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NSE Intra-day chart (05 April 2016)
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Market Commentary 06 April 2016
Markets to get a flat-to-positive start on supportive regional cues


Indian markets which looked controlling its breaths in early deals despite feeble global cues, went for a toss after the announcement of the Reserve Bank of India's (RBI) first bi-monthly policy review for the fiscal, where it going much on expected lines reduced repo rate by 25 basis points from 6.75 per cent to 6.5 per cent, while narrowed the policy rate corridor from +/-100 basis points (bps) to +/- 50 bps by reducing the MSF rate by 75 basis points and increasing the reverse repo rate by 25 basis points. The RBI kept the cash reserve ratio (CRR) unchanged at 4.0 per cent of net demand and time liabilities (NDTL) but reduced the minimum daily maintenance of the CRR from 95 per cent of the requirement to 90 per cent with effect from the fortnight beginning April 16, 2016. Stock markets, which had rallied on hopes that Rajan would announce a bigger rate cut, in a knee-jerk reaction fell sharply despite the RBI saying that its policy would remain 'accommodative', raising the prospect of another rate cut later this year. RBI also pledged to inject more long-term liquidity. Though, traders welcomed the move but the 25 bps cut seemed already been priced into markets and they were looking for some unexpected or rather a firm outlook for further rate cuts. Traders were unable to get any support with global rating agency Moody's Investors Service's statement that it is looking at India's pace of reforms and pace of implementation. It added that the agency has a positive outlook on India's BAA3 rating and that signals upward pressure on the rating over the next 12 to 18 months. On the global front, the Asian markets followed the footsteps of their US counterparts and ended mostly in red. The European markets too made a weak start on fading hopes about an output curb by oil producers. Back home, the Indian markets posted their worst day in nearly two months, as investors booked profits, with bears in full control. Sensex not only slipped below its 100 days moving average but also lost its crucial psychological mark of 25000. Nifty too barely managed to protect its 7600 level in the brutal slump of the day. Finally, the BSE Sensex slumped by 516.06 points or 2.03% to 24883.59, while the CNX Nifty plunged by 155.60 points or 2.01% to 7603.20.


The US market closed lower on Tuesday, logging a second day of losses as fears about global economic health dogged the market and fueled selling in traditionally riskier assets. Following pressure from Europe and Japan, along with the run-up in US stocks from February lows, investors are easing off, even with signs of economic improvement domestically. On the economy front, the US trade deficit widened 2.6% in February largely because of an uptick in imports, marking the third increase in a row and the biggest gap since the end of last summer. The deficit increased to a seasonally adjusted $47.1 billion from a revised $45.9 billion in January. The last time the trade gap was higher was in August 2015. The bigger trade gap in the first two months of 2016 compared to a year earlier is expected to subtract from first-quarter US growth. A higher deficit reduces gross domestic product. Imports advanced by 1.3% to $225.1 billion in February, led by increases in pharmaceutical drugs, toys, games and sporting goods. The Dow Jones Industrial Average lost 133.68 points or 0.75 percent to 17,603.32, Nasdaq dropped 47.87 points or 0.98 percent to 4,843.93 while, S&P 500 was down by 20.96 points or 1.01 percent to 2,045.17.


Crude oil futures made a good bounce back on Tuesday after falling to their fresh one month lows in early trade, after Kuwait indicated producers could reach an agreement to arrest output even if Iran doesn't join in. Earlier, the prices fell on an unexpected decline in monthly US gasoline demand and continued skepticism on the viability of a comprehensive output freeze among major producers provided downward pressure on global oil prices. Benchmark crude oil futures for May delivery gained $0.25 or 0.70 percent to $35.95 a barrel after trading in a range of $35.24 and $36.00 a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery closed at $37.94, up $0.26 or 0.69 percent on the ICE.


Snapping its six day gaining streak, Indian rupee depreciated substantially against dollar on Tuesday due to demand for American currency from banks and importers. Besides, losses in local equity markets also hit the rupee sentiment. Meanwhile, Reserve Bank of India has cut repo rate by 25 basis points, which was in line with market expectations. RBI Governor Raghuram Rajan also narrowed the policy rate corridor from +/-100 basis points (bps) to +/- 50 bps by reducing the MSF rate by 75 basis points and increasing the reverse repo rate by 25 basis points. On the global front, dollar fell on Tuesday to its weakest against the yen since October 2014 as investors' view of riskier assets soured, pushing shares and oil prices lower as the outlook for US interest rates remained clouded. Finally, the rupee ended at 66.46, 26 paise weaker from its previous close of 66.20 on Monday.


The FIIs as per Tuesday's data were net buyers in equity and in debt segments both. In equity segment, the gross buying was of Rs 3107.51 crore against gross selling of Rs 2702.10 crore, while in the debt segment, the gross purchase was of Rs 1531.66 crore with gross sales of Rs 1102.58 crore.         


The US markets despite some late hour recovery ended lower in last session, as the overseas markets moved mostly lower amid concerns about the global economy. Although, ISM said its non-manufacturing index climbed to 54.5 in March from 53.4 in February. The Asian markets have made mostly a positive start, as oil rebounded amid optimism a deal will be struck for major producers to freeze output. However, the Chinese market that has bucked the trend last session was marginally in red despite the Caixin Services PMI improving to 52.2 compared to 51.2 in last month. The Indian markets suffered severe slump in last session with major averages losing over two percent, posting their worst single day decline in last two months. Today, the start is likely to be in green and markets will recover from the massacre of last session with things stablising on global as well as domestic fronts. Rate sensitives like realty, consumer durables and auto may see some recovery, as home loans and other borrowings are set to get cheaper by at least half a percentage point in the coming months following Reserve Bank of India (RBI) governor Raghuram Rajan's decision to cut rates by 25 basis points to 6.50% .Traders are likely to get some encouragement with NITI Aayog member Bibek Debroy's statement that India's growth could be around 7.8 percent in 2015-16, higher than the Finance Ministry's projection of 7.5 percent. There will be some buzz in the fertilizer stocks, as the government has notified the subsidy rates for phosphatic and potassic (P&K) fertilisers for the current fiscal, which are lower than the last year. The subsidy on nitrogen (N) is fixed at Rs 15.85 per kg, Rs 13.24 per kg for phosphorous (P), Rs 15.47 per kg potash (K) and Rs 2.04 per kg for sulphur (S). The PSU banking stocks too may see some action, as the Finance Minister Arun Jaitley has said that the government will push for consolidation of public sector banks once they are capitalised and strengthened.


Support and Resistance: NSE Nifty and BSE Sensex



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  • Maruti Suzuki India, country's largest car maker, has reported 13.78% rise in its production to 139,178 units in March 2016 as compared to 122,314 units in March 2015.
  • NTPC has received its board's approval for investment in Mandsaur Solar PV Project - 250 MW in the state of Madhya Pradesh at an appraised estimated cost of Rs 1,502.77 crore.
  • L&T's wholly owned subsidiary L&T Hydrocarbon Engineering has received an onshore EPC contract valued over Rs 650 crore from Gujarat State Fertilizers & Chemicals.
  • Yes Bank has entered into an agreement with T-Hub to assist Indian start-ups focusing on financial technology space.
  • Tech Mahindra is planning to set up a Center for Excellence in Robotics and Analytics Department at the International Institute of Digital Technologies in Tirupati.
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