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NSE Intra-day chart (07 September 2016)
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Market Commentary 08 September 2016
Markets to make a cautious start on sluggish global cues


It turned out to be a lackadaisical performance from the benchmark indices on Wednesday as they failed to snap the session in the green territory and settled marginally below the neutral line.  The frontline gauges took a breather, a session after showcasing a scintillating performance as market participants remained on the sidelines lacking conviction amid the persistent worries over Thursday's meeting of the European Central Bank. Anxiety among investors further increased after disappointing US services data reignited worries about growth in the world's largest economy. However, the downside risks for the frontline indices was limited by reports that the government has begun the groundwork for creation of a secretariat to cater to the Goods and Services Tax (GST) Council, which will be constituted after Presidential assent for the Constitution Amendment Bill enabling implementation of the proposed tax. The government wants the institutional arrangements ready so that the GST Council can start deliberating the nuances of the law quickly. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1439 crore on September 06, 2016. Investors were also optimistic  about the private report indicating that India is on the path of becoming a 'pivot' for high-tech world manufacturing even as global manufacturing growth is expected to remain low in 2016 due to weakened financial support for productive activities. Meanwhile, stocks related to agriculture and irrigation gained traction on report that India's apex rural-development bank National Bank for Agriculture and Rural Development (NABARD) will manage a Rs. 77,000 crore corpus as part of a Central government push to complete 99 unfinished irrigation projects across the country by 2019 and bring water to 76.03 lakh hectares. Good buying was also observed in many banking stocks on the report that services sector data, which came out yesterday, showed there is still room for the Reserve Bank of India (RBI) to cut interest rates further. Finally, the BSE Sensex declined by 51.66 points or 0.18% to 28926.36, while the CNX Nifty dropped 25.05 points or 0.28% to 8,917.95.


The US markets closed mostly lower on Wednesday, after a report from the 12 Federal Reserve districts had a modestly positive tone about the economy but noted that the presidential election is making some firms cautious about expanding activity. The Fed's latest beige book report stated that commercial real estate contacts in several districts cited only modest expectations for sales and construction activity moving forward, due in part to economic uncertainty surrounding the November elections. The Dallas, Cleveland and Boston districts cited the election as one reason that firms were cautious about the outlook. Overall, the beige book had the same modestly positive tone seen in the last few surveys. The latest report gave no hint of a second-half surge in growth or any reason for urgency to raise interest rates. The Fed report highlighted that activity in the manufacturing sector was flat to slightly up, while demand growth for nonfinancial services picked up slightly. On the economy front, the Labor Department's job openings and labor turnover survey showed 5.87 million openings, an all-time high, while hires increased to 5.23 million from 5.17 million in June. The Dow Jones Industrial Average lost 11.98 points or 0.06 percent to 18,526.14, S&P 500 was down 0.32 points or 0.01 percent to 2,186.16, while Nasdaq was up 8.02 points or 0.15 percent to 5,283.93. 


Crude oil futures rallied on Wednesday amid hopes that Russia and Saudi Arabia will curb supplies. However, the limited likelihood of a near-term agreement among the world's biggest exporters to rein in production kept gains in check. The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia are expected to discuss an output freeze at informal talks in Algeria on Sept. 26-28. Benchmark crude oil futures for October delivery gained $0.47 or 1.05 percent to close at $45.30 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for November delivery gained by $0.55 or 1.16 percent to $47.81 a barrel on the ICE.


Indian rupee continued its unabated run on Wednesday and climbed to over 4 months high, on increased selling of the American currency by banks and exporters. The domestic currency continued being aided by strong foreign fund inflows and weakness of the dollar against other currencies overseas after data showed activity in the US service sector slowed sharply last month. The initial gain in the equity markets too supported the rupee to some extent, however they lost their momentum but rupee continued its bullish trend for the sixth consecutive session. Gains in the Asian currencies markets also boosted sentiments, while on the global front the dollar fell to its lowest in more than a week against the yen on Wednesday as subdued US data made an interest rate increase this month by Federal Reserve unlikely. Finally the rupee ended at 66.37, stronger by 15 paise from its previous close of 66.52 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5549.06 crore against gross sell of Rs 4155.68 crore, while in the debt segment, the gross purchase was of Rs 1454.68 crore with gross sales of Rs 964.70 crore.


The US markets after a lackluster trade ended almost flat in last session, though the tech-heavy Nasdaq reached another new record closing high. Traders largely shrugged off the Federal Reserve's Beige Book, which said economic activity continued to expand at a modest pace from July through late August. The Asian markets have made mostly a lower start, with some indices falling for the first time in last four days. Japanese market also declined, as investors assessed the chances of government stimulus after revised data showed the economy grew more than estimated. The Indian markets turned into consolidation mood, with traders booking some profit in the last session after the recent rallies. Today, the start is likely to be cautious on sluggish global cues, though traders will be getting some encouragement with Finance Minister Arun Jaitley's statement that the government is 'running against time' for the implementation of GST, but added that he would certainly like to give it a try. He said the new GST, once implemented, would have a transformational impact by creating a common market in the country, while also acting as a transfer mechanism that would aid poorer states. Meanwhile, Economic Affairs Secretary Shaktikanta Das has said that implementation of the goods and services tax will bring small and medium enterprises (SMEs) into the national value chain and committed many more reforms.  There will be some buzz in the aviation sector as the domestic air travel surged with 26.2 per cent traffic growth in July, while globally domestic travel demand climbed 3.8 per cent in July, compared to the same month last year. There will be some buzz in services oriented stocks too, as Commerce Minister Nirmala Sitharaman has said that India will present proposals to the World Trade Organization on ways to ease trade in services.


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



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  • BHEL has reported 54.21% rise in its net profit at Rs 77.77 crore for the quarter ended June 30, 2016 as compared to Rs 50.43 crore for the same quarter in the previous year.
  • Tata Motors' subsidiary -- Jaguar Land Rover has reported its best ever August retail sales of 36,926 vehicles, up 26% compared to August 2015.
  • Bharti Airtel is planning to launch 4G services in Assam.
  • In order to boost its capital base as well as business growth, SBI has raised Rs 2,100 crore through perpetual bonds.
  • Wipro has won an IT contract from NSB Group, one of Norway's largest transportation groups.
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