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NSE Intra-day chart (01 January 2018)
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Market Commentary 02 January 2018
Markets to remain in somber mood with a soft start

First day of 2018 turned out to be a dismal day of trade for Indian equity benchmarks with frontline gauges settling with a cut of around a percent, breaching their crucial 10,450 (Nifty) and 33,900 (Sensex) levels. Key bourses made cautious start and traded lacklustre throughout the session, as traders remained concerned with fiscal deficit at the end of November breaching the target and touching 112 percent of the budget estimate for 2017-18, mainly due to lower GST collections and higher expenditure. Fiscal deficit was Rs 6.12 lakh crore during April-November 2017-18. Traders also remained concerned with government's statement that Indian economy slowed down in 2016-17, with the gross domestic product declining drastically from 8 percent in 2015-16 to 7.1 percent the next year. Sentiments also remained dampened with Finance Minister Arun Jaitley's statement that the slower economic growth reflected lower growth in the industry and the services sectors, due to a number of factors including structural, external, fiscal and monetary factors. But selling in last leg of trade mainly played spoil sports for domestic bourses and dragged them to their intraday lows in dying hour of trade with traders turning pessimistic on report that overseas investors pulled out close to Rs 5,900 crore from domestic equities in Decemebr, with widening fiscal deficit and higher crude prices making market participants cautious on macro-economic front. In spite of December performance, foreign portfolio investors (FPIs) ended the year with a net inflow of over Rs 51,000 crore. Sentiments also weighed down on report that India's external debt position surged by around 2.1 percent to $495.7 billion during July-September quarter (Q2 FY18), as compared to $485.8 billion reported for the end-June period. Traders shrugged off report that the government has extended by 10 days the last date for filing of final sales return GSTR-1 till January 10 under the Goods and Services Tax. Businesses with turnover of up to Rs 1.5 crore will have to file GSTR-1 for July-September by January 10, 2018, as against December 31, 2017 earlier.  Finally, the BSE Sensex declined 244.08 points or 0.72% to 33,812.75, while the CNX Nifty was down by 95.15 points or 0.90% to 10,435.55.


The US markets remained closed on Monday on account of 'New Year's Day' holiday.


International commodity market remained closed on New Year's Day.


Indian rupee continued its upward march for the third straight session on Monday, on persistent selling of the American currency by exporters. Investors even overlooked report that India's fiscal deficit breached FY18 target at Nov-end by standing at 112% of Budget Estimates. The country's fiscal deficit, the difference between government expenditure and revenue, stood at Rs 6.12 lakh crore for the period April-November 2017-18. Though, heavy selling in last hour of trade in the domestic equity markets limited further appreciation of Indian currency. Meanwhile, investors awaiting December Manufacturing PMI data which is scheduled to be release on January 02, 2018. Finally, the rupee ended at 63.67, 20 paise stronger from its previous close of 63.87 on Friday.


The FIIs as per Monday'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 3672.35 crore against gross selling of Rs 3139.49 crore, while in the debt segment, the gross purchase was of Rs 784.95 crore with gross sales of Rs 845.26 crore. Besides, in the hybrid segment, there was no buying against gross selling of Rs 2.13 crore.


The US markets along with other global markets remained closed in last session, unable to give any cues. The Asian markets after a long weekend have made mostly a positive start led by the Chinese markets, as manufacturing PMI for December beating the expectation came in at 50.7 up from 50.8 in the previous month.  The Indian markets made a disappointing start of the New Year and in a last hour sell-off ended with over half a percent loss. Today, the start is likely to be a bit somber and the markets may consolidate after previous day's big losses. However, there will be some support with the eight core industries growing by 6.8 per cent in November 2017, compared to the production during November 2016. The growth in November was driven by a 16.6 per cent increase in steel production over November 2016. Cement production too increased by 17.3 per cent in November 2017 over same month in 2016. Markets will also be getting some support with government's decision to ease norms for rectification of GST returns. The Finance Ministry has permitted businesses to rectify mistakes in their monthly returns - GSTR-3B - and adjust tax liability, a move that will help them file correct returns without fear of penalty. Meanwhile, there will be buzz in the markets with the Union Law Ministry turning down the proposal of Securities and Exchange Board of India (Sebi), who has sought additional powers for itself to impose fines besides issuing suspension and termination orders to stock brokers as well as annulling the central government's power to frame rules on holding inquiries and imposing penalties against bourse violators. There will be buzz in the banking sector stocks, as the country's largest PSU bank SBI has lowered the base rate by 30 basis points to 8.65 per cent, setting trend for other banks to follow. It is also set to initiate insolvency proceedings against at least a dozen defaulting companies.


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  • IndusInd Bank has concluded a $500 million Syndicated Term Loan Facility from a group of overseas lenders.
  • Maruti Suzuki India has reported 10.3% rise in its sales to 1,30,066 units in December 2017, as compared to 1,17,908 units in December 2016.
  • Mahindra & Mahindra's Auto Sector has sold 39,200 vehicles in December 2017, as against 36,464 vehicles during December 2016, to register a growth of around 8%.
  • L&T's wholly-owned subsidiary - LTHE has secured a major EPC contract for CDU & VDU from HPCL and an extension to an ongoing contract for Reliance Industries Jamnagar, both adding to approximately Rs 2,100 crore.
News Analysis