F&O Expiry...This is it

In a world filled with despair, we must still dare to dream. - Michael Jackson

There's not much despair on the street as the bulls managed to eke out slim gains after a fairly insipid session on Wednesday. With the global cues not supportive, it is not really easy to Just Beat It, especially with F&O expiry. While India’s macro fundamentals are sound, the smooth criminal remains the external scenario.



The start will be shaky with no decisive cues coming from Wall Street and European markets finishing in red. As expected, the Fed has kept its key rates steady. The FOMC continues to see a gradual recovery though it remains worried about the housing market and the euro-zone debt crisis.

Manufacturing growth in the debt-strapped euro-zone slowed to a four-month low in June. Exports in Japan rose 32% yoy in May but were below forecast. Markets in Asia are mixed, with the Hang Seng slipping while other benchmarks are holding in green.

A lot of action was seen outside the main indices. That trend may continue but we would like to remind you that dealing in some of these counters remains Dangerous.

June F&O series has been pretty good for the bulls after the mayhem last month. Going ahead, there is a chance of some disappointment after the string of gains in recent sessions. Much will hinge on how the latest quarterly earnings season unfolds.

ABG Shipyard, Core Projects and Orbit Corp. will be added in the NSE F&O segment.

Progress of monsoon in July will be crucial as well. The RBI will take up its quarterly review as well. All indications are that it will jack up rates as inflation continues to stick out like a sour thumb. One will also have to keep a close eye on fund flows.

The FIIs were net buyers of Rs2.65bn in the cash segment on Wednesday (provisionally), according to the NSE web site. Local funds remain cautious and were net sellers of Rs8.66bn. In the F&O segment, they were net buyers at Rs9.56bn. On Tuesday, the FIIs were net buyers of Rs10.37bn in the cash segment. Mutual Funds were net sellers of Rs2.32bn on the same day.

Australian shares advanced today, with resource stocks pacing the rally after Julia Gillard was named prime minister. However, it remains to be seen whether she will change a controversial mining-tax plan.

US stocks ended nearly unchanged on Wednesday as investors struggled for direction after the Federal Reserve left key rates steady but warned of an adverse fallout from the European debt crisis. A weak housing market report, weakness in commodity prices and the stronger euro added to the list of worries.

The Dow Jones Industrial Average, which rose more than to 70 points after the Fed announcement, ended with a slight gain of 4.92 points, or 0.1%, at 10,298.44. The S&P 500 lost 3 points, or 0.3%, to 1,092 and the Nasdaq Composite index dropped 7 points, or 0.3%, to 2,254.

The euro reversed course in the afternoon, sending already weak oil and gold prices and stocks even lower. The Europe's debt dilemma will be in focus ahead of this weekend's G-20 meeting.

The euro rose 0.3% versus the dollar, erasing early losses and remaining well above its four-year low of $1.188 hit last week. The dollar fell 0.7% versus the yen. The direction of the euro and the state of global debt are expected to be the focus of this weekend's G-20 meeting.

The US Dollar Index, which tracks the U.S. currency against a basket of six others, slipped 0.3%.

US light crude oil for August delivery fell $1.79 to settle at $76.35 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery dropped $2.40 to $1,234.80 an ounce after closing at a record $1,258.30 on Friday.

Treasury prices rallied, lowering the yield on the 10-year note to 3.11% from 3.17% late on Tuesday.

The central bank opted to hold the fed funds rate, a key overnight banking rate, steady at historic lows near zero. In its closely-watched statement, the bankers said that the economic recovery is proceeding and the labour market is improving gradually.

But the central bankers also cautioned about the weakness in the housing market and the less supportive financial conditions as a result of the development abroad, meaning the European debt crisis.

The Federal Reserve is likely to keep interest rate policy accommodative until at least the end of the year.

Stocks slipped in the morning after the May new home sales report showed a steep drop in activity to the worst level on record. But stocks managed to cut losses in the hour leading up to the Fed announcement.

New home sales fell 32.7% in May to a seasonally-adjusted annual unit rate of 300,000, the lowest on record, from a revised 446,000 in April. The report from the Census Bureau was expected to show that sales fell to a 430,000 annual unit rate, according to a consensus of economists surveyed by Briefing.com. The May plunge reflected the expiration of the homebuyer tax credit at the end of April, but also the reality of a still-struggling economy.

Adobe Systems (ADBE) tumbled as investors took a "sell the news" approach after it reported higher quarterly sales and earnings late on Tuesday that trounced estimates. The software maker also issued a current-quarter forecast that is higher than analysts' most recent estimates.

European shares ended lower, declining for the second straight day, with financials leading the decline. The Stoxx Europe 600 index lost 0.84% to end at 254.77

The index slipped 0.5% on Tuesday, snapping a nine-session winning streak.

A report showed that the rate of growth in the manufacturing sector in the 16-nation euro zone slowed to a four-month low in June.

The U.K. FTSE 100 index lost 1.3% to 5,178.52, the German DAX index declined 1% to 6204.52 and the French CAC-40 index fell 1.7% to 3,641.79.