canara Bank, Dena Bank, Indian Overseas Bank ended lower Investors in two primary market issues were laughing all the way to the bank with staggering returns in just two trading sessions. Dr Lal PathLabs ended at 894, 62 per cent gain compared to its issue price of Rs 550 per share. Alkem Laboratories ended at Rs 1,522, 45 per cent gains compared to its issue price of Rs 1,050 per share.

Markets are likely to remain volatile ahead of the expiry of December derivatives contracts, as traders roll-over positions to the January 2016 series. Meanwhile, oil explorers and select metal shares may extend gains tracking global crude and metal prices. Auto shares will be in focus ahead of their December sales figures that would be announced later during the week. On the global front, data on China's manufacturing PMI is scheduled for release on Thursday, December 31.

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First Published: Sat, December 26 2015. 22:50 IST