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NSE Intra-day chart (08 January 2019)
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Market Commentary 09 January 2019
Markets to make optimistic start on firm global cues


Higher gross domestic product (GDP) growth forecast kept Indian equity benchmarks higher for the third straight session on Tuesday. The Central Statistics Office (CSO) in its First Advance Estimates of National Income, 2018-19, showed that India's economic growth is expected to grow at 7.2% in the current fiscal year (FY19) from 6.7% in the previous fiscal, mainly due to improvement in the performance of agriculture and manufacturing sectors. The start of the trading session was cautious, impacted by Credit ratings agency, Crisil Ratings' latest report that India Inc is likely to register fall in revenue as well as profit growth numbers in Q3 (October-December) of 2018-19. Attributing the estimate mainly to high base in general and certain sector specific issues, it said that revenue growth will dip by up to 5 percentage points on average to 12-13%. The trade remained volatile for most part of the session, as Reserve Bank of India (RBI) governor Shaktikanta Das warned against farm loan waivers, saying a generalised loan waiver adversely hits the credit culture and suggested that states should look at their fiscal position before announcing these amnesty schemes. However, in the last leg of the trade, the markets gained momentum to end with notable gains, as Economic Affairs Secretary Subhash Chandra Garg described the 7.2% GDP growth projection for 2018-19 as very healthy and noted that India remains to be the fastest growing economy in the world. Garg also highlighted that increase in gross fixed capital formation (GFCF) indicates a pickup in investment activities. Traders were seen taking encouragement with the Finance Ministry's latest report indicating that in the first nine months (April-December) of current financial year (FY19), the direct tax collections surged by 14.1% to Rs 8.74 lakh crore. During the same period, the refunds amounting to Rs 1.30 lakh crore have also been issued, an increase of 17% from the year-ago period. Some comfort also came with a private report expecting that the government to maintain fiscal deficit target of 3.2-3.3%. Meanwhile, RBI Governor Shaktikanta Das has said that necessary steps will be taken by the central bank if there is a liquidity shortage in the economy. Das also said that he will meet representatives of non-banking finance companies to understand the liquidity crunch the sector is facing. Finally, the BSE Sensex gained 130.77 points or 0.36% to 35,980.93, while the CNX Nifty was up by 30.35 points or 0.28% to 10,802.15.


Extending their gains for third straight day, the US markets ended higher on Tuesday, as optimism about trade talks between the US and China contributed to the continued strength on markets amid a second day of meetings between US and Chinese officials. Face-to-face negotiations between US and Chinese officials entered a second day Tuesday, with hopes rising that the talks will bear fruit after Chinese President Xi Jinping's top policy aide, Premier Liu He, made an appearance on Monday. Meanwhile, President Donald Trump stated that talks were going well. Besides, support also came in real estate and internet stocks, while Apple Inc. and other mega-cap tech companies also helped to propel the market higher. Apple shares rose 1.9 percent after CEO Tim Cook tried to assuage some of the concerns plaguing the tech giant. Amazon also gained 1.66 percent, while Facebook jumped 3.26 percent. Netflix and Alphabet also closed higher. These gains add to the so-called FAANG trade's sharp rise since December 24. Netflix's stock was up nearly 37 percent in that time. On the economic front, small-business optimism fell in December, according to the National Federation of Independent Business small-business optimism index, which decreased 0.4 points to a seasonally adjusted level of 104.4, its lowest in 14 months. Dow Jones Industrial Average surged 256.10 points or 1.09 percent to 23787.45, Nasdaq gained 73.53 points or 1.08 percent to 6897.00 and S&P 500 was up by 24.72 points or 0.97 percent to 2574.41.


Magnifying their gains for seventh straight session, Crude oil futures ended higher on Tuesday, the longest run of gains in roughly 18 months, with prices lifted by global efforts to curb crude output, as well as measured optimism around US-China trade talks. The crude oil rally has been fueled by the Organization of the Petroleum Exporting Countries (OPEC) supply cuts that were planned to take 1.2 million barrels per day off the global market. Oil production from OPEC fell by 630,000 barrels a day to a six-month low of 32.43 million barrels in December from a month earlier. Benchmark crude oil futures for February surged $1.26 or 2.6 percent to settle $49.78 a barrel on the New York Mercantile Exchange. March Brent crude rose $1.39 or 2.4 percent to settle at $58.72 a barrel on London's Intercontinental Exchange.


Snapping its two-day gaining streak, Indian rupee ended considerably weaker against dollar on Tuesday, amid rising crude prices and strong demand for the American currency from importers. Sentiments turned pessimistic with a report that the growth in direct tax collection in the first nine months of the year was marginally lower than the rate of 14.4% required to meet the budget estimate of Rs 11.5 lakh crore for direct taxes in FY19. The net (post-refunds) direct tax collection for April-December period this fiscal was Rs 7.43 lakh crore, up 13.6% from the year-ago period. Traders failed to get relief with the central statistics office's (CSO) latest data showing that Indian economy is expected to grow at 7.2% in 2018-19, a tad higher from 6.7% in the previous fiscal, mainly due to improvement in the performance of agriculture and manufacturing sectors. On the global front, euro fell on Tuesday as the euro zone economy showed more signs of slowing, while the dollar gained despite growing bets the US central bank will pause its rate hike cycle. Finally, the rupee ended at 70.21, 53 paise weaker from its previous close of 69.68 on Monday.


The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4309.60 crore against gross selling of Rs 4005.04 crore, while in the debt segment, the gross purchase was of Rs 1707.21 crore with gross sales of Rs 1586.02 crore. Besides, in the hybrid segment, there was no buying and selling.


The US markets ended considerably higher on Tuesday on signs of progress between the US and China on trade negotiations. Asian markets were trading in green on Wednesday, supported by optimism the United States and China can strike a trade deal to avoid an all-out confrontation that will severely disrupt the global economy. Indian markets ended Tuesday's choppy trading session on positive note for the third straight day on widespread buying towards the fag-end amid fresh inflows by foreign funds and positive global cues. Today, the markets are likely to make positive start tacking firm global cues amid optimism on the potential for progress in trade talks between Washington and Beijing. Traders will be getting encouragement with the World Bank's forecast that India's Gross Domestic Product (GDP) is expected to grow at 7.3% in the fiscal year 2018-19, and 7.5% in the following two years. It said the growth is attributed to an upswing in consumption and investment. The bank said India will continue to be the fastest growing major economy in the world. Some support will also come with the finance ministry's statement that the recovery of evaded indirect taxes shot up in 2018-19, after a low in 2017-18, the year when the goods and services tax (GST) was implemented. Recovery as a percentage of the evaded taxes dropped from 26% in 2016-17 to 14% in 2017-18. Then, it went up to 29% in 2018-19 (April to December period). Traders may take note of a report that the central government has released Rs 48,202 crore as GST compensation to states during April-November 2018, higher than the Rs 48,178 crore paid in the previous financial year. There will be some buzz in the banking sector stocks with ICRA's report that the government decision to infuse Rs 41,000 crore more capital into the state-run banks is positive for these lenders as it will help them lower their losses on dud loans. With this round, the overall capital infusion into state-run banks during FY15-FY19 stands at Rs 2.56 trillion. There will be some reaction in gems and jewellery sector stocks with a private report indicating that India's gold imports have declined by 14.5% in 2018 to 759 tonnes from 876 tonnes the previous year. The reasons are sluggish demand, changes in regulations such as alteration of criteria for nominated agencies to import gold and the ban on export of 24 carat jewellery to stop misuse. Also, there will be buzz in the power sector stocks with report that power plants across the country generated 1,047.3 billion units (BU) of electricity in April-December, 2018, registering a 6.7% year-on-year (y-o-y) growth.


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  • Reliance Industries' telecom arm -- Reliance Jio Infocomm -- has launched the Kumbh JioPhone.  
  • Tata Motors' wholly owned subsidiary -- JLR has reported 16.23% rise in its sales in India at 4,596 units in 2018. The company had sold 3,954 units in 2017. 
  • Government is planning to incentivise ONGC and Oil India to raise output from fields given without auction to state-run firms in previous years. 
  • JSW Steel has reported crude steel production of 4.23 MT in Q3 FY19, registering a growth of 3% over corresponding period of previous year.
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