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NSE Intra-day chart (31 March 2016)
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Market Commentary 01 April 2016
Markets to make a soft start of the new series


Indian equity benchmarks ended the last day of the financial year on a cautious note, after a volatile session due to the expiry of monthly derivative contracts on Thursday, but indexes still posted their best monthly gain in more than four years boosted by big overseas inflows. According to data from National Securities Depository and Securities and Exchange Board of India, FIIs have put in Rs 21,327 crore ($3.18 billion) so far in the Indian market during the current month (till March 29). Rate sensitive sectors - banks, auto and realty - were among the top gainers in March that rallied a hope that the RBI might cut key rates in the next Monetary Policy review on April 5.  Sentiments got some support with the Finance Minister Arun Jaitley's statement that the country's GDP growth rate of 7.6% for the fiscal 2015-16, is ‘much less' than its potential and expressed hope for better numbers next year. Jaitley also said that India earlier had a bad reputation of not being the best place to do business, but the governments at the Centre and states have made considerable headway in reforming the system. Appreciation in the rupee against the dollar too aided sentiments. On the global front, Asia markets ended mixed on Thursday, while European stocks declined in early trade. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, a session after the awe-inspiring close to two percent rally. But the frontline indices slowly but steadily started gathering steam and surged by around half a percent by late morning trades. Finally, the BSE Sensex gained 3.28 points or 0.01% to 25341.86, while the CNX Nifty rallied 3.20 points or 0.04% to 7,738.40.


The US market finished one of their best-performing months since last October, despite the main benchmarks closing mostly lower on Thursday. Market reaction to a pair of mixed economic reports was muted as investors were cautious on the last day of the quarter and waited for key labor market data due Friday. On the economy front, the number of Americans who applied for unemployment benefits in late March rose by 11,000 to 276,000 and hit the highest level in two months, but the pace of layoffs in the US remains exceedingly low as companies steadily add new jobs. Initial claims have been below the 300,000 threshold for 56 weeks, a feat last accomplished in 1973 when the size of the labor force was much smaller. The low level of claims reflects an upsurge in hiring over the past several years. On the other hand, a measure of Chicago-area economic activity rebounded in March, in yet another sign that the manufacturing sector is starting to recover from difficulties that have plagued it, including a strong dollar and weak oil prices. The Chicago business barometer, or Chicago PMI, rose 6 points to 53.6 in March. The Dow Jones Industrial Average lost 31.57 points or 0.18 percent to 17,685.09, S&P 500 was down 4.21 points or 0.20 percent to 2,059.74 while, Nasdaq gained 0.56 points or 0.01 percent to 4,869.85.


Crude oil futures extended their decline on Thursday and capping strongest monthly rally in nearly a year. However March ended with their strongest monthly gains in nearly a year. Investors continued to digest a report of lower than expected build in US crude stockpiles last week by US Energy Information Administration. There was pressure also due to a report that OPEC output in March increased by 100,000 bpd to 32.47 million bpd, led by considerable gains in Iran and Iraq. Benchmark crude oil futures for May delivery declined by $0.05 or 0.13 percent to $38.27 a barrel after trading in a range of $37.59 and $39.03 a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery closed at $40.27, down $0.22 or 0.55 percent on the ICE.


Rising for fifth consecutive session, Indian rupee ended stronger against dollar on Thursday on continued selling of the American currency by banks and exporters amid increased foreign fund inflows. The domestic currency was strong from the start and was also supported by the gains in local equity market. Besides, gains in Asian currencies markets after Fed Chair Janet Yellen's dovish comments on the US interest rate trajectory also supported the domestic currency. On the global front, yen continued to build upon gains established on Thursday after Japan's PM Abe failed to mention any extra stimulus measures for the upcoming fiscal year this week. Finally, the rupee ended at 66.25, 13 paise stronger from its previous close of 66.38 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity and in debt segments both. In equity segment, the gross buying was of Rs 5927.44 crore against gross selling of Rs 4405.78 crore, while in the debt segment, the gross purchase was of Rs 2764.83 crore with gross sales of Rs 951.09 crore.         


The US markets made a mixed closing in last session, as traders seemed reluctant to make significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday. The Asian markets have made a weak start led by the Japanese market which is down by over two percent as the yen resumed gain and the Japanese ‘tankan' manufacturing confidence index came in worse than expected. However, there were some gains in metals after a gauge of Chinese manufacturing expanded for the first time since July. The Indian markets trading choppy ended flat in last session, with the March series expiring with over 10 percent gains. Rollovers to the April series were strong compared with that in last month. Today, the start of the new series and fiscal is likely to be in red, tailing the weakness in the other global markets.  However, there will be some support with reverse of a three-month decline in industrial production, eight core sector industries surged to a 15-month high of 5.7 per cent in February, almost double the 2.9 per cent of January. Traders will also be getting some comfort with Finance Minister Arun Jaitley pegging India's GDP growth rate at 7.6 percent for the fiscal 2015-16 and expressing hope for better numbers next year. There will be some buzz in the oil & gas sector, as the government has announced a ceiling price of $6.61/mBtu on gross calorific value basis for domestic natural gas produced from difficult areas for six months starting April 1. ONGC and Reliance Industries have discoveries in such areas and hence, stand to benefit from the new policy, though it may not come immediately. The auto sector too will be in action with announcement of their monthly sales numbers.


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