The last day of December series futures and options contract expiry turned out to be a good session for the Indian equity indices as they managed to settle with gains of over half a percent. Sentiments got some support with the report that the Reserve Bank of India (RBI) further extended the grace period for banks, non-banking finance companies and microfinance companies to classify bad loans by 30 days in the case of agriculture and term loans of up to Rs 1 crore.  Short-covering on the back of F&O expiry and the appreciation in Indian rupee value against the dollar added to the optimistic sentiments. The rupee appreciated by 16 paise to 68.09 against the US dollar at the time of equity markets closing at the Interbank Foreign Exchange. Investors got some comfort with minister of State for Finance Arjun Ram Meghwal saying that once the entire process of cash ban is completed, consumption and investments will pick-up rapidly. According to him, the move will increase the tax base and improve gross domestic product (GDP) by 2 percent. However, worries about capital outflows from emerging markets to the United States have hit sentiment since November. Foreign investors offloaded net $100.58 million of shares on December 27, having sold $975.80 million worth of local shares this month. On the global front, Asian equity markets ended mixed on Thursday, while European shares opened slightly lower with all sectors in negative territory in early deals as banking shares and miners fell.  Back home, finally, the BSE Sensex gained 155.47 points or 0.59% to 26366.15, while the CNX Nifty rose 68.75 points or 0.86% to 8,103.60. 

The US markets closed lower on Thursday, as investors remained reluctant to make big bets in a thinly-traded session ahead of long holiday weekend. Thursday's moves follow the biggest one-day percentage drop for the S&P 500 since October 11. All three main indexes are on track to post solid monthly gains and double-digit annual returns with one trading session to go in 2016. On the economy front, the trade deficit increased 5.5% in November to a seasonally adjusted annual $65.3 billion. That was larger than the $62.5 billion gap forecast and the fourth-highest reading since 2008. Exports rose 1.0% to $121.7 billion, while imports totaled $187.0 billion, up 1.2% from October. The fresh trade data suggests real exports will likely be down 4.6% during the third quarter, and imports to have surged 6.8%, more than double an initial estimate of 3%. On the other hand, the number of Americans who applied for unemployment benefits for week running from December 18 to December 24 before Christmas fell by 10,000 to 265,000, returning initial claims to the extremely low levels that have been the norm since last summer. The Dow Jones Industrial Average dropped 111.36 points or 0.56 percent to 19,833.68, Nasdaq slipped 48.88 points or 0.89 percent to 5,438.56 and S&P 500 was down by 18.96 points or 0.84 percent to 2,249.92.

Crude oil futures ended lower on Thursday on getting surprise reports of higher-than-expected inventories. The Energy Information Administration (EIA), reported that oil inventories increased for the week ending December 16. EIA reported that crude oil inventories rose by 0.614 million barrels in the week ended December 23. Gasoline inventories decreased by 1.593 million barrels, while distillate stockpiles fell by 1.811 million barrels in the week. Benchmark crude oil futures for February delivery declined by $0.25 or 0.46 percent to $53.74 on the New York Mercantile Exchange. In London, Brent crude for January delivery ended lower by $0.08 or 0.14 percent at $56.14 on the ICE.

Indian rupee ended substantially stronger against dollar on Thursday, mainly on account of weakness of dollar index against the basket of other major currencies. The sentiments remained on upbeat note with Minister of State for Finance Arjun Ram Meghwal's statement that once the entire process of cash ban is completed, consumption and investments will pick-up rapidly. According to him, the move will increase the tax base and improve gross domestic product (GDP) by 2 percent. Besides, a better trend in the domestic equity market also supported the local currency. On the global front, dollar slipped to a two-week low against the yen on Thursday, mirroring a fall in U.S. bond yields as weaker-than-expected economic data weighed on the greenback and waning risk appetite boosted Japan's safe-haven currency. Finally, the rupee ended at 68.10, 15 paise stronger from its previous close of 68.25 on Wednesday.

The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 2302.10 crore against gross selling of Rs 2828.48 crore, while in the debt segment, the gross purchase was of Rs 1301.32 crore with gross sales of Rs 199.57 crore.

The US markets coming off the early highs ended modestly lower in the last session, though selling pressure remained subdued, limiting the downside for the major averages. The Asian markets have made a mixed start with Japanese market trading lower heading toward its first annual loss since 2011, while Chinese shares advanced on the final day of trading. The Indian markets moved higher in the last session supported by short covering at the end of the December F&O series expiry. Today the start of the new series and the final trading session of the calendar year is likely to be in green. Traders will be eyeing some big-ticket measures to boost the Indian economy by Prime Minister Narendra Modi, in his year-end address to the nation on December 31, after the deadline to deposit the old Rs. 500 and Rs. 1,000 notes in banks will end today. Meanwhile, Finance Minister Arun Jaitley has said that the impact of demonetisation is clearly visible with tax collection figures seeing double-digit growth. He had said that there has been a 26.2 per cent increase in central indirect tax collection till November 30, while till December 19, direct tax collection increase has been to the extent of 14.4 per cent against a growth rate of only 8.3 per cent previous year. RBI Governor Urjit Patel too has said that the demonetisation exercise will have 'far reaching changes' towards a transformative effect on the economy going forward, despite some short-term disruptions and 'public hardship'. There will be some encouragement to the traders with the Reserve Bank of India (RBI) easing norms for working capital lending to micro and small enterprises (MSEs) on difficulties faced by them, as a result of the sudden withdrawal of legal tender status of high-value currency notes. There will be some buzz in the sugar stocks on report that the Central government doesn't have immediate plans to lower import duties on sugar as it did with wheat.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

  Nifty Top volumes

• Tata Steel is in discussion with foreign companies for investments in heavy industries over the next five years at the Special Economic Zone project at Gopalpur in Odisha.
• HDFC's 100% subsidiary - HDFC Realty, has launched a mobile application ‘PropPartner' exclusively for brokers.
• Bharti Airtel has unveiled 'V-Fiber' in Pune, Maharashtra to provide superfast broadband to its customers.
• Lupin has received tentative approval for its Balasalazide Disodium Tablets, 1.1 gm from the United States Food and Drug Administration.
• Bharat Heavy Electricals has successfully commissioned another 600 MW coal-based thermal power plant in the state of Telangana.