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NSE Intra-day chart (09 January 2017)
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Market Commentary 10 January 2017
Soft to cautious start on cards on mixed global cues

Indian equity markets commenced the week on a sluggish note as the frontline indices showcased an unenthusiastic performance on Monday and settled with moderate cuts of around ten basis points. Market participants remained on the sidelines and refrained from any buying activity after the US payrolls data released on Friday indicated strong underlying wage growth, strengthening the case for more rate increases in 2017. The US Labor Department said non-farm payroll employment climbed by 156,000 jobs in December, while hourly pay jumped 2.9 percent from the year before, which was the biggest monthly increase in seven years. For 2016 overall, job growth in the world's biggest economy remained steady, although the pace was slower than in 2015. On the domestic front, sentiments were undermined by the advance estimates of GDP data for fiscal year 2017, indicated a slowdown in growth even though the figures do not take into account the demonetisation impact. GDP growth is estimated to slow down to 7.1% in the current fiscal, from 7.6% in 2015-16, mainly due to slump in manufacturing, mining and construction sectors. sentiments weakened further on the report that Foreign investors pulled out more than $3 billion of the so-called 'hot money' from the Indian capital markets in 2016, making it the worst period in last eight years in terms of foreign investments. However, investors got some ease with Finance minister Arun Jaitley's statement that the impact of demonetization on the economy would be "transient" but in the medium and long run, the GDP would be "bigger and cleaner" and it will also help lower interest rates. He also said that the Goods and Services Tax (GST), which will be implemented this year, will provide for better indirect tax administration. Some support also came with the report that India has emerged as the most optimistic country globally in terms of business optimism as the country's businesses are high on expectations of increasing revenue, employment, profitability. According to the report, there is an overall increase in global optimism which augurs very well for India in terms of attracting investments and providing markets for Indian products and services globally. Finally, the BSE Sensex declined 32.68 points or 0.12% to 26726.55, while the CNX Nifty was down by 7.75 points or 0.09% to 8,236.05.

The US markets presented a mixed performance on Monday following the good gains in previous session. While the tech heavy Nasdaq extended the gains, the Dow and S&P ended mildly in red. A lack of major US economic data kept some traders on the sidelines, while energy stocks showed a notable move to the downside on the day amid a sharp drop in the price of crude oil. Traders are now waiting for release of producer prices and retail sales data along with financial giants Bank of America, JPMorgan Chase and Wells Fargo's quarterly results later this week for further cues. The Nasdaq gained 10.76 points or 0.20 percent to 5,531.82, while Dow Jones Industrial Average declined by 76.42 points or 0.40 percent to 19,887.38 and S&P 500 ended lower by 8.08 points or 0.35 percent to 2,268.90.

Crude oil futures started the week on a tepid note and declined to three week low on Monday, on indications of increased drilling activity in U.S. and overlooking signs that OPEC members are adhering to planned output cuts. There were also some worries in the market about production increases in Libya and Nigeria, which are both allowed to ramp up production as part of the OPEC deal. In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world's largest oil consumer. Benchmark crude oil futures for February delivery was down by $2.03 or 3.8 percent to $51.96 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended lower by $2.16 or 3.8 percent at $54.94 on the ICE.

Indian rupee ended one-week low against US dollar on Monday, tracking the losses in the local equity markets. Rupee sentiments were pessimistic after the advance estimates of Gross Domestic Product (GDP) data for fiscal year 2017, indicated a slowdown in growth even though the figures do not take into account the demonetisation impact. GDP growth is estimated to slow down to 7.1% in the current fiscal, from 7.6% in 2015-16, mainly due to slump in manufacturing, mining and construction sectors. Besides, sustained capital outflows and dollar strengthen against a basket of some currencies also weighed on the local unit. On the global front, dollar pushed higher against a basket of the other major currencies on Monday as the U.S. jobs report for December supported the case for rate hikes. Finally, the rupee ended at 68.20, 24 paise weaker from its previous close of 67.96 on Friday.

The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3511.02 crore against gross selling of Rs 3829.52 crore, while in the debt segment, the gross purchase was of Rs 563.75 crore with gross sales of Rs 751.19 crore.

The US markets made a mixed closing in last session with energy stocks declining amid lack of any major economic news. The Asian markets have made a mixed start and some of the indices are in red led by the Japanese market. The Indian markets ended marginally in red after a lackluster performance during the day on mixed global cues and weakness in rupee. Today the start is likely to see a cautious trade on mixed global cues and few other brokerages projecting a sharply lower growth numbers for the year. However, traders will get some support with Finance Minister Arun Jaitley's statement dismissing the slowdown concerns, saying that higher tax mop up indicates uptick in economic activity. He said that demonetised notes had no role to play in the tax collections for December as people were allowed to pay taxes in the spiked currency only in November and the indirect and direct tax collections between April and December this year increased by 25 percent and 12.01 percent respectively compared to the same period last year. The banking stocks will be under pressure, as the global credit rating agency Moody's and its Indian arm ICRA has said that asset quality issues will continue to hurt prospects of Indian banks in the medium term, despite continued deterioration of the asset quality having been arrested by most of the lenders.  On the other hand there will be some buzz in the aviation stocks, as per the global airlines OTP survey report domestic carriers Jet Airways and IndiGo have ranked seventh and tenth, respectively, in on-time performance in Asia Pacific.

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  • ITC has commenced construction of its super premium five star hotel 'ITC Narmada' in Gujarat.
  • Tata Motors is aiming to be among the top three passenger vehicle makers in India by 2019.
  • Maruti Suzuki India has reported 0.40% fall in its production to 107,338 units in December 2016 as compared to 107,773 units in December 2015.
  • Tata Steel has posted a 13% rise in sales in April-December 2016 to 7.7 mt up from 6.8 mt in the same period in 2015.
  • Tata Power Delhi Distribution, a joint venture of Tata Power and the Government of Delhi, has commissioned a 66/11 kV AIS Grid Substation at Dheerpur, Delhi. 

News Analysis