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Market Commentary 01 June 2017
Markets to get a muted start on disappointing GDP data

It turned out to be a lackadaisical performance from Indian benchmark indices on Wednesday, as they failed to snap the session in the green territory and settled marginally below the neutral lines. The frontline gauges took a breather, after closing at record highs for the previous sessions, as investors waited for gross domestic product (GDP) data due later in the day and searched for fresh corporate triggers with the results season coming to an end. According to India's former chief statistician Pronab Sen, the country's GDP for 2016-17 will get 50 basis points (bps) push to 7.6 percent from the government's estimate of 7.1 percent, due to the recent revision of the base year of the Wholesale Price Index (WPI) and the Index of Industrial Production (IIP). Further, investors around the world also turned cautious after a powerful bomb exploded in the morning rush hour in the centre of Kabul on Wednesday, killing at least 80 people, wounding hundreds and sending clouds of black smoke into the sky above the presidential palace and foreign embassies. However, losses remained capped with the Moody's Investors Service's report stating that Indian economy will grow by 7.5 per cent in the current fiscal year, 7.7 per cent in 2018-19 and will reach to around 8 per cent in 3-4 years on the back of government's various reforms. Some support also came with report that Southwest monsoon arriving in Kerala on the expected date this year and also advancing into some parts of the Northeast India. Also, Prime Minister Narendra Modi while speaking at the Indo-German Business Summit in Berlin said that India has one of the most liberal FDI policy regimes in the world and more than 90 percent of foreign investment flows are under automatic route. Meanwhile, Aviation stocks gained traction on expectations that a slide in oil prices would reduce carriers' fuel cost, which typically constitute about 50% of airlines' operating costs. Finally, the BSE Sensex lost 13.60 points or 0.04% to 31145.80, while the CNX Nifty was down by 3.30 points or 0.03% to 9,621.25. 


The US markets closed lower on Wednesday, but off their worst levels of the session, notching gains for the month as a slump in bank shares and a mixed reading of economic reports weighed on investor sentiment. Coupled with the drop in oil prices and reports that former FBI Director James Comey will publicly testify that President Donald Trump pushed him to end the probe into former national-security adviser Michael Flynn also weighed on the sentiments. On the economy front, a reading for pending-home sales came in below expectations. Pending-home sales from the National Association of Realtors fell 1.3% to a level of 109.8 from a reduction in the March reading, whereas a gauge of economic health, the Chicago business barometer, or Chicago PMI, rose to 59.4 in May, its highest level in two and half years. Earlier, reporting agency MNI Indicators had mistakenly said the gauge fell to 55.2. The Fed's survey of the economy, known informally as the Beige Book, painted a generally upbeat view of growth in the US in the period from early April through late May. The report appears to strengthen the case the Fed will raise a key short-term interest rate again at its next big meeting in two weeks. The Dow Jones Industrial Average lost 20.82 points or 0.10 percent to 21,008.65, Nasdaq was down 4.67 points or 0.08 percent to 6,198.52, while S&P 500 edged lower by 1.11 points or 0.05 percent to 2,411.80.


Crude oil futures extended their decline on Wednesday, amid renewed doubts over OPEC's supply quota plan. The global supply glut is expected to linger due to robust U.S. production and as certain outliers like Libya and Nigeria ramp up following recent interruptions. Libya's National Oil Corporation had said on Monday that oil production is expected to rise to 800,000 barrels per day (bpd) this week. Iran is also allowed to retain the right to increase production to the same reference level, around 3.797 million barrels a day, agreed in November last year. Benchmark crude oil futures for July delivery declined by $1.34 or 2.7 percent to $48.32 on the New York Mercantile Exchange. In London, Brent crude for July delivery ended lower by 2.03 percent to $51.16 on the ICE.


Indian rupee strengthened against US dollar on Wednesday, due to sustained selling of the US currency by exporters. Sentiments got boost with the Moody's Investors Service's report stating that Indian economy will grow by 7.5 per cent in the current fiscal year, 7.7 per cent in 2018-19 and will reach to around 8 per cent in 3-4 years on the back of government's various reforms.  Some support also came with report that Southwest monsoon arrived in Kerala on the expected date this year and also advancing into some parts of the Northeast India. On the global front, Sterling dropped against dollar, after a projection by polling company YouGov showed Britain's ruling Conservative party falling short of an overall majority in the June 8 national election. Finally, the rupee ended at 64.51, 15 paise stronger from its previous close of 64.66 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3421.99 crore against gross selling of Rs 3593.76 crore, while in the debt segment, the gross purchase was of Rs 1857.26 crore with gross sales of Rs 691.66 crore.


The US markets ended weak once again in last session, on reports that President Donald Trump has decided to withdraw from the Paris climate accord. Traders also remained unsure about the outlook for interest rates. The Asian markets have made a mixed start, as investors weighed economic data. The Japanese market was though surging close to a percent as the country's capital spending topped estimates. The Indian markets after a volatile day of trade ended marginally in red in the last session with traders turning cautious ahead of the GDP data. Today, the start is likely to be somber and traders will be reacting negatively to some weak economic data. India lost the tag of the world's fastest growing major economy to China with a gross domestic product growth of 6.1 per cent in the three months through March from a year earlier, also slowing from a provisional 7 percent in the previous quarter. Growth for the year ending in March came in at 7.1 percent, in line with the official estimate. Meanwhile, India Inc. has said that the government's note ban move clearly had a debilitating impact on India's economy. Also, the growth of eight core sectors declined to 2.5 per cent in April, dragged down by lower coal, crude oil and cement production. Core sector growth was 8.7 per cent in April last year. However, there will be some solace with the government achieving the fiscal deficit target of 3.5 percent of GDP in 2016-17. As per Controller General of Accounts (CGA) data fiscal deficit was 3.51 percent of GDP or Rs 5.35 lakh crore in 2016-17. The CGA further said that revenue deficit during the last fiscal was 2.02 percent of GDP. There will be some buzz in the PSU oil marketing companies, as petrol and diesel prices were hiked on Wednesday, while Petrol price was increased by Rs. 1.23 the diesel price was hiked by Rs. 0.89. The auto companies will be in focus as they will start announcing their monthly sales numbers.


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Bharti Airtel





  • Airtel Digital TV, the DTH arm of Bharti Airtel, has entered into partnership with Dominiche to launch a subscription-based video on demand astrology channel Astrovaani.
  • Tata Motors' subsidiary -- Jaguar Land Rover has trimmed prices of select models by up to Rs 10.9 lakh from immediate effect to pass on benefits of new tax rates under GST expected to be rolled out in July.
  • Mahindra & Mahindra will invest an average of Rs 4,000 crore every year for the next three years towards capital expenditure and investments. 
  • Sun Pharmaceutical Industries is recalling over 13,200 bottles of antihistamine, Children's Cetirizine Hydrochloride chewable tablets from the US market for failed specifications.
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