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NSE Intra-day chart (28 February 2018)
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Market Commentary 01 March 2018
Markets likely to make cautious start on weak global cues


Extending their previous session's downfall, Indian equity benchmarks ended the Wednesday's trade in red terrain, with frontline gauges ending with a cut of around half a percent, declining below their crucial 10,500 (Nifty) and 34,200 (Sensex) levels. Markets made pessimistic start and traded in red terrain throughout the session, as traders remained on sidelines ahead of December quarter GDP data to be announced later in the day. Sentiments also remained downbeat with report that the collection of Goods and Services Tax (GST) slipped marginally to Rs 86,318 crore in January 2018 (received in January/February up to February 25, 2018), from Rs 86,703 crore in December 2017. Markets extended losses, as growth in India's factory activity slowed to a four-month low in February as new orders eased and weighed on output after manufacturers raised prices at the fastest pace in a year. The Nikkei Manufacturing Purchasing Managers' Index (PMI) fell to 52.1 in February from January's 52.4. Markets made an attempt to pare losses and recovery was seen in second half of the session, but it proved short-lived and selling in dying hour of trade dragged markets lower. Sentiments remained dampened on report that the fiscal deficit for the April-January period stood at Rs 6.77 lakh crore. That is 113.7% of FY18 target, which means Modi government may not do any extra spending in the remaining two months of the year. The government outlined a fiscal deficit target of 3.3 per cent of GDP in 2018-19 as against a revised estimate of 3.5 per cent in 2017-18, indicating some fiscal consolidation, albeit at a slower pace than that recommended under the Fiscal Responsibility and Budget Management (FRBM) framework. Investors shrugged off Finance Minister Arun Jaitley's statement that India's economy has the potential to achieve a growth rate of more than 7-8 per cent in view of policy changes accompanied by a supportive global environment. He also said India will continue to remain one of the fastest growing economies in the world. Finally, the BSE Sensex shed 162.35 points or 0.47% to 34,184.04, while the CNX Nifty was down by 61.45 points or 0.58% to 10,492.85.


The US markets closed lower on Wednesday, to finish the month with losses. Major indexes finished out February on pessimistic note, with the S&P 500 and the Dow logging their worst monthly performance since January 2016 and the Nasdaq posting its weakest month since October 2016. On the economy front, the annual pace of growth in the US was trimmed to 2.5% from 2.6% in the fourth quarter, leaving a picture of a steadily growing economy intact. A slower inventory build accounted for the downward revision. Every other key figure in the latest update to gross domestic product was virtually unchanged. The increase in consumer spending, for example, was left at 3.8%. For the full year, the US expanded 2.3% vs. a 1.6% increase in 2016. Meanwhile, Chicago PMI slipped in February to a reading of 61.9, a six-month low, from 65.7 in January.  Any reading over 50 indicates improving conditions, so despite the decline, the data indicates a strong level of activity. Firms did report a slower pace of incoming orders and output. US manufacturing has been improving of late, and the Chicago region is particularly exposed to automakers whose fortunes have been helped by the need for replacements after the hurricanes. The Dow Jones Industrial Average lost 380.83 points or 1.50 percent to 25,029.20, Nasdaq was down by 57.345 points or 0.78 percent to 7,273.01 and S&P 500 dropped 30.45 points or 1.11 percent to 2,713.83.


Crude oil prices futures edged lower on Wednesday as data revealed a weekly climb in U.S. crude stockpiles that was larger than expected. Total domestic crude production also edged higher after a modest decline in the previous week. The U.S. Energy Information Administration (EIA) reported that domestic crude supplies rose by 3 million barrels for the week ended February 23. Analysts had expected the EIA to report a 1.2-million-barrel build in crude oil inventories. Gasoline stockpiles were also up by 2.5 million barrels. That compares with a 300,000-barrel build in the previous week. Production averaged 9.4 million bpd in the week to February 23, down from 10.1 million bpd a week earlier. Refineries operated at 87.8 percent of capacity, processing 15.9 million bpd of crude. Benchmark crude oil futures for April delivery surged $1.37 or 2.2 percent at $61.64 a barrel on the New York Mercantile Exchange. April Brent crude gained 85 cents or 1.3 percent to settle at $65.78 a barrel on London's Intercontinental Exchange.


Piling on yesterday's loss, Indian rupee weakened further against the American currency on Wednesday, following bouts of month-end dollar demand from banks and importers amid continued capital outflows. Cautiousness remained in the markets with report that growth in India's factory activity slowed to a four-month low in February as new orders eased and weighed on output after manufacturers raised prices at the fastest pace in a year. The Nikkei Manufacturing Purchasing Managers' Index (PMI) fell to 52.1 in February from January's 52.4. Traders also maintained cautious approach ahead of domestic economic data including December quarter gross domestic product (GDP) to be released later in the day. On the global front, dollar hit a three-week high on Wednesday, after an upbeat assessment of the US economy by Federal Reserve Chairman Jerome Powell's boosted bets on more interest rate hikes, while the euro edged lower before inflation data. Finally, the rupee ended at 65.17, 28 paise weaker from its previous close of 64.89 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both, in equity segment, the gross buying was of Rs 4407.31 crore against gross sell of Rs 5282.16 crore, while in the debt segment, the gross purchase was of Rs 1727.66 crore with gross sales of Rs 2324.91 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.14 crore against no selling.


The US markets closed sharply lower on Wednesday, as traders expressed uncertainty about the outlook for interest rates after new Federal Reserve Chairman Jerome Powell seemed to suggest that the Fed may raise rates more than the three times currently anticipated. Asian markets were trading mostly in red in early deals on Thursday following the weak lead overnight from Wall Street amid worries about interest rates. Indian markets edged lower on Wednesday, with weak cues from global markets as well as disappointing manufacturing and fiscal deficit numbers weighed on markets. Today, the start of the session is likely to be on negative side on weak global cues. Traders will also remain cautious with former RBI governor D Subbarao's statement where he cautioned against India's deficit challenge and said the country is no longer the sweet spot due to rising oil prices. Some anxiety will also persist during the trade after India reported a fiscal deficit of Rs 6.77 trillion ($103.72 billion) for April-January or 113.7 per cent of the target originally set for the fiscal year that ends in March. However, traders may get some support with  report that the Indian economy grew at five-quarter high of 7.2% in the October-December period reflecting overall recovery due to good show by agriculture, manufacturing, construction and certain services. The economy is expected to grow at 6.6% in the current fiscal ending March 31, as per the second advanced estimates of the Central Statistics Office (CSO), compared to 7.1% in 2016-17. The earlier estimate was 6.5%. The growth for the second quarter (July-September) has been revised upwards to 6.5%, from 6.3% estimated earlier by the CSO. Meanwhile, India's core sectors grew at a faster clip in January from a year ago than in the previous month, with an uptick in cement, electricity, coal, refinery products and steel industries, indicating a strong start to the last quarter of 2017-18. The combined index of the eight core industries rose 6.7% in January compared to 4.2% in December 2017. Some support may also come with Prime Minister's Economic Advisory Council Chairman Bibek Debroy's statement that the economy is on the right track and the current expansion in the growth rate suggests that the reforms initiated by the government have started showing results.


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



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  • Infosys' wholly owned subsidiary - Infosys Finacle has entered into partnership with Moneythor. 
  • SBI has revised retail and bulk deposits rates by up to 0.75% for various maturities, with effect from February 28, 2018.
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