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NSE Intra-day chart (03 June 2016)
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Market Commentary 06 June 2016
Markets to make a flat-to-positive start of the new week


Indian benchmark indices that started the session on firm note failed to maintain their momentum by the end of the session and ended on flat note, as market participants remained wary ahead of US jobs data that could provide some hints about the timing of the Federal Reserve's likely move on interest rate hike. On the domestic front, sentiments were undermined after the growth of services activity in India softened for the second straight month in May, as new business inflows expanded at the slowest rate since July 2015. However, investors got some comfort with finance minister Arun Jaitley stating that India will attempt to keep the proposed Goods & Services Tax (GST) rate as moderate as possible and the government will push for passage of the bill introducing the levy in the upcoming monsoon session of Parliament. Some support also came with the India Meteorological Department (IMD) stating that the country is all set to receive above-normal monsoon rains this year with a long-period average of 106 per cent. The Met department said that conditions are becoming favourable for the onset of monsoon and it would hit the Indian coast in the next 4-5 days. On the global front, Asian market ended the week's final session on positive note, while European stocks traded marginally in the positive range in early deals. Back home, Indian benchmark indices started the session on firm note as traders and foreign funds built long positions, driven by a series of positive factors such as forecast of a normal to excess rainfall this monsoon, robust GDP numbers and encouraging earnings.  However, the bourses failed to capitalize on the early momentum and slipped to lower levels after growth in India`s services industry slowed sharply in May to a six-month low, due to a deceleration in new orders. Finally, the BSE Sensex ended lower by 0.11 points to 26843.03, while the CNX Nifty gained 1.85 points or 0.02% to 8,220.80.


The US markets closed lower on Friday, as investors weighed implications of a dismal jobs report on the Federal Reserve monetary policy decision in two weeks. US Treasuries which are also sensitive to shifts in rate-hike expectations saw their prices soar, pushing yields sharply lower as doubts about the vigor of the economy and a possible delay in rate increases sparked haven-related buying. Oil prices fell to their lowest level in more than a week as an increase in the number of active US oil rigs implied higher crude output. The US created just 38,000 new jobs in May and nearly half a million people dropped out of the labor force, raising doubts about the strength of the economy and possibly forcing the Federal Reserve to scuttle plans to raise interest rates this summer. The increase in hiring was the smallest since the fall of 2010. More than half of the nation's major industries eliminated jobs last month, the first time that's happened in several years. In another bad sign, temp employment fell by 21,000 and it's down 64,000 so far this year. Average hourly wages climbed 0.2% last month to $25.59. The Dow Jones Industrial Average was down 31.50 points or 0.18 percent to 17,807.06 Nasdaq slipped by 28.84 points or 0.58 percent to 4,942.52 while, S&P 500 dropped 6.13 points or 0.29 percent to 2,099.13.


Crude oil futures once again declined on Friday, on getting unexpectedly weak set of jobs data and as OPEC failed to agree on a deal for a new output ceiling, raising concern of output glut. US employment edged up by just 38,000 jobs in May, reflecting the smallest increase in employment since September of 2010. Meanwhile, oil services firm Baker Hughes said in its Weekly Rig Count report that U.S. oil rigs rose by nine to 325 for the week ending May 27, the largest weekly increase since last December. Putting pressure on the crude prices, as any gains in the weekly rig count typically send lagging indications that crude production is about to increase. Benchmark crude oil futures for July delivery declined by $0.48 or 0.98 percent to $48.69 a barrel after trading in a range of $48.34 and $49.41 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery closed at $49.74, down $0.30 or 0.60 percent on the ICE.


Indian rupee entered the consolidation mood on Friday, as traders turned cautious ahead of the key US jobs data due later in the day, which will offer an indication of whether the Federal Reserve will pull the trigger in June. The domestic currency made a strong start in morning on sustained selling of the American currency by banks and exporters. The good trade in the local equity markets too supported the sentiments, but later as the enthusiasm waned, the equity markets declined and so does the rupee, paring most of the gains tracking dollar's strength against other currencies overseas. On the global front, the pound was little changed against the US dollar on Friday, despite data showing that the UK service sector expanded at a faster rate than expected in May. Finally, the rupee ended at 67.26, 3 paise stronger from its previous close at 67.29 on Thursday.


The FIIs as per Friday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity, the gross buying was of Rs 4524.50 crore against gross selling of Rs 3921.58 crore, while in the debt segment, the gross purchase was of Rs 819.40 crore with gross sales of Rs 866.67 crore.            


The US markets despite recovering from early losses ended modestly lower in last session, after the Labor Department's highly anticipated monthly jobs report showed much weaker than expected job growth. The Asian markets have made a mixed start and some indices are in red, led by the Japanese markets, as concern over the state of the US economy kept the yen near a one-month high and boosted gold to government debt. The Indian markets paring all their early gains and showing a volatile trend ended flat in last session. Today, the start of the crucial week is likely to be modestly in green, but cautiousness may persist with the Reserve Bank of India slated to release its bimonthly money policy review on Tuesday. Meanwhile, traders will be getting some support with the weak US jobs data, which has lowered the chances of immediate rate hike by the US Fed. Marketmen will also be rejoicing the Met department's latest report, stating that the conditions continue to remain favourable for the onset of the southwest monsoon over Kerala over the next 2--3 days. Though, there will be some cautiousness too, as a survey from industry body, CII has said that government needs to speed up implementation of GST, address the issue of cheap imports and improve investment climate as majority of sectors are witnessing 'moderate' growth. There will be some buzz in the oil & gas stocks, as the government evinced interest in joint exploration of new oil and gas fields as well as development of discovered assets in resource-rich Qatar, as the two countries decided to focus on enhancing cooperation in the energy sector. The chemical stocks too will be in action, as government has imposed anti-dumping duty of $0.277- 0.404 per kilogram on a compound, used in the pharmaceutical industry, imported from the US and China to protect domestic makers from cheap shipments.


Support and Resistance: NSE Nifty and BSE Sensex



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Tata Motors






  • Yes Bank is planning to raise $1 billion from overseas investors in the current fiscal as it has got government approval for increasing foreign investment to 74 per cent.
  • Tech Mahindra has bagged a $75 million contract from Nevada's Department of Motor Vehicles as the prime integrator for a system modernization project.
  • Mahindra & Mahindra is betting big on its tractor business in the US where it expects to double its revenues to $1 billion in the next three-four years.
  • Tata Power's Joint venture Maithon Power has reported 7% rise in its generation capacity in FY16 as compare to previous year.
  • Axis Bank has allotted Senior Fixed Rate Green Bonds aggregating to $500 million on June 01, 2016, under the MTN Programme through its Dubai International Financial Centre branch.
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