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NSE Intra-day chart (05 February 2018)
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Market Commentary 06 February 2018
Markets to make negative start on weak global cues

Bears took full control over Dalal Street on Monday, with frontline gauges settling below their crucial 34,800 (Sensex) and 10,700 (Nifty) levels, as traders opted to stay away from risky assets ahead of Reserve Bank of India's (RBI's) monetary policy meeting to be start from tomorrow. Markets, after a gap-down start, traded with pessimism throughout the session, as traders remained concerned that Union Budget could push up inflation and prompt the central bank to raise interest rates soon. sentiments also remained dampened with Fitch Ratings' statement that high debt burden of the government constrains India's rating upgrade, after Finance Minister Arun Jaitley projecting a fiscal deficit of 3.5 per cent of GDP against the earlier target of 3.2 per cent. Besides, the US-based agency had kept India's sovereign rating unchanged at BBB-, the lowest investment grade with stable outlook, citing weak fiscal position. Traders failed to get any sense of relief with report that the Indian service sector remained in expansion mode in January, registering the fastest rise in activity in three months driven by a renewed increase in new business orders. The seasonally adjusted Nikkei Services Business Activity Index improved to 51.7 in January, up from 50.9 in December. Traders took note of industry body ASSOCHAM's report stating that the RBI should not over-react to high yield pressures in the bond market and should refrain from hiking interest rates in its next monetary policy review outcome on February 7. ASSOCHAM enlightened in a post-Budget paper that some of the macro indicators, including pegging of higher fiscal deficit of 3.3% for 2018-2019 and 3.5% of the GDP for the current fiscal, look difficult, but reaction of the bond market would ease out soon. Meanwhile, DEA Secretary Subhash Chandra Garg said that achieving a double-digit economic growth for India in current global scenario is difficult but the country is on path to clock 8% plus expansion by 2020-21. Garg added that achieving double digit growth is difficult as the growth in the global economy is not that high. Finally, the BSE Sensex tumbled 309.59 points or 0.88% to 34,757.16, while the CNX Nifty was down by 94.05 points or 0.87% to 10,666.55.


The US markets tumbled on Monday, with the Dow recording its worst one-day point drop in history, in a selloff that at times took on the characteristics of a panic. The Dow was down more than 1,500 points at its session low, while the S&P 500 logged its first 5% pullback from its all-time high in over a year. The financial sector was the biggest loser, tanking 5%, followed by health care, industrials, energy, telecommunications, and information technology which all fell more than 4%. Monday's sell-off was driven by firms moving to sell stocks to put more money into assets such as bonds which benefit from higher rates. On the economy front, a survey that tracks the performance of service-oriented companies such as hotels, restaurants and banks surged in January to a 13-year high of 59.9. Employment activity set a record. An index that measures current staffing and future hiring plans rose to an all-time high of 61.6 from 56.3 in the prior month. That's the highest level since the ISM services index began in 1997. The new orders index also jumped 8.2 points to 62.7, the highest level since 2011. Fifteen of the 17 industries tracked by ISM said their businesses expanded in January. The Dow Jones Industrial Average lost 1,175.21 points or 4.60 percent to 24,345.75, the Nasdaq dropped 273.42 points or 3.78 percent to 6,967.53, the S&P 500 edged lower by 113.19 points or 4.10 percent to 2,648.94.


Extending previous session's fall, crude oil futures ended lower on Monday along with global stocks, as the U.S. dollar rallied on expectations of interest rate hikes. Data showing another increase in the U.S. rig count too weighed on prices. The number of active U.S. rigs drilling for oil climbed by 6 at 765 last week. On the economic front, the U.S. ISM services index hit its highest level since mid-2005, a sign of further strength in the nation's economy. Economic activity in the non-manufacturing sector grew in January for the 96th consecutive month, according to a survey of purchasing managers. Benchmark crude oil futures for March delivery declined $1.42 at $64.03 a barrel on the New York Mercantile Exchange. Brent crude lost 68 cents or 1% to $67.91 a barrel on London's Intercontinental Exchange.


Indian rupee ended unchanged on Monday compared to its previous close as investors remained cautious ahead of Reserve Bank of India's (RBI's) monetary policy meeting to be start from tomorrow. Traders also remained pessimistic with Fitch Ratings' statement that high debt burden of the government constrains India's rating upgrade, after Finance Minister Arun Jaitley projected a fiscal deficit of 3.5 percent of GDP against the earlier target of 3.2 percent. Meanwhile, Arun Jaitley said that the economy has entered into a phase of consolidation after a series of structural reforms which were initiated in the past two years. On the global front, US dollar paused on Monday after rebounding at the end of last week, when a strong jobs report suggested the currency's weakness might have gone too far, too fast. Finally, the rupee ended unchanged from its previous close of 64.06 on Friday.


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 8286.24 crore against gross selling of Rs 6996.34 crore, while in the debt segment, the gross purchase was of Rs 1318.12 crore with gross sales of Rs 585.40 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.87 crore against gross selling of Rs 0.14 crore.


U.S. stocks suffered sharp sell-off on Monday, as markets continued to throw a tantrum over rising interest rates. The sell-off overshadowed any corporate headlines. Markets also ignored some upbeat economic news. Asian markets were trading with severe cut after Wall Street suffered its biggest decline since 2011 as investors' faith in factors underpinning a bull run in markets began to crumble. Indian shares fell for a fifth consecutive session on Monday tracking weak cues from global markets, after a strong U.S. jobs report for January helped fuel expectations that the Federal Reserve will lift borrowing costs more than the three times initially expected this year. Today, the start is likely to be on the negative side amid weak global cues. Traders will also look ahead to the RBI's policy review meeting to start later in the day amid expectations that the central bank will tighten its monetary policy stance in the wake of growing concerns over fiscal slippage. Investors may remain concern on private report that lower indirect tax revenue collections may outweigh any upside risks from higher nominal GDP growth, non-tax revenue and direct tax collection. Meanwhile, Finance Secretary Hasmukh Adhia said that while implementing GST, the government has sacrificed revenue in the hope that compliance would improve in the future. He said, the organised sector has gained in the process and the improvement is evident in companies' balance sheets. Market participants may get some relief with Finance Minister Arun Jaitley's statement that expediting public services and ensuring fairness in procurement will supplement rapid economic growth in the South Asian region including India. Sugar stocks will remain in focus after the food ministry has proposed doubling of the import duty on sugar to 100 per cent to curb cheaper imports, check falling wholesale prices of sweetener and ensure timely payment to cane farmers. There will be lots of important earnings announcements too, to keep the markets buzzing.


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  • Reliance Industries is planning to invest Rs 2,500 crore in Assam in various sectors, including retail, petroleum, telecom, tourism and sports.
  • IOC is planning to invest Rs 3,400 crore in Assam over the next five years to expand its operations by setting up new units as well as upgrading the existing ones.
  • Tata Steel will be investing over 14 million pounds in its Hot Strip Mill at Port Talbot in south Wales, which will help manufacture higher-value steels.
  • Tata Motors has reported around 13-fold jump in its consolidated net profit at Rs 1,198.63 crore for Q3FY18 as compared to Rs 93.77 crore for Q3FY17.
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