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NSE Intra-day chart (04 September 2017)
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Market Commentary 05 September 2017
Markets to get a flat-to-green start

Indian equity benchmarks ended the sluggish day of trade with a cut of over half a percent on Monday on geopolitical tensions surrounding around North Korea after its latest hydrogen bomb test. Markets started the session on pessimistic note and extended their fall later on after the country's former central bank head Raghuram Rajan cautioned the government that short-term costs of a radical ban of high-value currency notes would outweigh the long-term benefits. Report that India's total public debt (excluding liabilities under the public account) increased by 3.6 percent to Rs 63.35 lakh crore at the end of June 2017, too dampened sentiments. The debt of the government was Rs 61.13 lakh crore at the end of March 2017. According to the report on debt management released by the finance ministry, this indicated a quarter-on-quarter rise of 3.6 percent in Q1 FY18 as compared to a decline of 1.15 percent in the previous quarter (Q4 FY17). Sentiments also weighed on by foreign brokerage report that investment continued to slip to 27.5 percent of GDP, from 29.2 percent in June 2016, with high lending rates dampening demand and sustaining excess capacity. It added that lending rate cuts are key to economic growth recovery and banks should lower rates by 25 bps before the start of the busy season in October to accelerate reforms momentum. Separately, another global brokerage firm lowered India's GDP growth forecast to 6.6 percent for this fiscal from 7.2 percent earlier. The brokerage said that the growth is expected to pick up in coming quarters as the economy normalizes post implementation of the GST. According to official data, India's economic growth slipped to a three-year low of 5.7 percent in April-June as disruptions caused by demonetization spilled over to the third straight quarter amid a slowdown in manufacturing activities. Finally, the BSE Sensex lost 189.98 points or 0.60% to 31,702.25, while the CNX Nifty was down by 61.55 points or 0.62% to 9,912.85.


The US markets remained closed on Monday on account of 'Labor Day' holiday.


Crude oil futures moved higher in holiday thinned trade on Monday, as the floor trading was closed on account of Labor Day. Traders got some support with refinery activity slowly resuming on the Gulf Coast, although they were still trying to assess the long term damage of Hurricane Harvey on the U.S. petroleum industry.  Investors also closely followed developments in the US-North Korea standoff. Benchmark crude oil futures for October delivery last traded up by $0.29 or 0.61 percent to $47.58 on the New York Mercantile Exchange. In London, Brent crude for October delivery ended down by 0.20 cent at $52.55 a barrel on the ICE.


Indian rupee pared some of its early losses but still ended marginally weaker against the American currency on Monday, due to fresh dollar demand from banks and importers amid foreign fund outflows. Sentiments remained dampened as foreign brokerage reported that investment continued to slip to 27.5 percent of GDP, from 29.2 percent in June 2016, with high lending rates dampening demand and sustaining excess capacity. Besides, massive losses of domestic equity markets too affected the rupee, but a weak dollar overseas kept the fall to a minimum. On the global front, dollar fell against Japanese yen on Monday as concerns about geopolitical risks following North Korea's latest nuclear test over the weekend prompted a rush to traditional currency hedges. Finally, the rupee ended at 64.05, 2 paise weaker from its previous close of 64.03 on Friday.


The FIIs as per Monday'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 3193.04 crore against gross selling of Rs 3938.49 crore, while in the debt segment, the gross purchase was of Rs 396.70 crore with gross sales of Rs 334.62 crore.


The US markets remained closed in the last session on account of Labor Day, unable to give any cues to the other markets. The Asian markets have once again made mostly a lower start on the Korean threat to the markets. The Japanese market was once again down by over half a percent as the yen and gold extended gains and traders awaited further developments on the North Korea front. The Indian markets snapped their gaining streak in last session on heightened geopolitical tensions between the U.S. and North Korea, which dented risk sentiment leading traders to safe heaven. Today, the start is likely to remain cautious though a tinge of green will be seen at the opening. Traders will be getting some support with Prime Minister Narendra Modi's statement at BRICS Summit 2017 that India is fast changing into one of the most open economies in the world, with improvements on global indices and the biggest ever reform GST weaving the nation into one unified market. However, there will be some cautiousness too, as the domestic rating agency Crisil has lowered its growth forecast to 7 per cent for fiscal 2018, down from 7.4 per cent earlier, as it sees disruptions arising from the implementation of the new uniform tax regime to continue to impact the economy for a few more quarters. Meanwhile, the former RBI governor Raghuram Rajan has said that short-term note ban costs will outweigh long-term benefits. There will be some buzz in the realty stocks, as the new Minister for Housing and Urban Affairs, Hardeep Singh Puri, has said that the government will meet the targets that have been instituted. There will be some action in the gold and jewellary stocks too, as India's gold imports in August nearly tripled from a year ago, despite sluggish domestic demand.



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Tata Motors






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