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NSE Intra-day chart (08 February 2017)
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Market Commentary 09 February 2017
Markets to make a soft-to-cautious start

It turned out to be a lackadaisical performance from the Indian benchmark indices on Wednesday as they snapped the session near neutral line. Sentiments remained dismal after Reserve Bank of India (RBI) maintained status quo on interest rates in its sixth monetary policy review of financial year 2016-17. The central bank decided to change the stance from accommodative to neutral and kept the short-term lending rate, called repo rate, unchanged at 6.25%, opting to wait for more clarity on the trend for inflation. RBI has also cut the economic growth forecast to 6.9 percent for the current fiscal from 7.1 percent estimated earlier. However, inventors got some comfort with the central bank's statement that demonetisation-induced ease in bank funding conditions has led to a sharp improvement in transmission of past policy rate reductions into marginal cost-based lending rates (MCLRs), and in turn, to lending rates for healthy borrowers, which should spur a pick-up in both consumption and investment demand. It also said the economic activity in cash-intensive sectors such as retail trade, hotels and restaurants, and transportation, as well as in the unorganised sector, is expected to be rapidly restored. Some support also came after Economic Affairs Secretary Shaktikanta Das rejecting arguments that fiscal deficit target of 3.2 per cent is optimistic, said it is realistic and there is all possibility that revenues will exceed the target as Budget has not taken into account the demonetisation windfall. Besides, he said, there would be collection taxes next fiscal from those who fail to avail Pradhan Mantri Garib Kalyan Yojana (PMGKY). On the global front, Asian markets ended mostly lower on Wednesday on lingering political and economic uncertainty in the United States and Europe, which sapped investors' confidence. Back home, finally, the BSE Sensex declined 45.24 points or 0.16% to 28289.92, while the CNX Nifty was up by 0.75 points or 0.01% to 8,769.05.


The US markets closed mostly higher on Wednesday, but weak financial stocks dragged the Dow Jones Industrial Average lower in a session where the major indexes mostly hugged the flat line. Financial stocks were pressured by falling yields, with the benchmark 10-year Treasury note's yield earlier touched three-week low. Low yields tend to hurt banks' business models. Major US stock indexes are hovering around record highs after a rally following the November 8 election of President Donald Trump amid expectations he will usher in fiscal stimulus and lower regulations and taxes. But the rally has stagnated in recent days as investors await more details about Trump's potential economic policy agenda. Federal Reserve Chair Janet Yellen will testify on the US economy and monetary policy before the House Financial Services Committee on February 15. The Nasdaq was up 8.23 points or 0.15 percent to 5,682.45, S&P 500 gained 1.59 points or 0.07 percent to 2,294.67, while the Dow Jones Industrial Average lost 35.95 points or 0.18 percent to 20,054.34. 


Crude oil futures ended modestly higher despite data on crude oil inventories from the the Energy Information Administration (EIA) showed a massive build and the third straight weekly increase. EIA reported that crude oil inventories in the U.S. jumped by 13.5 million barrels at the end of last week. However, gasoline stockpiles unexpectedly fell, signaling that demand for crude oil will rise in the coming weeks. Gasoline stocks fell 869,000 barrels and crude stocks at the Cushing, Oklahoma, delivery hub for US crude futures rose 1.1 million barrels. Benchmark crude oil futures for March delivery gained $0.17 or 0.33 percent to $52.34 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended higher by $0.07 or 0.13 percent at $55.12 on the ICE.


Indian rupee ended stronger against dollar on Wednesday on account of sustained selling of American currency by banks and importers. Local currency got some support from a private report stating that the global economic order is expected to shift from advanced to emerging economies over the next few decades and by 2040 India could edge past the US to become the world's second largest economy in purchasing power parity (PPP) terms. Rupee strengthened further despite the Monetary Policy Committee of the Reserve Bank of India, headed by Urjit Patel, unanimously decided to hold the key repo rate at 6.25 percent and reverse repo rate at 5.75 percent. On the global front, euro slipped against dollar, pressured by political woes in Europe ahead of elections that checked its recent ascent against the dollar. Finally, the rupee ended at 67.18, 24 paise stronger from its previous close of 67.42 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 4393.68 crore against gross selling of Rs 4123.38 crore, while in the debt segment, the gross purchase was of Rs 2010.85 crore with gross sales of Rs 1302.64 crore.


The US markets made a mixed closing in last session after showing a lackluster trade through the day, as traders seemed reluctant to make significant amid another relatively quiet day on the U.S. economic front, though the tech-heavy Nasdaq reached a new record closing high. The Asian markets have made a mixed start with some indices trading marginally in red with the Euro-dollar volatility surged as investors assess political risks in Europe and the US, while the Chinese market extended the rally. The Indian markets coming off the intraday low managed a flat closing in last session, with traders digesting RBI's status quo stance. Today, the start is likely to remain cautious with RBI cutting the economic growth forecast to 6.9 percent for the current fiscal from 7.1 percent estimated earlier, even as the RBI governor said the economy will bounce back to 7.4 percent rate next fiscal. Markets may get some support with governor's another statement that there is further scope for banks to reduce lending rates as the Reserve Bank has already brought down its policy rates by 175 basis points since January 2015. Marketmen will also be getting some support with reports that foreign direct investment into the country surged by 60 percent to $ 4.68 billion in November 2016, compared to $2.93 billion in November 2015. There will be some buzz in the IT stocks, as global IT major Cognizant has guided for a revenue growth of $3.51 billion to $3.55 billion for March quarter. The company expects March quarter non-GAAP diluted EPS to be at least $0.83 per share. There will be lots of earnings reactions to keep the markets buzzing.


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Tata Steel






  • ICICI Bank's subsidiary ICICI Securities has entered into a strategic partnership with Saxo Bank.
  • Tata Power has launched 'spot collection' facility in the eastern part of Mumbai to provide value-added services to its consumers.
  • Idea Cellular is planning to raise Rs 1,000 crore through issuance of non-convertible debentures on private placement basis.
  • NTPC has reported 7.50% fall in its net profit at Rs 2468.72 crore for the quarter ended December 31, 2016 as compared to Rs 2668.77 crore for the same quarter in the previous year.
  • Bharti Airtel is restructuring its shareholding pattern of foreign subsidiaries to simplify the structure and bring in synergies between the companies.


News Analysis