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NSE Intra-day chart (02 March 2017)
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Market Commentary 03 March 2017
Markets to continue the weak trend on feeble global cues


Indian equity benchmarks showed a volte-face on Thursday as what started on a promising note ended as a dismal show. Investors squared off position in the dying hours of trade as sentiments turned pessimistic on the report that GST Council has proposed to raise the peak tax rate to 20%, from the current 14%, in the model goods and services tax Bill to preclude the requirement of approaching Parliament for any change in rates in future. The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon last year, but is only a provision being built into the model law to take care of contingencies in future. Furthermore, traders remained cautious as Non-food credit, comprising loans given by banks to agriculture and allied activities, industry, services and personal segments, grew at a slower clip of 3.5% year-on-year in January 2017 as against 9.8% in the year-ago period. The slow growth in non-food credit shows that demand in the economy has not recovered after taking a beating during the 50-day demonetisation period between November 9 and December 30, 2016. Moreover, credit to agriculture and allied activities increased at a slower pace of 8.1% in January 2017, compared with a robust increase of 13.4% in January 2016. Adding anxiety among market participants, Moody's kept India's gross domestic product (GDP) forecast for FY17 at 6.9% and expects the full impact of demonetisation to reflect in the fourth quarter numbers. The ratings agency expects Q4 GDP to moderate to 6.4%. However, losses remained capped with the report that the government is expected to soon announce relaxations in the foreign direct investment (FDI) policy in certain sectors, including single brand retail. The further liberalisation in the FDI policy is aimed at providing better business environment by removing impediments. The government last year relaxed FDI norms in over a dozen sectors, including defence, civil aviation, construction and development, private security agencies, real estate and news broadcasting. Finally, the BSE Sensex declined 144.70 points or 0.50% to 28839.79, while the CNX Nifty was down by 46.05 points or 0.51% to 8,899.75. 


The US markets closed lower on Thursday, as weak financial shares dragged on the market and on some profit taking. Major indexes had posted their biggest gains in months on Wednesday, with both the S&P 500 and the Nasdaq posting largest one-day rally since November 7, while the Dow posted its best advance since December. Investors will be looking for more hints on the Fed's plans for interest rates from the central bank's chairwoman, Janet Yellen, who will deliver a speech on Friday. On the economy front, the number of Americans who applied for unemployment benefits near the end of February fell by 19,000 to 223,000, setting a fresh post-recession low and illustrating the strength of the US labor market. New claims, a measure of layoffs, have now been below the key 300,000 threshold for 104 straight weeks. The less volatile four-week average of initial claims dropped by 6,250 and stood at 234,250. That's the lowest level since April 1973. Continuing jobless claims, meanwhile, rose by 3,000 to 2.07 million in the week ended February 18. The Dow Jones Industrial Average lost 112.58 points or 0.53 percent to 21,002.97, Nasdaq was down 42.81 points or 0.73 percent to 5,861.22, while S&P 500 dropped 14.04 points or 0.59 percent to 2,381.92.


Crude oil futures slumped on Thursday with stronger dollar and surging U.S. inventories. The Energy Information Administration (EIA) reported that US crude oil inventories rose by 600,000 barrels to a record 518.7 MMbbls. Also, data from the EIA showed that domestic supplies of natural gas rose by 7 billion cubic feet for the week ended Feb. 24. Rising US crude stockpiles added to oversupply concerns while Russia failed to initiate further production cuts in January. Benchmark crude oil futures for April delivery declined by $1.22 or 2.3 percent to $52.61 on the New York Mercantile Exchange. In London, Brent crude for May delivery ended lower by $1.21 at $55.15 on the ICE.


Indian rupee ended stronger against dollar on Thursday, due to selling of greenback by banks and exporters. Sentiments got a boost with Finance Minister Arun Jaitley's statement that the Q3 GDP data was substantially impacted by demonetization, adding that Indian economic growth is likely to pick up further in coming quarters and that GDP number belies exaggerated claim by many that rural sector was in distress. Some optimism also came with Moody's Investors Service's report that demonetisation will be credit positive for India as it is likely to reduce tax avoidance and corruption. Besides, some positive gains in the domestic equity market and robust GDP numbers for the December quarter also lifted the rupee sentiments. On the global front, dollar gained against yen and euro, after the latest hawkish remarks from a Federal Reserve official further fueled expectation that the next U.S. rate increase will come at the Fed's March policy meeting. Finally, the rupee ended at 66.71, 11 paise stronger from its previous close of 66.82 on Wednesday.


The FIIs as per Thursday'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 5236.96 crore against gross selling of Rs 5334.17 crore, while in the debt segment, the gross purchase was of Rs 513.72 crore with gross sales of Rs 303.57 crore.


The US markets retreated in last session after moving sharply higher over the course of the previous session. Profit taking contributed to the pullback by stocks, while there were indications of a continued increase in the chance that the Federal Reserve will raise interest rates at its next monetary policy meeting later this month. The Asian markets have made an all red start following weakness in Wall Street. The Japanese market too declined despite report of a gauge of consumer prices rising for the first time since December 2015. The Indian markets suffered sharp setback in last session as the major benchmarks after a strong start lost ground in the final hours to end with cut of around half a percent. Today, the start is likely to be somber on weak global cues. Traders will be a bit concerned with the government deciding to peg the peak goods and services tax (GST) rate at 40 per cent in the legislation instead of 28 per cent, giving it the flexibility to raise rates without having to reach out to Parliament. Though, the change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon last year for the moment. Meanwhile, Chief Economic Advisor Arvind Subramanian has said that Economic and political systems in India have "not developed maturity" for nuanced interventions and tend to take recourse to bans and restrictions. There will be some buzz in the defence and telecom stocks on report that the government is set to make further changes in its overseas investment regime, scrapping the need for approvals in sectors where licences are also required, such as defence, telecom and broadcasting, eliminating one layer completely from the process.


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Tata Motors





  • Tata Motors passenger and commercial vehicle total sales (including exports) in February 2017 stood at 47,573 vehicles, higher by 2% over 46,674 vehicles sold in February 2016.
  • Maruti Suzuki's top-selling urban compact SUV Vitara Brezza has crossed 1 lakh cumulative sales milestone in the domestic market.
  • Hero MotoCorp has reported sales of 524,766 units of two-wheelers in the month of February.
  • Coal India has reported provisional production of 54.30 million tones in February 2017, as against a target of 56.81 MT.
News Analysis