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


Indian equity markets started the fresh week on a sluggish note but managed to post decent gains by the end of trade as the benchmarks clawed back into the positive terrain in the last leg of trade on getting some supportive leads from the European markets. Though, European bourses opened on a bearish note, the risk sentiment soon recovered and the European equities turned positive and staged a solid rebound, calming unnerved markets, with the officials from the Euro area economies hitting the wires and posting optimistic remarks on the Italian banks sector and overall economy. Also, markets cheered an unexpected rebound seen in the UK's services sector activity alongside solid services PMI reports published from the Euroland as well. On the domestic front, market participants remained optimistic on raising expectation that the Reserve Bank of India will cut its repo rate by 25 basis points to 6 per cent in the bi-monthly monetary policy review on December 7, 2016, amid downside risks to growth following the notes ban and subdued inflation. Adding optimism among investors, Prime Minister Narendra Modi said India's economy is expected to witness a five-fold growth by 2040 owing to increase in investments. Modi said while global economy is going through uncertainty, India has shown tremendous resilience. Indian economy is more stable than others with investment in India at the highest levels. The country's current account deficit has improved steadily, while he expects growth in manufacturing, transport and civil aviation among other sectors. However, investors remained cautious with the report that Indian services activity dived into contraction in November after Prime Minister Narendra Modi's surprise move to withdraw high denomination bank notes led to a sharp decline in demand. The Nikkei/Markit Services Purchasing Managers' Index sank to 46.7 in November from October's 54.5, the first time since June 2015 that the index has gone below the 50 mark that separates growth from contraction. It was the biggest one-month drop since November 2008, just after the collapse of Lehman Brothers triggered the global financial crisis. The latest data, coupled with another last week that showed factory activity slumped as well, offers the first glimpse of the massive hit the economy is likely to take from the demonetisation drive. Finally, the BSE Sensex gained 118.44 points or 0.45% to 26349.10, while the CNX Nifty rose 41.95 points or 0.52% to 8,128.75. 


The US markets closed higher on Monday, as solid economic data offset concerns about Europe's stability in the wake of a rejection of Italy's vote on Sunday to reform existing constitutional rules. The broader stock market rose after a survey showed that the services side of the economy grew at its fastest pace in November in a year. The Institute for Supply Management said its nonmanufacturing index rose to 57.2% last month from 54.8%. Any reading over 50% signals that more businesses are expanding instead of contracting. Fourteen of the 18 service sectors tracked by the ISM expanded in November. Still, most services companies continue to hire new workers at a healthy pace. A gauge that measures employment climbed to 58.2% from 53.1%, marking the highest level in 16 months. The Dow Jones Industrial Average added 45.82 points or 0.24 percent to 19,216.24, Nasdaq was up 53.24 points or 1.01 percent to 5,308.89, while S&P 500 gained 12.76 points or 0.58 percent to 2,204.71.


Crude oil futures though managed to end in green on Monday, holding strong recent gains amid hopes the global supply glut will soon dwindle, but the rally of last couple of session seemed cooling down with traders considering the rally since the Organisation of the Petroleum Exporting Countries' (OPEC) agreement last Wednesday to curb production was getting stale. Benchmark crude oil futures for January delivery ended up by $0.11 or 0.21 percent to $51.79 on the New York Mercantile Exchange. In London, Brent crude for January delivery ended higher by $0.48 or 0.88 percent at $54.22 on the ICE.


Indian rupee ended unchanged at its previous close, as investors remained cautious ahead of the Reserve Bank of India's (RBI) bi-monthly policy on December 7, 2016. Sentiments remained dampened with the report that Indian services activity dived into contraction in November after Prime Minister Narendra Modi's surprise move to withdraw high denomination bank notes led to a sharp decline in demand. The Nikkei/Markit Services Purchasing Managers' Index sank to 46.7 in November from October's 54.5, the first time since June 2015 that the index has gone below the 50 mark that separates growth from contraction. Rupee sentiment was also hit after Italian Prime Minister Matteo Renzi announced his resignation on suffering a crushing defeat in a referendum on constitutional reform. On the global front, dollar gained against yen on expectations that President-elect Donald Trump will increase fiscal spending and deregulate key industries, leading to higher U.S. growth and interest rates. Finally, the rupee ended unchanged from its previous close of 68.21 on Friday.


The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4114.53 crore against gross sell of Rs 4239.78 crore, while in the debt segment, the gross purchase was of Rs 1789.17 crore with gross sales of Rs 2199.97 crore.


The US markets moved higher in last session with Dow touching new record highs after the Institute for Supply Management released a report showing a significant acceleration in the pace of growth in the service sector. The Asian markets have made an all green start joining the global relief rally and tailing the gains in US Markets overnight. The Indian markets were first to see signs of recovery, wiping out an initial slump on the Italian premier's resignation. The global rating agency S&P has said that Italian referendum outcome may not have immediate implications for Italy's economic or budgetary policies beyond likely near-term changes in Italian politics.  Today, the start of the domestic market is likely to be in green and the markets will be extending the gains on supportive global cues, however all eyes will be on Monetary Policy Committee (MPC) meeting starting today amid expectations of at least 0.25 percent policy rate cut in order to tackle the impact of demonetisation move by the central government.  It will be the second meeting of the MPC chaired by the Reserve Bank of India Governor Urjit Patel. There will be some cautiousness too in the markets with a private report stating that India's economic growth rate is likely to fall to 6.5 percent in the ongoing quarter and remain subdued at around 7 percent in the January-March period as cash shortage is expected to last at least until next month. The PSU oil marketing companies may see some signs of relief with break in global crude price rally. Tata group stocks will again be buzzing with former chairman of Tata Sons, Cyrus Mistry suggesting that the government should look into the governance structure at Tata Trusts and take action against people who have shown "a blatant disregard for good governance" within the trust.



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  • State Bank of India will enter into an agreement with MMTC to sell government-minted 'Indian Gold Coin'.
  • Dr. Reddy's Laboratories has launched Nystatin and Triamcinolone Acetonide Cream, USP, in the United States market, approved by the US Food & Drug Administration.
  • YES Bank has partnered with Ola to set up Mobile ATMs and enable convenient cash withdrawals for citizens by swiping their Debit Cards.
  • Tata Power's Strategic Engineering Division has bagged an order from Ministry of Defence, Government of India for the supply of one regiment of Command Post and Launcher of Pinaka Multi Rocket Launcher System to Indian Army.
  • Oil and Natural Gas Corporation has crossed its daily production target of 16,200 tonnes per day and has accordingly revised its annual goal upward to 5.9 million tonnes for this fiscal.
News Analysis