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NSE Intra-day chart (03 October 2017)
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Market Commentary 04 October 2017
Markets to make a green start eyeing RBI's policy decision

Tuesday turned out to be a fabulous day of trade for Indian equity benchmarks, with frontline gauges garnering gains of around three fourth of a percent ahead of RBI monetary policy review begins today and the decision is due tomorrow. This has led to unabated buying by domestic financial institutions, which added to the positive mood. Sentiments remained jubilant since start with bourses making gap-up opening, as traders took encouragement with Finance Minister FM Arun Jaitley's indication that the government would consider reducing the goods and services tax slabs and easing compliance burden for small taxpayers once revenues from GST better those from the previous tax regime. Some support also came after Industry body Assocham urged the government to relax fiscal deficit targets and boost public expenditure as a means to accelerate India's economic growth, which slipped to 5.7 percent in the June quarter. Former RBI Governor C Rangarajan also said that the government needs to “pick up very fast” to be able to maintain a healthy annual growth.  Markets maintained the bullish momentum and traded with jubilation till end as some support came after the Nikkei India Manufacturing Purchasing Managers' Index, or PMI, remained unchanged at 51.2 in September. As per the report, September data painted an encouraging picture as the sector continued to recover from the disruptions caused by the introduction of the GST in July. Adding to the optimism, the Centre has begun a slew of measures to boost medium and small scale industries, exports and the textile sector. As per report, September 27 Cabinet meeting had discussed proposals related to providing stimulus to medium and small-scale industries, exports and the textile sector which have not performed to their optimum strength in last few quarters. Finally, the BSE Sensex surged 213.66 points or 0.68% to 31,497.38, while the CNX Nifty was up by 70.90 points or 0.72% to 9,859.50.


The US markets closed higher on Tuesday, with the S&P 500 notching its sixth positive session in a row, as the market took its cues from upbeat data, including reports on vehicle sales. Stocks have been supported by some strong economic data, including the recent ISM manufacturing survey for September, as well as hopes for tax-cut legislation. However, there are lingering concerns that the market's record advance has been overdone. That's especially as the Federal Reserve increases borrowing costs. The dollar stepped back from a 1 1/2-month high against a basket of currencies, as the rally triggered by strong US data fizzled on speculation US President Donald Trump's choice for the next Fed Chair may be a less hawkish candidate than previously thought. Meanwhile, major auto makers posted mostly solid sales gains in September amid heavier consumer discounts and surging demand to replace hurricane-damaged vehicles, giving the industry relief from months of declining results and some momentum heading into the key fourth-quarter selling season. The Dow Jones Industrial Average added 84.07 points or 0.37 percent to 22,641.67, the Nasdaq gained 14.99 points or 0.23 percent to 6,531.71, and the S&P 500 edged higher by 5.46 points or 0.22 percent to 2,534.58. 


Crude oil futures extended their weakness on Tuesday ahead of weekly inventory data which is expected to show crude oil supplies fell for a second-straight week amid concerns that the sharp uptick in crude prices could encourage US shale producers to ramp up production. Also, the advent of autumn is traditionally associated with weaker oil demand as it marks the end of the summer driving season. Meanwhile, OPEC Secretary-General Mohammad Barkindo said that compliance with the oil output cut deal between OPEC and non-OPEC nations is extremely high. Barkindo said compliance was high, but at 86% last month, the cartel will simply need to get more nations to fully commit. Benchmark crude oil futures for November delivery ended lower by $0.16 or 0.3 percent at $50.42 a barrel on the New York Mercantile Exchange. Brent crude for November delivery lost 0.15 cents to $55.97 a barrel on the ICE.


Indian rupee depreciated against the US dollar on Tuesday, as the greenback took on more strength overseas. Investors even overlooked the report that manufacturing activity in India showed a modest improvement in September supported by increases in both output and new orders. The Nikkei India Manufacturing Purchasing Managers' Index, or PMI, remained unchanged at 51.2 in September. However, a strong domestic equity market prevented the rupee from falling further. On the global front, dollar climbed for a second consecutive day on Tuesday as a strong reading for US manufacturing activity pushed bond yields higher, prompting investors to trim some of their extreme short bets against the greenback. Finally, the rupee ended at 65.50, 23 paise weaker from its previous close of 65.27 on Friday.


The FIIs as per Tuesday'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 7495.43 crore against gross selling of Rs 6418.12 crore, while in the debt segment, the gross purchase was of Rs 512.08 crore with gross sales of Rs 645.61 crore.


The US markets continued their upmove in the last session and with the upward move on the day, the major averages climbed to new record closing highs, as traders seemed optimistic about the economic outlook and the prospects for Republican tax reform. The Asian markets have made mostly a positive start with China's markets on a week-long holiday and South Korea and Taiwan too closed for a holiday. The Indian markets rallied in the last session, traders coming after a long weekend went for hefty buying, with auto stocks remaining in lime light on robust sales data. Today, the start of the important day is likely to be in green but traders will remain cautious ahead of the RBI's monetary policy review due out later in the day. This will be the fourth bimonthly monetary policy review of FY2017-18. With inflation firming up and the rupee coming under pressure, the general view is that RBI will keep the policy rates unchanged. Traders will however be getting some support with report of core sector output growing at its fastest pace in five months in August, driven by higher coal and electricity production. The output grew 4.9 percent in August compared with a revised 2.6 percent year-on-year growth in July. Meanwhile, the government sees the decline in growth as a hiccup and expects the economy to pick up pace in the second half of the year as teething troubles with GST get resolved and the effect of demonetisation wanes. There will be some buzz in the oil & gas sector stocks too, as the government has reduced basic excise duty rate on both branded and unbranded petrol and diesel by Rs 2 per litre. The Finance Ministry said that this has been done to cushion the impact of rising international prices of crude petroleum oil, petrol and diesel on their retail sale prices. Also a report by Moody's has said that India will surpass China as the fastest-growing Asian market for petroleum products in 2018, on the back of a 6 per cent demand growth.


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  • Maruti Suzuki India has sold a total of 163,071 units in September 2017, growing 9.3% over the same period of last fiscal.
  • HDFC Bank is planning to partner with 50 technology and business schools, in a bid to tap into emerging fintech ideas.
  • Tata Motors has unveiled its new generation range of commercial vehicles -Tata Ultra, The Business Utility Vehicle at Futuroad Expo, 2017 in Johannesburg, South Africa.
  • M&M has forayed into the road construction segment with the launch of its first Motor Grader - the Mahindra RoadMaster G75 under the aegis of its Construction Equipment business.
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