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NSE Intra-day chart (28 February 2019)
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Market Commentary 01 March 2019
Markets to get a pessimistic start after weak GDP data


Benchmark indices ended lower on the F&O Expiry day, with Sensex and Nifty slipping below their crucial psychological levels of 35,900 and 10,800, respectively. The markets made a firm start of the day, amid a private report indicating that private equity (PE) investments in India witnessed a 36 per cent growth to $1,325 million despite fall in volume on account of increased follow-on investments last month as compared to a year ago. Trade remained positive for most part of the session, aided by a report that the Ministry of Micro, Small and Medium Enterprises is organizing a programme on Technology Support and Outreach (TECH-SOP) in New Delhi. The objective of the programme is to educate MSMEs and enhance their awareness about latest technological innovation available and sensitize them on the role of technology in creating competitiveness and opportunities. Investors took a note of the commerce ministry's statement that India and countries of the Latin American and Caribbean region have huge potential to boost economic ties in areas like agriculture, health, energy and information technology. But, volatility which came during noon deals pushed the markets lower to settle in red, on the account of weak cues from global markets. Traders got cautious with Fitch Ratings' statement that government's $7 billion (around Rs 48,000 crore) fund infusion into public sector banks (PSBs) would not be sufficient to support significantly stronger lending growth. Fitch estimated that banks would need an additional $23 billion (around Rs 1.6 trillion) in 2019, after these latest injections, to sufficiently meet minimum capital standards. Adding more anxiety among market participants, credit rating agency, India Ratings said that the Government has depended on the National Small Savings Fund (NSSF) in FY19, but such borrowing runs the risk of understating the fiscal deficit number. It further noted that the Government has borrowed an additional Rs 500 billion from the NSSF to take its total dependence on this route to Rs 1,420 billion or 22.4 percent of the budgeted fiscal deficit in FY19. Finally, the BSE Sensex lost 37.99 points or 0.11% to 35,867.44, while the CNX Nifty was down by 14.15 points or 0.13% to 10,792.50.


The US markets ended lower on Thursday after the summit between President Donald Trump and North Korean leader Kim Jong Un ended abruptly without an agreement on the denuclearization of the Korean peninsula. Trump said the North Korean dictator wanted the US to lift all sanctions without having to give up all of his weapons of mass destruction. The president noted that the two sides will continue to work toward an agreement, although the lack of a deal at the summit added to recent uncertainty on Markets. However, indexes posted strong gains in February. Better-than-expected fourth-quarter (Q4) gross domestic product (GDP) data helped to offset some of the selling pressure during the session. The Commerce Department said real GDP climbed by 2.6% in the Q4 compared to the 3.4% jump in the Q3. Street had expected GDP to increase by 2.3%. The bigger than expected increase in GDP came as consumer spending growth slowed but continued to make a strong contribution to the economy. Consumer spending jumped 2.8% in the fourth quarter after surging up by 3.5% in the third quarter. The report also showed positive contributions from non-residential fixed investment, exports, private inventory investment, and federal government spending. Meanwhile, a report released by the Labor Department showed first-time claims for US unemployment benefits rose by more than expected in the week ended February 23. The report said initial jobless claims climbed to 225,000, an increase of 8,000 from the previous week's revised level of 217,000. The Labor Department said the less volatile four-week moving average fell to 229,000, a decrease of 7,000 from the previous week's revised average of 236,000. Dow Jones Industrial Average declined 69.16 points or 0.27 percent to 25916.00, S&P 500 lost 7.89 points or 0.28 percent to 2784.49 and Nasdaq was down by 21.98 points or 0.29 percent to 7532.53.


Crude oil futures ended higher on Thursday, while Brent crude prices finished lower on weaker Chinese economic data, which fed concerns over a demand slowdown. Gauge of China's factory activity fell to the lowest level in three years, as production contracted likely due to the Lunar New Year holiday, while external demand weakened further. Though, both benchmarks finished the month higher, up a second consecutive month. Based on the front-month contracts, benchmark crude oil futures climbed 6.4% for the month of February and Brent crude rose 6.7% for the month. Benchmark crude oil futures for April gained 28 cents or 0.5 percent to settle at $57.22 a barrel on the New York Mercantile Exchange. However, April Brent crude declined 36 cents or 0.5 percent to settle at $66.03 a barrel on London's Intercontinental Exchange.


Breaking two-day downtrend, Indian rupee ended significantly higher against dollar on Thursday, on persistent selling of the American currency by exporters. Trades took encouragement with private report indicating that private equity (PE) investments in India witnessed a 36% growth to $1,325 million despite fall in volume on account of increased follow-on investments last month as compared to a year ago. Some optimism also spread among the investors with a report that with inflation likely to remain under 4% till October, the Reserve Bank may cut rates to the tune of 75-100 basis points in the next financial year. The report also includes the 25 basis points reduction in the February policy. Headline CPI inflation is likely to remain below 4% until October and averages at 3.8% in FY20. On the global front, dollar ended lower against its rivals on Thursday, as the closely followed US-North Korea summit in Hanoi ended without an agreement. Finally, the rupee ended at 70.72, 52 paise stronger from its previous close of 71.24 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 5118.21 crore against gross selling of Rs 5533.96 crore, while in the debt segment, the gross purchase was of Rs 922.51 crore with gross sales of Rs 2187.71 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.68 crore against gross selling of Rs 2.28 crore.


The US markets ended lower on Thursday following data that showed US economic growth slowed in the fourth quarter even as it topped expectations. Asian markets are trading mostly in red on Friday as investors remained concerned about China's economy and global trade. Indian markets extended their southward journey for third straight session and ended marginally lower on Thursday after investors squared-off positions as February derivative contracts expired amid concerns over tension between India and Pakistan. Today, the markets are likely to make a negative start of the new month amid weak global cues on growth concerns. Investors will be eyeing manufacturing PMI data to be out later in the day. There will be cautiousness with the Central Statistics Office's (CSO) data stating that India's economic growth slowed to a 5-quarter low of 6.6% in October-December period of this fiscal on the back of lower farm and manufacturing growth and weaker consumer demand. The Gross Domestic Product (GDP) at constant prices (2011-12) had grown at 7 per cent in October-December quarter of the previous financial year. Traders will also be concerned about the government's data showing that eight core industries grew at the slowest pace in 19 months in January as the production of crude oil, refinery products and electricity contracted. Also, there will be negative reaction on CARE Ratings' report that FDI equity inflows fell for the first time in the past 5 years of Modi rule during the first 9 months of FY19 in terms of annual growth rate. During April-December period of the fiscal, the FDI equity inflows aggregated to $33,492 million, nearly 7% lower than the inflows worth $35,914 million during the corresponding period of FY18. Meanwhile, the Cabinet approved National Mineral Policy 2019 which will lead to sustainable mining sector development in future, while addressing the issues of project affected persons, especially those residing in tribal areas. There will be some buzz in the banking stocks as Finance Minister Arun Jaitley assured government funding support to public sector banks and hoped that the 6 lenders which remain under the RBI's prompt corrective action framework will soon come out of it. There may be some reaction in auto stocks with Finance Minister Arun Jaitley's statement that the Union Cabinet has cleared Rs 10,000-crore programme under the FAME-II scheme, with an eye on promoting electric and hybrid vehicles. Meanwhile, auto companies to announce their monthly sales numbers today.


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