F&O settlement and Budget expectations to drive the markets ..

Bullish signals from global markets , better than expected Q3 figures from blue chips , Fresh cuts in GST rates and news that 100% FDI may be allowed in banking sector pushed the Indian markets to new highs last week . The markets ignored the rise in crude oil prices. The benchmark indices – The Sensex and the Nifty closed 919 and 213 points higher at 35512 and 10895 respectively. What was noticeable was that the small and mid-cap stocks did not show as much enthusiasm as in the many previous weeks and the BSE mid and small cap index closed lower by 2.1% and 2.7% respectively. This along with the news that the US markets are at over bought territory is a cause of worry.

Going ahead, the week is likely to see some actions as the January derivatives expiry is on Thursday. Markets are expected to be volatile ahead of F & O expiry. We may also see some profit booking, as the participants will now turn their focus to the upcoming budget. As long as the Q3 earning seasons spells out more good news, the current trend in the markets may continue ahead of the budget. The other near term factors that might influence the market movement are FII fund flows, Crude oil prices and Global cues. For the week ahead, an trading range of 35000-36000 is expected for the Sensex and 10700-11000 is expected for the nifty with positive bias.

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