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NSE Intra-day chart (05 January 2017)
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Market Commentary 06 January 2017
Markets to make a positive start despite mixed global cues

After remaining in a consolidation mood for last two trading sessions, Indian benchmark indices showed dramatical up-move on Thursday, as trading sentiments turned bullish after US Fed minutes suggested a less hawkish stance from policymakers. Also underpinning the cautious streak of optimism has been a steady stream of upbeat factory and service sector surveys out of the US, Europe and Asia this week, prompting some banks to raise their global growth forecasts for 2017. On the domestic front, sentiments remained optimistic with the private report indicating that the government is expected to meet the fiscal deficit target of 3.5% of GDP in the current financial year, despite recent demonetisation move and potential delay in roll out of the Goods and Services Tax (GST). Fiscal deficit has been pegged at Rs 5.33 lakh crore, or 3.5% of GDP, in 2016-17. Some support also came with Finance Minister Arun Jaitley expressing confidence that direct and indirect tax mop-up will surpass Budget estimate of Rs 16.3 lakh crore by March-end. Jaitley had in his Budget for 2016-17 fiscal put gross tax revenue estimates at Rs 16.3 lakh crore, about 11 percent higher than gross tax receipts of Rs 14.5 lakh crore for the previous fiscal. Indirect tax collections till November had shown a 26.2 percent jump to Rs 5.52 lakh crore when compared with a year ago collections. Going forward, market would be driven by corporate earnings, with Tata Consultancy Services (TCS) and Infosys scheduled to post their quarterly results on January 12 and January 13, respectively. the country is also gearing up to its annual budget, and investors hope the government would keep spending under control and promote growth after its move to ban higher-value banknotes paralysed large parts of the economy. On the global front, Asian markets ended the session on firm note on Thursday, buoyed by further gains on Wall Street and an overnight bounce in oil prices that bolstered energy and resource shares. Finally, the BSE Sensex rallied 245.11 points or 0.92% to 26878.24, while the CNX Nifty rose 83.30 points or 1.02% to 8,273.80.


The US markets closed mostly lower on Thursday, while the Nasdaq Composite rebounded to close at an all-time high, but losses in financials dragged the S&P 500 lower. Mixed data on jobs also raised concerns a day before the closely watched December employment report due Friday. On the economy front, the number of Americans who applied for unemployment benefits after Christmas fell by 28,000 to the second-lowest level of the Obama era, hugging close to a 43-year low. Initial claims sank to 235,000 from a revised 263,000. New claims averaged 262,000 a week in the final year of the Obama presidency, the lowest average since 1973. And initial claims have been under 300,000 for 96 straight weeks, the longest stretch since 1970. The Labor Department said that the less volatile four-week average of initial claims declined by 5,750 to 256,750. Continuing jobless claims rose 16,000 to 2.11 million in the week ended December 24. The Dow Jones Industrial Average lost 42.87 points or 0.21 percent to 19,899.29, S&P 500 was down by 1.75 points or 0.08 percent to 2,269.00, while Nasdaq gained 10.93 points or 0.20 percent to 5,487.94.


Crude oil futures rose on Thursday, after Saudi Arabia started talks about a reduction in crude sales to support a plan by OPEC to reduce global supply. Also, as the government data confirmed a big drop in US oil stockpiles. The U.S. Energy Information Administration (EIA) reported that crude stockpiles declined by 7.1 million barrels for the week ended Dec. 30. Gasoline supplies rose 8.3 million barrels. Benchmark crude oil futures for February delivery gained $0.50 or 0.90 percent to $53.76 on the New York Mercantile Exchange. In London, Brent crude for March delivery moved higher by $0.48 or 0.85 percent at $56.94 on the ICE.


Indian rupee, appreciated for second consecutive session on Thursday due to selling of American currency by banks and exporters. The domestic currency looked strong from the very beginning and was supported by strong gains in the local equity markets. Sentiments remained optimistic with the private report indicating that the government is expected to meet the fiscal deficit target of 3.5% of GDP in the current financial year, despite recent demonetisation move and potential delay in roll out of the Goods and Services Tax (GST). Weakness of dollar against the some major currencies overseas too gave the rupee some relief. On the global front, dollar continued to its sharp move lower on Thursday, extending weakness from the prior session when Federal Reserve minutes pointed to a number of risks that could change the path for interest rates. Finally, the rupee ended at 67.96, 9 paise stronger from its previous close of 68.05 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3544.24 crore against gross sell of Rs 4226.17 crore, while in the debt segment, the gross purchase was of Rs 963.55 crore with gross sales of Rs 1440.27 crore.


The US markets made a mixed closing in last session after a choppy day of trade, though the tech-heavy Nasdaq managed to end the day at a new record closing high. There was some trepidation ahead of the release of the Labor Department's monthly jobs report on Friday. The Asian markets have made a mixed start, with some indices trading in red led by the Japanese market after the dollar showed signs of faltering ahead of Friday's US jobs report. The Indian markets went for a surprise rally in last session and the major benchmarks not only recovered their key psychological levels but posted decent gains of about a percent. Today, the start is likely to be in green and the traders will be getting support with the report of Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley that India appears to be much better placed with improved macro-economic fundamentals, as measures to eliminate shadow economy and tax evasion are expected to have positive impact on GDP. India expects to grow at around 7 per cent in the first half of the next financial year. However, there will be some cautiousness too with President Pranab Mukherjee issuing a note of caution that the Narendra Modi government's demonetisation decision could likely lead to a temporary slowdown in the economy and hurt the poor. On the other hand Reserve Bank of India former governor Duvvuri Subbarao has hailed the demonetisation measure introduced by PM Modi as creative destruction and the most disruptive policy innovation. There will be some buzz in the export oriented sector stocks, as in a major relief to exporters, the government has agreed to refund as much as 90% of their duty claims just within a week under the new goods and services tax (GST) regime.


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Tata Motors






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