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NSE Intra-day chart (03 May 2018)
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Market Commentary 04 May 2018
Markets likely to make pessimistic start on feeble global cues


Indian equity benchmarks ended the volatile day of trade with marginal losses, mirroring weak cues from global markets after the U.S. Federal Reserve sprang no surprises with its latest policy statement. Markets made pessimistic start as sentiments remained dampened on report that India has slipped by three spots to eleventh position in the FDI Confidence Index 2018 released by American global management consulting firm AT Kearney. India falls by three spots, reversing its two-year streak of rising in the rankings. The report also said that India fell out of the top 10 for the first time since 2015. Investors remained cautious with RBI's research paper highlighting that bad loans have impaired monetary policy transmission in India as banks were unable to increase their lending rates and protect net interest margins (NIMs) amid a broad deterioration in asset quality between 2013 and 2017. The report showed that NIMs of public sector banks, which had large NPA/stressed assets, were negatively impacted, while NIMs of private sector and foreign banks were not. Markets pared almost all of their early losses in second half of the session as traders took some encouragement with report stating that Economic growth in India is expected to strengthen to 7.3 percent in financial year 2018-19 on the back of robust activity from construction, manufacturing, and services sectors. But, recovery proved short-lived and markets once again lost momentum and settled marginally in red. Sentiments turned pessimistic with a private report highlighting that tax authorities have asked many companies to reverse claims of input credit made on investments in mutual funds and other securities, in a move that could increase the tax burden on corporate India. The report added that notices were recently issued to companies such as Mahindra & Mahindra, Japanese automobile giant Honda, South Korean major Hyundai and pharma company Cipla, informing them that their claims of input tax credit on non-core services would not be allowed. Finally, the BSE Sensex declined 73.28 points or 0.21% to 35,103.14, while the CNX Nifty was down by 38.40 points or 0.36% to 10,679.65.


The US markets closed mostly lower on Thursday, while the Dow erased a triple-digit intraday drop to end higher, in choppy action as investors awaited a key reading of monthly employment on Friday. Unsteady trade was underpinned by quarterly results that failed to impress the street, uncertainty over the Federal Reserve's policy plan - despite its Wednesday update - and worries over a full-blown US-China trade war. The Atlanta Federal Reserve's GDPNow forecast model showed that the US economy is expanding at a 4.0 percent annualized rate in the second quarter in the wake of the latest data on domestic vehicle sales, trade balance and factory orders. The latest estimate on gross domestic product growth was a tad lower than the 4.0 percent pace calculated on Tuesday. On the economy front, the trade deficit sank 15% in March to the lowest level in six months, but the decline is likely just temporary. The US is on track to run another large trade gap in 2018 that exceeds the deficit in the prior year. The deficit slid to $49 billion in March from $57.7 billion in February. Exports advanced 2% to $208.5 billion and set a new record. The Nasdaq dropped 12.746 points or 0.18 percent to 7,088.15, the S&P 500 was down by 5.94 points or 0.23 percent to 2,629.73, while the Dow Jones Industrial Average added 5.17 points or 0.02 percent to 23,930.15. 


Crude oil futures edged higher on Thursday amid concerns over a potential withdrawal of the U.S. from Iran's nuclear deal. With sanctions looming, Iran is pumping oil at a breakneck pace. Still, total supplies from Organization of the Petroleum Exporting Countries (OPEC) have dwindled due to problems in Venezuela and a supply quota deal with Russia. OPEC produced 31.93 million barrels of oil a day in April, down from a revised 31.97 million in March. Prices shook off earlier weakness that was driven by recent data showing a hefty climb in weekly crude supplies and record U.S. production. Benchmark crude oil futures for June delivery jumped by 50 cents or 0.70 percent to settle at $68.43 a barrel on the New York Mercantile Exchange. July Brent crude gained 26 cents or 0.40 percent to settle at $73.62 a barrel on London's Intercontinental Exchange.


Indian rupee pared most of its early gains and ended almost flat against dollar on Thursday, due to selling of the US currency by exporters and banks. Traders took some support with the BMI Research's latest report predicting that the Indian economy is likely to grow at 7.3% in the current financial year (FY19) from 6.6% rate reported in the previous year (FY18) on account of robust activity from the construction, manufacturing, and services sectors. Besides, dollar losing sheen against some other currencies overseas also supported the local unit. However, the rupee pared most of the gains in final hours as some concerns remained among the investors with report stating that India has slipped by three spots to eleventh position in the FDI Confidence Index 2018 released by American global management consulting firm AT Kearney. India falls by three spots, reversing its two-year streak of rising in the rankings. On the global front, dollar pulled back from four-month highs against a currency basket on Thursday, as investors took profits following its recent run higher after the Federal Reserve did little to alter market expectations for further interest rate rises this year. Finally, the rupee ended at 66.64, 1 paise stronger from its previous close of 66.65 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 6939.21 crore against gross selling of Rs 7285.66 crore, while in the debt segment, the gross purchase was of Rs 412.05 crore with gross sales of Rs 1704.91 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.59 crore against gross selling of Rs 9.60 crore.


The US markets ended mostly lower on Thursday as investors fretted about the outcome of Sino-U.S. trade talks and a report on service sector activity disappointed. All the Asian markets are trading in red in early deals on Friday, with Japanese markets closed for a public holiday, as investors awaited the April jobs report out of the U.S. Indian markets ended marginally in red on Thursday tracking weak global markets as the U.S. Federal Reserve signaled further gradual increases in the federal funds. Today, the markets are likely to make negative start amid weak global cues as investors await the U.S. jobs report due later in the day for directional cues. However, traders will get some support later in the day with report that private equity and venture capital investments in India reached $7.9 billion across 180 deals in January-March this year, the best first quarter since 2008, mainly driven by large transactions. Traders will also get some solace with report that India wants the Asian Development Bank (ADB) to increase lending to the world's fastest growing economy to help bridge funding requirement for infrastructure development. Market participants will also get some encouragement with report that China has removed import duties on as many as 28 medicines, including all cancer drugs, from May 1, a move which would help India to export these pharmaceuticals to the neighbouring country. Meanwhile, ratings agency Icra said that the high quantum of impaired assets will restrict the credit growth for fiscal 2018-19 to 8 percent, and India Inc will borrow more from cheaper sources abroad. External commercial borrowings (ECBs) will go up to USD 27-32 billions on the back of relaxed norms announced by the RBI and the high rate of borrowing domestically. There will be some important earnings announcements too, to keep the markets buzzing.


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  • ONGC has drilled 503 wells in 2017-18, which is the highest number of wells drilled in last 27 years. 
  • Tata Motors has launched its latest and the most awaited product - Tata NEXON HyprDrive Self - Shift Gears. 
  • M&M's arm - SsangYong Motor Company has sold a total of 10,930 units in April 2018; comprising of 8,124 units in domestic sales and 2,806 in exports. 
  • Power Grid Corporation of India has received investment approvals worth Rs 461.63 crore.
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