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NSE Intra-day chart (04 August 2017)
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Market Commentary 07 August 2017
Markets to start the new week on a positive note

Bulls which woke up in last leg of trade mainly helped the benchmarks to end near intraday high levels on Friday, as investors took to hefty across the board buying. Markets started the day on pessimistic note and extended their downside, as the Street remained disappointed with Reserve Bank of India's 25 bps rate cut. Traders also remained concerned with Finance Minister Arun Jaitley's statement that lending rate of 14-15 percent will make India uncompetitive in the global market and industry cannot invest at such higher interest rates. He said at a time when inflation was running high at 10 percent bank deposit rates were high at 9 percent. But loans were extended by banks at 14-15 percent interest rate and with such high interest rates global industrial investments will not come in. However, 32,100 (Sensex) and 10,000 (Sensex) proved to be the strong support levels, as markets started recovering from thereon and entered into green terrain in last leg of trade. Traders took some solace with the private report expecting a pick-up in the note ban affected rural demand from October this year. The report further said that the second consecutive bumper crop on good monsoons, farm loan waivers, and lower agriculture input costs will help revive the rural demand. Meanwhile, the government may impose anti- dumping duty on castings for wind operated power generators from China to guard domestic players from below-cost imports. Finally, the BSE Sensex gained 87.53 points or 0.27% to 32,325.41, while the CNX Nifty was up by 52.75 points or 0.53% to 10,066.40.

The US markets closed higher on Friday, with the Dow ending at a record for an eighth straight session following a read on the labor market that came in above expectations, a sign that current valuations may be supported by current economic activity. The Atlanta Federal Reserve's GDP Now forecast model showed that the US economy is on track to grow at a 3.7 percent annualized pace in the third quarter, following the release of the government's July payrolls report. The latest third-quarter gross domestic product estimate was weaker than the previous one for 4.0 percent growth. Also, the US labor market showed little sign of exhaustion nine years into an economic recovery as the economy added an impressive 209,000 new jobs in July. The US has created nearly 450,000 new jobs in the past two months, knocking the unemployment rate back down to a 16-year low of 4.3%. A steady flow of new jobs has added fresh fuel to a recovery that is one of the longest on record. More Americans working and bringing home paychecks has spawned higher consumer spending and kept the economy on an even keel. Pay rose 0.3% in July to an average of $26.36 an hour. The Dow Jones Industrial Average added 66.71 points or 0.30 percent to 22,092.81, the Nasdaq gained 11.22 points or 0.18 percent to 6,351.56, while the S&P 500 edged higher by 4.67 points or 0.19 percent to 2,476.83. 

Crude oil futures though managed a positive close on Friday but snapped the volatile week in red, amid renewed concerns over Opec's compliance with the deal to curb production.  Concerns over growing Opec production come ahead of a highly anticipating meeting between Opec members on Aug 7-8, as the group seeks to reaffirm its committee to increase compliance with the deal to curb production. Meanwhile, oilfield services firm Baker Hughes reported that the weekly count of oil rigs operating in the United States ticked down by one rig to a total of 765. However, a strong US jobs report supported the dollar, preventing a bigger rally in oil prices. Benchmark crude oil futures for September delivery moved up by $0.55 or 1.1percent to $49.58 on the New York Mercantile Exchange. In London, Brent crude for September delivery ended higher by $0.36 at $52.35 a barrel on the ICE.

Continuing its winning run for the fourth straight session, Indian rupee ended higher against dollar on Friday, due to sustained selling of the US currency by exporters and banks. Investors took support with the private report expecting a pick-up in the note ban affected rural demand from October this year. The report further said that the second consecutive bumper crop on good monsoons, farm loan waivers, and lower agriculture input costs will help revive the rural demand. The domestic unit also got some support as dollar weakened overseas along with positive gains in the local equity markets. On the global front, the dollar slipped against yen as investors awaited the closely watched non-farm jobs report later in the session for potential relief. Finally, the rupee ended at 63.57, 11 paise stronger from its previous close of 63.68 on Thursday.

The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5565.19 crore against gross selling of Rs 5509.68 crore, while in the debt segment, the gross purchase was of Rs 3356.97 crore with gross sales of Rs 923.88 crore.

The US markets made a modestly positive close in last session supported by a strong U.S. jobs report. Employment in the US jumped by 209,000 jobs, much more than anticipated in the month of July. The Asian markets have made mostly a positive start led by the Japanese market on strong US hiring data which bolstered optimism about economic growth in the world's largest economy, though the Chinese market was marginally in red. The Indian markets after two days of losses, made a strong comeback in the final hours and recovered all their initial losses to post gains of about a quarter percent in the last session. Today the start of the new week is likely to be in green tailing positive global cues. Traders will first be reacting to the outcome of the GST Council meeting, which during weekend approved implementation the electronic way bill system across the country, created necessary structural framework for anti-profiteering mechanism and provided relief to the agitating textiles sector by slashing rate of job work to 5% from a high of 18%. Meanwhile, the government has said that rollout of GST by and large has been smooth and it has deployed a large number of senior officials to regularly review the working of the new indirect tax regime. Traders will also react positively to the appointment of noted economist Rajiv Kumar as the new vice-chairman of the government think-tank Niti Aayog. There will be buzz in the gold and jewellary sector stocks, as the Finance Ministry has turned down the Commerce Ministry's pitch for a reduction in import duty on gold, citing improved data in respect of the current account deficit (CAD). There will be lots of important earnings announcements too, to keep the markets in action.

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



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  • Infosys is planning to acquire Brilliant Basics, a London-based product design and customer experience company, for an undisclosed amount.
  • M&M's wholly owned subsidiary - Mahindra Agri Solutions has inked a pact with Multi Commodity Exchange of India to provide agriculture related price information.
  • BPCL is planning to venture into gas business and diversify resources for sourcing fuels as part of its five-year plan.
  • IndusInd Bank has inaugurated its first branch in Faridkot.
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