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NSE Intra-day chart (27 December 2017)
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Market Commentary 28 December 2017
Markets likely to get a cautious but positive start

Indian equity benchmarks ended the lackluster day of trade in red terrain on Wednesday with frontline gauges ending below their crucial 34,000 (Sensex) and 10,500 (Nifty) levels. Selling which emerged in last leg of trade mainly played spoil sport for the markets and dragged the markets lower. Markets after a cautious start gained traction and traded in green terrain for most part of the day's trade, as sentiments remained up-beat on report that the Securities and Exchange Board of India (SEBI) board will consider proposals to ease compliance norms for insolvent firms - especially with regard to trading, listing and de-listing, and declaring results-at its meeting on Thursday. Traders also took some encouragement with rating agency ICRA's expectations that gross value added (GVA) growth to rise by 50 basis points in 2018-19 to 7 per cent, on the back of normal monsoon, a commitment towards fiscal consolidation at the Central and State level, and the commencement of broader efficiency gains related to Goods and Services Tax (GST). Some support also came from report that the State Bank of India's Composite Index, an indicator of manufacturing activity that helps estimate periods of contraction and expansion, has showed that Indian manufacturing activity in December improved marginally over the previous month taken over a yearly period, while the index fell more sharply on a month-wise comparison, amid the worries of GST rollout weighing down the manufacturing sector. However, sharp sell-off in dying hour of trade dragged key gauges lower, as traders opted to book profit with markets trading at all time high levels. Traders also remained concerned with GST collections slipping to their lowest in November as rates were cut on dozens of goods to make the new national sales tax regime more acceptable. Total collections under the GST in November slipped for the second straight month to Rs 80,808 crore, down from over Rs 83,000 crore in the previous month. Investors took note that Grant Thornton in its latest International Business Report (IBR) has said that business leaders in India remained largely positive, but their level of optimism has dropped to its lowest level in four years. Finally, the BSE Sensex declined 98.80 points or 0.29% to 33,911.81, while the CNX Nifty was down by 40.75 points or 0.39% to 10,490.75.


The US markets closed slightly higher on Wednesday, with major indexes halting a two-day skid, although trading activity was subdued as investors found few fresh catalysts in what is typically one of the lowest-volume weeks of the year. On the economy front, pending-home sales ticked up 0.2% in November. The National Association of Realtors (NAR) said that its index of pending home sales tracks real-estate transactions in which a contract has been signed, but the deal hasn't closed. The index reading was 109.5, where 100 is equal to the average level of contract activity during 2001. That is 0.8% higher than a year ago.  The housing market's biggest headwind remains extremely lean levels of inventory available for sale. In November, NAR said there were 3.4 months' worth of homes for sale, the lowest on record back to 1999. However, consumer confidence fell in December, a month after hitting a 17-year high, but the level of optimism among Americans this year was the highest since 2000. The index slipped to 122.1 this month from a revised 128.6 in November. The Dow Jones Industrial Average added 28.09 points or 0.11 percent to 24,774.30 and the Nasdaq gained 3.087 points or 0.04 percent to 6,939.34, and the S&P 500 edged higher by 2.12 points or 0.08 percent to 2,682.62.


Crude oil futures turned lower on Wednesday on some profit taking and as the prospect of prolonged supply disruptions in Libya eased following an update from Libyan state oil firm NOC. A day before, prices were lifted by supply interruptions in the North Sea and Libya, where a bomb went off on a major pipeline. Benchmark crude oil futures for January delivery ended lower by $0.33 at $59.64 a barrel on the New York Mercantile Exchange. Brent crude for February delivery was down by 0.54 percent to $65.90 a barrel on the ICE.


Continuing its downward slide for the second day in a row, Indian rupee ended marginally weaker against dollar on Wednesday, on the back of sustained month-end demand for the US currency from importers and banks. Sentiments remained dampened with Grant Thornton's latest International Business Report (IBR) stating that though business leaders in India remained largely positive, their level of optimism has dropped to its lowest level in four years. The rupee's losses were also caused by late hour sell-off in domestic equity markets. However, losses were limited with rating agency ICRA's expectations that gross value added (GVA) growth to rise by 50 basis points in 2018-19 to 7%, on the back of normal monsoon, a commitment towards fiscal consolidation at the Central and State level, and the commencement of broader efficiency gains related to Goods and Services Tax. On the global front, dollar eased against a basket of currencies and fell against the euro on Wednesday in thin holiday trading, while a rally in commodity prices helped push the Canadian and Australian dollars to their highest levels in two months. Finally, the rupee ended at 64.15, 7 paise weaker from its previous close of 64.08 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 3605.63 crore against gross selling of Rs 2351.22 crore, while in the debt segment, the gross purchase was of Rs 1680.77 crore with gross sales of Rs 1655.82 crore. Besides, in the hybrid segment, there was no buying against gross selling of Rs 1.63 crore.


The US markets managed a modestly positive close in the last session, though the trade remained lackluster, as overall activity was light once again, as many traders remained away from their desks following Christmas and ahead of the holiday on New Year's Day. The Asian markets have made a green start and some of the indices were near the record high. Japanese market too was in green as the Industrial production in the country rose in November, fueled by strong growth in exports, Retail sales too rebounded to top expectations. The Indian markets witnessed some late hour selling that dragged the benchmarks lower in the last session. Today, the start of the F&O series expiry session is likely to be cautious and lots of volatility can be seen with the progress of the trade and as the traders balance their positions to the new series. There will be some cautiousness in the markets with the government decision to make additional borrowing of Rs 50,000 crore this fiscal through dated securities, a move that may put burden on the fiscal deficit target of 3.2 percent of GDP. There will be buzz in the banking sector, as the global rating agency Standard & Poor's (S&P) on the basis of the economy and industry risk criteria has classified the Indian banking sector under 'Group 5' along with countries such as Italy, Spain, Ireland, the UAE and South Africa and has said that Banks' asset quality is weak and has been deteriorating in the past four years, accentuated by historically weak foreclosure laws. There will be some buzz in the insurance sector stocks, as the Insurance Regulatory Development Authority of India (IRDAI) issuing enabling regulations for undertaking offshore insurance business from the only operational International Financial Services Centre (IFSC), at Gujarat International Finance Tec City (GIFT). The auto stocks too will be in focus, as the Lok Sabha has approved a bill to hike cess on luxury vehicles from 15 to 25 per cent with a view to enhance funds to compensate states for revenue loss following the rollout of GST.


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