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NSE Intra-day chart (06 February 2018)
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Market Commentary 07 February 2018
Markets to make positive start ahead of RBI's policy outcome


Extending their losing streak for sixth straight session, Indian equity benchmarks ended the daunting day of trade with a cut of over one and a half percent on Tuesday, breaching their crucial 34,200 (Sensex) and 10,500 (Nifty) levels. Short covering in last leg of trade helped markets to pare most of their initial losses. Markets started the session with gap-down opening and shaved off around three and a half percent amid global sell off. Traders remained concerned ahead of the Reserve Bank of India's (RBI's) policy review meeting outcome on tomorrow amid expectations that the central bank will tighten its monetary policy stance in the wake of growing concerns over fiscal slippage. Investors also remained concerned 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. Traders also took note of foreign brokerage report which enlightened that the economy will grow 7.5 percent level in the first half on a lower base, but will slip down to 7 percent in the second half of the next fiscal. The report added that even with the jump, it will continue to trend 1 percentage point lower than the potential growth of the economy. Sentiments also remained dampened with private report that the budgeted fiscal deficit is in line with expectations but there are some risks of slippage in financial year 2018-19, unless economic activities formalize at a rapid pace. It estimates a 20 bps upside risk to the fiscal deficit in 2018-19, unless economic activities formalize at a rapid pace over the coming year to generate the necessary buoyancy in revenues. Markets even breached their crucial 33,600 (Sensex) and 10,300 (Nifty) levels in initial trades, but key gauges got strong support near those levels and managed to prune some of their initial losses, as traders took 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. Investors also took some comfort with CBDT chairman Sushil Chandra's statement that a large number of taxpayers have been brought into the net taking the total base to 8 crore and underlined that the government has consolidated direct tax reforms. Finally, the BSE Sensex tumbled 561.22 points or 1.61% to 34,195.94, while the CNX Nifty was down by 168.30 points or 1.58% to 10,498.25.


The US markets closed higher on Tuesday, after a wild day of trading that saw the Dow ricocheting more than 1,000 points, underscoring a new regime of volatility on Wall Street. The turnaround, which follows on the heels of the blue-chip index's worst one-day point decline on Monday, helped to return key benchmarks back to positive territory for the year. St. Louis Fed President James Bullard said that he didn't think the strong US labor market meant that higher inflation is just around the corner, pushing back on one of the market's fears that has led to a broad sell off in stocks in recent days. On the economy front, the US trade deficit in December and for the full year both rose to the highest levels since 2008, complicating efforts by President Trump to fulfill his vow to reduce the gap. The deficit in December rose 5.3% to $53.1 billion. Imports increased 2.5% to a record $256.5 billion in December. Exports edged up 1.8% to $203.4 billion, also a new high water mark. In 2017, the US trade gap leaped 12.1% to a nine-year high of $566 billion. The Dow Jones Industrial Average added 567.02 points or 2.33 percent to 24,912.77, the Nasdaq gained 148.356 points or 2.13 percent to 7,115.88, the S&P 500 edged higher by 46.2 points or 1.74 percent to 2,695.14.


Crude oil futures continued its southward journey and ended lower on Tuesday, even as U.S. stocks were found their footing after the biggest one-day drop for the Dow Jones Industrial Average. The fall in crude futures is also attributable to a global sell off in equities. Meanwhile, a report from the Energy Information Administration (EIA) said that the U.S. production will rise in the next two years, denting oil prices. The EIA forecast U.S. crude production at an average 10.59 million barrels per day in 2018 and 2019 output at 11.18 million barrels a day, up 3.1% from previous projections. Benchmark crude oil futures for March delivery declined 76 cents or 1.2 percent, at $63.39 a barrel on the New York Mercantile Exchange. Brent crude lost 71 cents or 1.1% to $66.91 a barrel on London's Intercontinental Exchange.


Indian rupee ended lower against US dollar on Tuesday, on sustained bouts of dollar demand from importers and banks amid sell-off in local equities. Sentiments remained down-beat with the private report stating that GDP growth will slip down to 7 percent in the second half of the next fiscal, however the economy will grow 7.5 percent level in the first half on a lower base. Some cautions also prevailed in the markets ahead of outcome of the Reserve Bank of India's (RBI) policy review meeting. Investors are expecting that the central bank will tighten its monetary policy stance in the wake of growing concerns over fiscal slippage. On the global front, US dollar dropped against yen on Tuesday due to a global equities rout triggered by a rise in US Treasury yields overnight causing a record point decline in the Dow Jones Industrial Average. Finally, the rupee ended at 64.25, 19 paise weaker from its previous close of 64.06 on Monday.


The FIIs as per Tuesday data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 6031.51 crore against gross selling of Rs 7114.94 crore, while in the debt segment, the gross purchase was of Rs 2737.04 crore with gross sales of Rs 966.88 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.56 crore against no selling.


U.S. markets traded jubilantly and ended with a gain of around two percent on Tuesday, as traders went for short covering after previous session's sell-off. Asian markets were trading with traction on Wednesday, retracing losses made in the last session, after major U.S. indexes finished their Tuesday session higher. Japanese Nikkei edged higher by over three percent as weaker yen lifted exporters' shares. Indian shares continued to plunge on Tuesday, tracking weak global markets on concerns about rising inflation and potentially higher interest rates. Today the start is likely to be on positive side amid firm global cues. Traders will remain watchful ahead of outcome of Reserve Bank of India's (RBI) policy review meeting. The RBI is widely expected to keep its key rate on hold, but toughen its rhetoric as inflation has accelerated sharply. Traders will get some support from report that as many as 67 foreign direct investment proposals (FDI) worth Rs 117 billion were approved during the first nine months of the ongoing financial year. Traders may remain concern on report that India's fiscal deficit is expected to come in at 3.5 percent of GDP in financial year 2018-2019 , as policymakers seek to promote economic growth by reducing the pace of fiscal consolidation. According to the report by BMI Research, a unit of Fitch Group, there is room for fiscal slippage as the government seeks to achieve its 7.5 percent growth target. Steel stocks will be in focus after realising the importance of iron ore and coking coal to the competitiveness of steel making, the Union steel ministry said it wants to be consulted on all decisions concerning the two commodities. Sugar stocks too will be in focus after the government doubled import duty on sugar to 100 per cent to protect domestic farmers. At present, customs duty or import tax on sugar is 50 per cent. There will be lots of important earnings announcements too, to keep the markets buzzing. 

Support and Resistance: NSE (Nifty) and BSE (Sensex)



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Axis Bank






  • M&M has introduced higher powered mHAWK engine on the entry level and mid variants of its compact SUV TUV300.
  • Lupin has reported 64.98% fall in its net profit at Rs 221.73 crore for Q3FY18 as compared to Rs 633.11 crore for Q3FY17.
  • SBI is planning to raise equity capital by way of preferential allotment of equity shares to Government of India to the tune of Rs 8,800 crore.
  • Tata Steel is eyeing Rs 1,000 crore turnover from sale of household solutions in the next three years.
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