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NSE Intra-day chart (01 January 2016)
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Market Commentary 04 January 2016
Markets to make soft start on weak global cues

The domestic benchmark equity indices managed to gather some impetus in final hours of the session to snap the first trading day of 2016 on an optimistic note, with moderate gains.  Earlier, Indian benchmarks started the day on subdued note due to lack of participation coupled with disappointing macro data that prompted some investors to book profits at lower levels. Sentiments remained bearish on the report that India's core sector contracted 1.3% in November after expanding for six consecutive months, dragged down by a sharp decline in steel production due to weak demand and imports. The fall in core sector output may curb industrial growth, which reached a five-year high of 9.8% in October.  Furthermore, India's fiscal deficit at the end of November was 87% of the target for the entire financial year, suggesting some struggle over the next four months but the government is still expected to stay within the budgeted figure without resorting to material spending cuts. The fiscal deficit for 2015-16 is budgeted at Rs 5.5 lakh core, or 3.9% of GDP.  However, bellwether indices pared their losses and entered into positive terrain in late afternoon session on the back of short-coverings and hopes that the Reserve Bank of India (RBI) will reduce key lending rates after Thursday's disappointing macro data points. On the BSE sectoral space, Realty counter remained the top gainer in the space with around two percent gains followed by the high beta-Capital Goods index which ended with gains of over a percent. On the flipside, the IT and Teck sectors languished at the bottom of the table with losses of 0.34% and 0.30% respectively, being the only laggards in the space.  Meanwhile, shares that attracted investors in a quiet market, were from aviation sector, such as Jet Airways, SpiceJet and InterGlobe Aviation after oil marketing companies reduced aviation turbine fuel (ATF) prices by 10%. Good buying was also witnessed in Telecom stocks like Bharti Airtel, RCom and MTNL on the report that Mobile phone user base crossed 1 billion-mark in October this year to reach 1.03 billion connections, a rise of 0.7% from September. On the other hand, metal stocks witnessed some beating as an official survey showed activity in China's manufacturing sector contracted for a fifth straight month in December. Finally, the BSE Sensex gained 43.36 points or 0.17% to 26160.90, while the CNX Nifty ended up by 16.85 points or 0.21% to 7,963.20. 

The US markets closed lower on Thursday, ending the final trading day of 2015 with a whimper rather than a bang, as the S&P 500 Index and the Dow Jones Industrial Average both snapped multiyear winning streaks. The minutes of the December Federal Open Market Committee meeting will be released in coming weeks, possibly giving clues on the timing of the next US interest-rate move. On the economy front, new applications for US unemployment benefits jumped by 20,000 to 287,000 in the seven days ended December 26. This is the largest weekly increase since February. Claims are at their highest level since the week of July 4. The average of new claims over the past month, meanwhile, rose by 4,500 to a seasonally adjusted 277,000. Separately, economic activity in the Midwest contracted at the fastest pace in more than six years in December, according to the Chicago Business Barometer, also known as the Chicago PMI. The index fell to 42.9 from 48.7 in November. The index has spent much of the year below the 50 mark that separates expansion from contraction. The Dow Jones Industrial Average lost 178.84 points or 1.02 percent to 17,425.03, the Nasdaq was down 58.44 points or 1.15 percent to 5,007.41 and the S&P 500 dropped 19.42 points or 0.94 percent to 2,043.94. The US markets remained closed on Friday on account of New Year’s Day holiday. 

Crude oil futures recovering from the last session’s steep fall, inched higher on Thursday, trimming brutal losses that saw prices drop to 6-year lows in December, but were still down for second year after a race to pump by Middle East crude producers and US shale oil drillers created an unprecedented global glut. Oil trimmed gains somewhat after oil-field services firm Baker Hughes said the total number of US oil rigs fell by two this week to 536. Meanwhile, it was reported that Saudi Arabia is planning for lower oil prices next year after delivering a budget plan earlier this week that aims to boost non-oil revenues and cut spending. Benchmark crude oil futures for February delivery ended up by $ 0.44, or 1.2 percent to $37.04, after trading in a range of $36.22 and $37.79 a barrel on the New York Mercantile Exchange. In London, Brent crude for February delivery closed at $36.76, up $0.30 on the ICE. 

Rupee ended flat against dollar on Friday owing to mild dollar demand from banks and importers. Sentiments of the domestic currency were hit by weak trade in local equity market which despite some choppiness managed a positive close, but rupee failed to take the advantage. Dollar's gain overnight against major world currencies also influenced the rupee movement. Investors remained concerned with report that India’s external debt rose 1.7% to $483.2 billion at the end of September from the level in March due to long-term liabilities, especially commercial borrowings and non-resident Indian deposits. On the global front, dollar was higher against a basket of currencies, despite a small decline in December, with portfolio rebalancing from asset managers leading the currency higher in thin trading. Finally, the rupee ended flat at its previous close of 66.14 on Thursday.

The FIIs as per Friday’s data were net buyers in equity and in debt segments both. In the equity segment gross buying was of Rs 4575.36 crore against gross selling of Rs 3470.80 crore, while in the debt segment, the gross purchase was of Rs 1364.78 crore with gross sales of Rs 237.17 crore.        

The US markets remained closed on the first trading day of the year, unable to give any cues to the other global markets. Asian equity indices have also made a sluggish start with all the regional counters were trading in red in early deals. Meanwhile, China’s factory activity fell for a tenth straight month in December, underscoring persistent sluggishness in the world’s second-largest economy. The Caixin/Markit manufacturing purchasing managers, index (PMI) showed a reading of 48.2 in the final month of 2015, down from 48.6 in November. The Indian markets after a choppy trade managed to end slightly in green in last session. Today, the start of the session is likely to be weak and the markets will be extending their decline tailing sluggish global cues. Sentiments will also be dampened on report that Foreign funds stayed away from Indian equities in 2015 and invested just Rs 17,806 crore ($3.2 billion) in stock markets last year as compared to Rs 1 lakh crore invested each into equities in the preceding three years. Traders will also be concerned with Former finance minister P Chidambaram stating the government has not been able to fulfill its promises. He also argued that since the GDP growth for 2015-16 is not likely to be higher than 7% to 7.3%, the economy is stuck in a groove. Shares of the three listed aviation companies will continue to be in action for second straight day after oil marketing companies slashed aviation turbine fuel prices by 10 per cent, the fourth consecutive monthly cut. Cement stocks too will be in action after average cement prices declined sharply by 7.3 per cent in December 2015 compared to the same month in the previous year mainly due to weak demand.


Support and Resistance: CNX Nifty and BSE Sensex


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  • Mahindra & Mahindra has reported its auto sales numbers which stood at 37915 units during December 2015 as against 36328 units during December 2014, registering a growth of 4%.
  • Maruti Suzuki India, country’s largest car maker, has registered a rise of 8.5% in its total car sales for the month of December 2015 at 119,149 units, as against 109,791 units in 2014.
  • GAIL has entered into a binding Gas Sale and Purchase Agreement with Petronet LNG for supply of an additional quantity of 0.30 MMTPA of RLNG with effect from January, 2016.
  • Yes Bank has successfully raised Rs 1,500 crore of Basel III Compliant Tier II bonds.
  • Bharat Petroleum Corporation has entered into a binding Gas Sale and Purchase Agreement with Petronet LNG for supply of an additional quantity of 0.1 MMTPA of RLNG with effect from January, 2016.

News Analysis