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Market Commentary 05 January 2018
Markets to make a positive start tailing sanguine global cues

Thursday turned out to be a fabulous day of trade of Indian equity benchmarks, with frontline gauges recapturing their crucial 10,500 (Nifty) and 33,900 (Sensex) levels amid firm global cues. After a positive start, there appeared not even an iota of profit booking in the session with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Sentiments remained upbeat with NITI Aayog's expectation that the first strategic disinvestment of Central Public Sector Enterprises will be conducted within the current financial year. It said that the process of divestment is being carried out by DIPAM (Department of Investment and Public Asset Management) and the first transactions are expected in the current financial year after a long gap of 14 years. Some support also came with the Union Cabinet approving the revised model concession agreement for public private partnership projects in major ports. The amendments were made in the MCA to attract more investments in the port sector and are expected to clear the hurdles created by some of the provisions in the current model concession agreement. Markets extended northward journey on report that the Nikkei India services Purchasing Managers' Index, or PMI, returned to modest growth in December amid signs of recovery from the effects of new goods and service taxes, or GST. The seasonally adjusted business activity index stood at 50.9 in December, up from 48.5 in November. The report highlighted that this expansion was mainly driven by manufacturing companies, with output growth here the sharpest since December 2012. Market participants also took some encouragement with private report that the second quarter results of the Indian Corporate sector have started showing some signs of stability, attributable to declining negative impact of the Goods and Services Tax (GST) and the festive season. Finally, the BSE Sensex surged 176.26 points or 0.52% to 33,969.64, while the CNX Nifty was up by 61.60 points or 0.59% to 10,504.80.


The US markets closed higher on Thursday, at an all-time high, while the Dow topped the 25,000 milestone for the first time. The S&P closed at a record in each of the first three trading days of the New Year, the first time it has done so since 1964.  The Nasdaq did the same, for the first time since 1999. On the economy front, private-sector hiring was stronger than expected in December. Employers added 250,000 jobs, more than the 188,000 jobs forecasted. November's tally was cut by 5,000, however. Almost all of the December gain was in the service-providing sector, which accounted for 222,000 of the jobs. Within services, the trade/transportation/utilities category made up 45,000 of those jobs, a sign of the continued dominance of e-commerce. Separately, initial jobless claims, a tool to measure layoffs, rose 3,000 to 250,000 in the seven days ended December 30. Claims in the prior week were revised to a gain of 2,000 to 247,000, from the original estimate that they were flat at 245,000. The Dow Jones Industrial Average added 152.45 points or 0.61 percent to 25,075.13 and the Nasdaq gained 12.384 points or 0.18 percent to 7,077.92, and the S&P 500 edged higher by 10.93 points or 0.40 percent to 2,723.99.


Crude oil futures extended their gains on Thursday after data showed crude stockpiles fell for the seventh-straight week. Energy Information Agency (EIA) inventory report showed that crude stockpiles fell more-than-estimated but gains were capped somewhat as both distillates and gasoline inventories rose. Inventories of U.S. crude fell by roughly 7.4 million barrels for the week ended Dec. 29. Gasoline inventories rose by 4.8 million barrels, while supplies of distillate rose by 8.9 million barrels. Benchmark crude oil futures for January delivery ended higher by $0.38 or 0.62 percent at $62.01 a barrel on the New York Mercantile Exchange. Brent crude for March delivery was up by 0.18 percent to $67.97 a barrel on the ICE.


Indian rupee ended higher against the dollar on Thursday, with the American currency coming under heavy selling by banks and exporters. Sentiment got up-beat with the survey report showing that activity in India's services industry bounced back to modest growth in December after contracting in the previous month, as new business orders stabilised and price increases slowed. The Nikkei/IHS Markit Services Purchasing Managers' Index rose to 50.9 in December from 48.5 in November. Beside, dollar's weakness against other currencies overseas together with strong momentum in the domestic equity markets too supported the domestic unit. On the global front, Sterling edged up against dollar on Thursday after surveys showed Britain's dominant services sector rebounded strongly last month although investors remained cautious of pushing the British currency higher due to a lack of broad catalysts. Finally, the rupee ended at 63.41, 12 paise stronger from its previous close of 63.53 on Wednesday.


The FIIs as per Thursday'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 4544.07 crore against gross selling of Rs 4430.91 crore, while in the debt segment, the gross purchase was of Rs 1059.15 crore with gross sales of Rs 1247.23 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.99 crore against gross selling of Rs 3.52 crore.


The US markets extended their bull-run and surged to fresh record highs in the last session, in reaction to a report from payroll processor ADP showing private sector employment jumped by much more than expected in the month of December. The Asian markets have made a positive start as investors around the world pile into equities at the start of 2018 amid robust economic data from the US to Europe to China, though the Hong Kong and Shanghai markets were flat. The Indian markets bounced back in last session and surged by around half a percent on encouraging service sector data. Today, the start is likely to be good and the markets will be extending gains on bullish global cues. Traders will also be getting some support with credit rating agency Fitch's statement, which ahead of the first advance estimates for GDP growth for 2017-18, has expressed optimism about India's medium-term economic prospects and said it would outstrip China's growth. The PSU banks will be in action as India's biggest state-owned banks are likely to get Rs 80,000 crore of fresh capital this fiscal year after the government sought Parliament's nod for additional spending toward the infusion. There will also be some reaction to the latest report from the credit rating agency Moody's that the government's Rs 2.11 lakh crore capital infusion in PSU banks would narrow the gap between the capital profiles of public and private sector banks. The oil and gas stocks too will be in focus after the Directorate General of Hydrocarbons (DGH) unveiled a draft policy framework to promote enhanced recovery methods, with government's plan to offer fiscal incentives such as lower taxes and higher share in profit to companies to encourage them to boost oil and gas output from local ageing fields.


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  • Tata Motors has entered into development and supply agreement with Canada-based Westport Fuel Systems Inc.
  • Coal India is exploring the feasibility of producing methanol and other chemicals.
  • Power Grid is planning to ink pact with Uttar Pradesh Power Transmission Corporation to form an equal joint venture company to strengthen the intra-state transmission network.
  • Infosys has entered into a new partnership with ValGenesis that will bring even stronger compliance and quality management for its customers in the healthcare and life sciences sectors.
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