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NSE Intra-day chart (09 August 2017)
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Market Commentary 10 August 2017
Markets to make a cautious start on muted global cues

Bears continued to rule the roost at Dalal Street for third straight session, with frontline gauges breaching their crucial 31,800 (Sensex) and 9,950 (Nifty) levels, as geopolitical worries mainly weighed on the sentiments with remarks by President Donald Trump adding to concerns about rising tensions between the US and North Korea. Indian markets started on pessimistic note and traded under pressure, as investors continued to remain concerned after capital market regulator SEBI directed exchanges to initiate action against 331 suspected shell companies. SEBI's restrictions on trading in 331 stocks have impacted about 36 lakh investors. These include some big names, such as Rakesh Jhunjhunwala, DSP Blackrock, HDFC Mutual, Reliance Mutual and UTI among domestic investors. Foreign institutions like Goldman Sachs, Fidelity, Blackrock and Smallcap World too are holders of some of these stocks.  In last leg of trade, markets tried to pare their losses, but immense selling in dying hour of trade shattered all their hopes of getting a positive close. Investors failed to get any support with the government's statement that job loss through automation in India should not be a matter of concern as the ‘growth momentum' of the economy will result in new job opportunities. Investors paid no heed towards Niti Aayog Vice-Chairman Rajiv Kumar's statement that the implementation of Goods and Services Tax (GST) has brought down overall tax burden on the economy. Union Power Minister Piyush Goyal's statement that the newly-introduced GST is crucial for promoting transparency and a corruption-free business environment in the country, too failed to provide markets any strength. Finally, the BSE Sensex declined 216.35 points or 0.68% to 31,797.84, while the CNX Nifty was down by 70.50 points or 0.71% to 9,908.05.


The US markets closed lower on Wednesday, but off session lows as tensions between North Korea and the US added a dollop of geopolitical uncertainty to markets, and as high-profile companies disappointed with their quarterly results. In the latest escalation of tensions between Washington and Pyongyang, the isolated Asian country threatened a missile strike at US territory Guam. That saber-rattling came a day after US President Donald Trump said he would respond with fire and fury like the world has never seen if the country doesn't halt its threats. On the economy front, the productivity of US workers accelerated a bit in the second quarter as economic growth accelerated, though it remains well below historical average. Productivity - or how many goods and services US workers produce per hour - rose at an annual rate of 0.9% in the second quarter from the prior three months. This is up from a 0.1% rate in the first quarter. Unit labor costs, a measure of wages and benefits for US workers, grew at a 0.6% rate in the second quarter compared with the prior three months. This is down from a 5.4% rate in the first quarter. This closely-followed measure reflects how much it costs a business to produce one unit of output, such as a ton of coal, a ream of paper or a bushel of wheat. Faster output growth drove the strength in productivity. Output rose at a 3.4% rate in the second quarter compared with a 1.8% gain in the first quarter. The Dow Jones Industrial Average lost 36.64 points or 0.17 percent to 22,048.70, the Nasdaq dropped 18.13 points or 0.28 percent to 6,352.33, while the S&P 500 edged lower by 0.9 points or 0.04 percent to 2,474.02.


Crude oil futures bounced back on Wednesday, on data showing a sharp decline in supplies of U.S. crude but gains were capped by a surprise uptick in gasoline stockpiles. The report from the Energy Information Administration (EIA) showed crude stockpiles fell by more than expected last week, pointing to an uptick in refinery activity. EIA reported that US crude oil inventories fell by 6.5 million barrels to 1.15 billion barrels while gasoline inventories rose 3.4 million barrels to 231.1 million barrels in the week ended Aug. 4. It was sixth-straight week of falling crude inventories. Benchmark crude oil futures for September delivery gained $0.23 or 0.5 percent to $49.41 on the New York Mercantile Exchange. In London, Brent crude for September delivery ended higher by $0.53 at $52.67 a barrel on the ICE.


In line with equity market, the Indian rupee ended lower against US dollar on Wednesday, on account of sustained demand for dollar from banks and importers despite weakness in American currency overseas. Geopolitical worries mainly weighed on the sentiments with remarks by President Donald Trump adding to concerns about rising tensions between the US and North Korea. Investors paid no heed towards Niti Aayog Vice-Chairman Rajiv Kumar's statement that the implementation of GST has brought down overall tax burden on the economy. Finally, the rupee ended at 63.83, 20 paise weaker from its previous close of 63.63 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 6587.22 crore against gross selling of Rs 4689.20 crore, while in the debt segment, the gross purchase was of Rs 1906.64 crore with gross sales of Rs 975.73 crore.


The US markets extended their weakness and ended mildly lower once again in the last session on geopolitical concerns amid a continued increase in tensions between the U.S. and North Korea. The Asian markets have made mostly a soft start triggered by an escalation in tensions between the U.S. and North Korea, though many of the indices have halted the slide and some are making attempt to enter the green. The Indian markets once again lost the momentum completely in the final hours and lost over half a percent in the last  trade. Today, the start is likely to be cautious, on muted global cues, though some recovery can be expected in the latter part of the trade. Traders will be getting some support with report that a contraction in refund outgo, rich dividends from ‘Operation Clean Money' and more assessees coming under the income tax net post demonetisation, net direct tax collections surged 19.1 per cent to Rs1.90 lakh crore during April-July. Markets will also be getting some support with industrialist Adi Godrej's statement that despite certain teething problems under the new tax regime, the Goods and Services Tax (GST) will lead to considerable increase in the GDP in the next six months. Meanwhile, the government has notified the timeline for furnishing final tax returns for July and August under the GST regime. As per the notification, outward supplies in Form GSTR-1 for the month of July will have to be filed between September 1-5. For August, it is to be filed between September 16-20. The original date for filing GSTR-1 was 10th of the next month. There will be lots of important earnings too, to keep the markets in action. There will be some buzz from the primary market too, as the shares of Security and Intelligence Services (SIS) will make its stock market debut today, the issue was subscribed 7 times.


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