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NSE Intra-day chart (31 August 2016)
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Market Commentary 01 September 2016
Markets to start the new month on a soft note reacting to weak data


Indian shares extended their winning streak for third straight session on Wednesday, led by gains in Capital Goods, banks and consumer durables companies, but major benchmarks ended off their day's high as investors booked profits in metal and select information technology (IT) names. Sustained foreign fund inflows and persistent buying by domestic financial institutions as well as retail investors, supported the markets' uptrend. Including Tuesday's inflows, FPIs have pumped in about Rs 40,100 crore in Indian equities so far this year, while DIIs have put in roughly Rs 10,600 crore. Sentiments remained buoyant with a Ficci survey that India's economy is likely to expand 7.8 percent during the current financial year on the back of good monsoon. The estimated median GVA (gross value added) growth for Q1 FY17 has been put at 7.6 percent. Also, raising confidence among investors Niti Aayog Vice-Chairman Arvind Panagariya said India's economy will accelerate to 8 per cent growth in the current financial year thanks to a good monsoon, policy reforms and PM Narendra Modi's focus on implementation at the grassroots level. However, there was some cautiousness due to Credit Suisse's report that India along with Philippines, Indonesia and Malaysia are likely to continue to underperform in an Asia and emerging market context as these four countries are overvalued in terms of price to book vs return on equity valuations.  For India, every time the premium of price to book vs return on equity rises to above 50%, it has tended to underperform and MSCI India has underperformed so far this year by 5.8%. Meanwhile, good buying was observed in select auto stocks as the Minister for Road Transport and Highways Nitin Gadkari said that the draft vehicle scrapping policy would offer a combined benefit of Rs 14,000 crore to the Centre and states and drive the auto industry growth by 22 percent. On the global front, Asian markets ended mixed on Wednesday, while the European counterparts were trading in the positive territory in early deals. Back home, the benchmarks slowly started gaining pace and by afternoon session surged to the high points of the day. Finally, the BSE Sensex surged 109.16 points or 0.39% to 28452.17, while the CNX Nifty gained 41.85 points or 0.48% to 8,786.20.


The US markets closed lower on Wednesday, with the Dow Jones Industrial Average snapping its six-month winning streak as weak energy shares weighed on the broader market. A batch of economic reports that may potentially add more cause for the Federal Reserve to follow through with recent talk of lifting key interest rates also dampened sentiment. On the economy front, private-sector hiring stayed strong in August, as employers added 177,000 jobs, Automatic Data Processing (ADP) reported. ADP also revised July's gain to 194,000 from the original estimate of 179,000. Pending home sales in July reached their second highest reading in a decade, as a solid jobs market and low mortgage rates underpin demand. The National Association of Realtors stated that its pending home sales index rose 1.3% in July, after a downward revision in June to show a 0.8% drop instead of a 0.2% gain. It's 1.4% above year-ago levels and the second-strongest reading since April. However, a measure of business conditions in the Chicago area posted the weakest performance in August in three months. The Dow Jones Industrial Average lost 53.42 points or 0.29 percent to 18,400.88, Nasdaq was down 9.77 points or 0.19 percent to 5,213.22, while S&P 500 dropped 5.17 points or 0.24 percent to 2,170.95. 


Crude oil futures slumped on Wednesday on reports of larger than expected build in stockpiles. However, crude futures posted their best monthly return since April, rising as much 11 percent in August. The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 2.3 million barrels in the week ended August 26. Gasoline stocks fell 691,000 barrels after a rise of 36,000 the previous week. Total U.S. crude oil inventories stood at 525.9 million barrels as of last week, which the EIA considered to be “historically high levels for this time of year”. Benchmark crude oil futures for September delivery dropped $1.65 or 3.60 percent to close at $44.70 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery declined by $1.33 or 2.88 percent to $47.04 a barrel on the ICE.


Indian rupee after making a weak start recouped all its losses and ended strong on Wednesday, on account of splendid gains in local equities amid sustained foreign fund inflows. Local currency got some support with a Ficci survey indicating that India's economy is likely to expand 7.8 percent during the current financial year on the back of good monsoons. However, month-end demand for the American currency from importers and the dollar's strength against some other currencies overseas restricted the rupee's gains. On the global front, dollar edged up against the yen and held steady against the euro on Wednesday, ahead of an update on private-sector hiring before the release of the U.S. government's closely watched labor-market report due later this week. Finally the rupee ended at 66.96, stronger by 7 paise from its previous close of 67.03 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 4138.05 crore against gross selling of Rs 3749.20 crore, while in the debt segment, the gross purchase was of Rs 1279.14 crore with gross sales of Rs 1385.83 crore.


The US markets despite recovering from the lows of the day ended modestly lower in the last session, adding to losses posted in the last session, ahead of the release of the Labor Department's closely watched monthly jobs report on Friday. The Asian markets have made a mixed start, with some of the indices trading in red weighed down by decline in crude oil prices, though the Chinese market was up after data indicated a pickup in Chinese manufacturing, while the Japanese market was up on continued weakness in yen. The Indian markets bucking the global trends, extended the gains in last session with benchmarks surging to fresh 52 weeks high. Today, the start is likely to be a bit cautious and soft amid the mixed global cues and reacting to some weak economic data. India's economic growth rate slipped to 6-quarter low of 7.1 percent in April-June, as compared to 7.9 percent in the previous quarter, mainly due to subdued performance of mining, construction and farm sectors. The economy had expanded at 7.5 percent in the April-June quarter of last financial year, 2015-16. Also, the Core Sector growth slowed to 3.2 percent in July, compared to 5.2 percent recorded in June. However, the cumulative growth of the sector during April-July period of the fiscal was 4.9 percent. Meanwhile, fiscal deficit in the first four months of the current financial year stood at Rs 3.93 lakh crore, or 73.3 percent of the Budget estimates for 2016-17. There will be some buzz in the infra sector, as the government has announced a package of measures to revive the construction sector, putting in place a mechanism to release funds stuck in arbitration awards to revive stalled projects. The PSU oil marketing companies too will be buzzing with the announcement of hike in petrol prices by Rs 3.38 a litre and diesel by Rs 2.67 per litre, the first increase in rates since July.


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  • Bharat Petroleum Corporation has registered 11.01 % jump in its net profit at Rs 2620.5 crore for the quarter as compared to Rs 2360.66 crore for the same quarter in the previous year.
  • ICICI Bank has launched ‘Unified Payments Interface' on two of its customer facing mobile banking applications - 'Pockets' and 'iMobile'.
  • UltraTech Cement has received an approval from the Reserve Bank of India, whereby the apex bank has notified that Foreign Institutional Investors /Registered Foreign Portfolios Investors can now invest up to 30% of the paid up capital of the company under the Portfolio Investment Scheme.
  • NTPC's 800 MW Koldam Hydro Project in Himachal Pradesh on the river Satluj has achieved a Plant Load Factor of 107.27% in July 2016, one of the highest across the country.
  • HDFC is undertaking an issuance of Rupee Denominated Bonds to overseas investors.
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