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NSE Intra-day chart (02 March 2016)
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Market Commentary 03 March 2016
Another jubilant start on cards amid positive global cues

Wednesday's session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges, extending their previous session's jubilation, garnered gains of around another two percent. Sentiments got a boost with Finance Minister Arun Jaitley's statement that India stands out as a haven of stability amid a weak economic environment globally and promised steps to sustain growth. He also said the country's macroeconomics factors are stable and the government is committed to fiscal consolidation as well as low inflation. Investors also drew some comfort from a rally in Asian shares, which touched two-month highs on Wednesday as overnight gains in oil prices and a batch of positive economic data from Australia to the United States calmed fears of a global economic slowdown. Some support also came with the report that India's GDP growth is likely to pick up to 7.8% in fiscal 2016-17 from 7.6% this year, largely driven by higher discretionary demand. Meanwhile, banking shares mainly public sector undertakings (PSUs) rallied after the Reserve Bank of India (RBI) allowed banks to beef up their capital adequacy by including certain items such as property value, foreign exchange for calculation of Tier-I capital. Shares of Real estate companies surged for the second straight trading sessions after the Union Budget presented by Finance Minister Arun Jaitley on Monday assigned special thrust to rural India, infrastructure, real estate and the housing sector. On the global front, Asian markets hit a two-month high, while European markets were up for the fifth day in a row. Back home, the benchmark got off to a positive start in the morning trade as investor's sentiment remained buoyant tracking a firm trend in the rest of Asia, following the overnight rally in the US on improved economic data. Some support also came with the Agriculture minister Radha Mohan Singh's statement that he expects the country to achieve 4% growth in the farm sector next fiscal year, helped by the Budget boost and on early predictions of a favourable monsoon. Finally, the BSE Sensex surged by 463.63 points or 1.95% to 24242.98, while the CNX Nifty rose 146.55 points or 2.03% to 7,368.85.


The US markets closed higher on Wednesday, building on the previous session's advance, thanks to a jump in the energy sector following sharp gains in crude. Meanwhile, a key report about the US economy released offered a relatively somber take on the US economy, bolstering the view of many that the Federal Reserve will be slow to raise interest rates further this year. None of the 12 districts in the Federal Reserve's Beige Book reported any dramatic improvement in conditions in the January-through-late-February reporting period. Growth was described as remaining modest or moderate in half of the districts. On the economy front, the private sector added 214,000 jobs in February, ADP reported, more than had expected and an acceleration from January's revised gain of 193,000. According to ADP, small private-sector businesses added 76,000 jobs in February, medium-size businesses added 62,000 jobs and large businesses added 76,000. The Dow Jones Industrial Average added 34.24 points or 0.20 percent to 16,899.32, the Nasdaq was up 13.82 points or 0.29 percent to 4,703.42 while, the S&P 500 gained 8.10 points or 0.41 percent to 1,986.45.   


Crude oil futures extended their gains albeit modestly on Wednesday, remaining near one-month highs. Traders mostly ignored report of massive build in US crude oil inventories by the U.S. Energy Information Administration (EIA), which exacerbated concerns that top storage facilities nationwide could reach full storage capacity in the near-term future. Meanwhile, EIA in its Weekly Petroleum Status Report said that US commercial crude inventories for the week ending on February 26 increased by 10.4 million barrels from the previous week. Benchmark crude oil futures for April delivery ended up by $0.19 or 0.55 percent to $34.59 a barrel after trading in a range of $34.47 and $35.14 a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery closed at $36.90, up $0.09 or 0.24 percent on the ICE.


Indian rupee extended its gains for four consecutive sessions against dollar on Wednesday, on sustained bouts of dollar selling from banks and exporters. The domestic currency was looking strong from the very beginning and was also supported by the smart rally in the equity markets on speculation the government's pledge to narrow the fiscal deficit will pave the way for interest-rate cuts. Sentiments got further boosted after Finance Minister Arun Jaitley's statement that the India stands out as a haven of stability amid a weak economic environment globally and promised steps to sustain growth. On the global front, dollar traded at around a one-month high against a basket of major currencies on Wednesday, as investors got solace with the encouraging US economic data which bet that the Federal Reserve may hike interest rates this year.  Finally, the rupee ended at 67.54, 33 paise stronger from its previous close of 67.87 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity and in debt segments both. In equity segment, the gross buying was of Rs 7482.11 crore against gross selling of Rs 4464.86 crore, while in the debt segment, the gross purchase was of Rs 945.80 crore with gross sales of Rs 925.71 crore.        


The US markets despite a choppy trade managed to end the session on a modestly positive note, partly due to an increase by the price of crude oil and an upbeat private sector employment data from payroll processor ADP. The Asian markets have made mostly a positive start, extending their rally, buoyed by improving US economic data and prospects for further stimulus in China. The Indian markets extended their post budget jubilation with a second consecutive day of rally in last session. Today, the start is likely to be extension of the euphoric mood and the Nifty is likely to reclaim 7400 level in the very opening trade amid supportive global cues. Markets will be getting encouragement with the International Monetary Fund (IMF) projecting a robust growth rate of 7.3 percent for the country this fiscal, picking up to 7.5 percent next year. IMF has welcomed recent measures proposed in budget, aimed at increasing public infrastructure spending, rationalising subsidies, creating more flexible labour and product markets as well as enhancing financial inclusion. There will be some buzz in power stocks too after a report compiled by WEF ranked India at the 90th place in a list of 126 countries, on the basis of their ability to deliver secure, affordable and sustainable energy. The railways stocks will continue buzzing after the Cabinet approved a cooperation pact between railways and Japan. The aviation stocks too will remain in action, as the civil aviation ministry expects to implement the aviation policy by the beginning of the next fiscal year, after the cabinet approves it at the end of the month.


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