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NSE Intra-day chart (10 February 2016)
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Market Commentary 11 February 2016
Markets to make a cautious start lacking any supportive cues

Following decline in the global stock exchanges, Indian benchmark indices extended cuts for the third straight session and ended at their lowest level since May 2014 on the back of broad-based selling pressure. Sentiments remained down-beat with the report Indian economy is expected to grow at 7.9% in the fiscal starting April, lower than earlier forecast of 8.1%, due to intensifying global headwinds.  Also, the weak earnings of PSU banking stocks kept weighing on the sentiments, state-run lenders - Central Bank of India, Dena Bank, Allahabad Bank and IOB - reported massive losses and the spillover effects were seen on the other banking stocks too. Furthermore, foreign Institutional Investors (FIIs) continued their selling spree as they sold net Rs. 681 crore on February 09, 2015. Deprecating rupee against the dollar also influenced the sentiment. Indian rupee depreciated 6 paise to 67.96 against the US dollar due to increased demand for the American unit from importers and banks. Investors failed to draw any solace with Economic Affairs Secretary Shaktikanta Das underscoring the importance of reforms, stating that the 7.6 per cent GDP growth is ‘significant' amid the global turmoil and there is no need to be ‘skeptical'. On the global front, Asian markets ended in red, however, European shares rebounded on Wednesday from two-year lows reached in the previous session. Back home, the benchmark got off to a somber opening, extending the downtrend for the third straight session as pessimistic sentiments prevailed across Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The selling pressure accentuated in the mid afternoon trades as investors took to across the board risk aversion. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses go home with relatively less losses. Finally, the BSE Sensex declined by 262.08 points or 1.09% to 23758.90, while the CNX Nifty dropped 82.50 points or 1.13% to 7,215.70. 


The US markets closed mostly lower on Wednesday, with the Dow industrials and S&P 500 relinquishing their gains in late-afternoon trade, leaving the benchmark indexes with their longest stretch of consecutive losses in months. Materials and energy stocks led the losses, following a drop in oil prices, with West Texas Intermediate crude oil sinking below $28 a barrel for the first time in 3 weeks. Stocks had enjoyed healthy gains earlier in the session as Federal Reserve Chairwoman Janet Yellen delivered testimony and answered monetary-policy questions in front of a congressional committee but abruptly turned lower in afternoon trading. Fed Chairwoman Janet Yellen stated that the US central bank is watching the growing risks facing the economy but is unlikely to have to reverse course and cut interest rates. Yellen added that financial conditions have become less supportive to growth but the US economy could still continue to expand. On the economy front, the Treasury Department reported the federal government ran a budget surplus of $55 billion in January, and a fiscal year-to-date deficit of $160 billion. The Dow Jones Industrial Average lost 99.64 points or 0.62 percent to 15,914.74, the S&P 500 was down by 0.35 points or 0.02 percent to 1,851.86 while the Nasdaq was up 14.83 points or 0.35 percent to 4,283.59.  


Crude oil futures remaining near 12-year lows, slipped further on Wednesday, despite US Energy Information Administration (EIA) reported an unexpected draw in US crude inventories last week. EIA said in its Weekly Petroleum Status Report that US commercial crude oil inventories for the week ending on February 5, decreased by 754,000 barrels from the previous week. Total motor gasoline inventories also increased by 1.3 million barrels last week, extending gains from the previous four weeks. Benchmark crude oil futures for March delivery declined by $0.38 or 1.36 percent to $27.55 a barrel after trading in a range of $27.27 and $29.20 a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery closed at $30.91, down by $0.62 or 2.06 percent on the ICE.


Indian rupee appreciated for the second consecutive session against dollar on Wednesday on fresh selling of American currency by banks and exporters, despite sustained fall in equities. Besides, dollar's weakness overseas also added to the positive milieu of Indian currency. Further, investors got some relief with Economic Affairs Secretary Shaktikanta Das statement that the 7.6 percent GDP growth is 'significant' amid the global turmoil and there is no need to be 'skeptical', underscoring the importance of reforms. Meanwhile, the finance ministry said that tax collections stood at Rs 10.66 lakh crore in the first ten months of the current financial year, which was 73.5% of the Budget target of Rs 14.49 lakh crore. On the global front, dollar languished close to a 3-1/2-month low against a basket of major currencies on Wednesday, as traders waited for US interest rate guidance from Federal Reserve Chair Janet Yellen. Finally, the rupee ended at 67.85, 5 paise stronger from its previous close of 67.90 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity and in debt segments both. In equity segment, the gross buying was of Rs 1984.40 crore against gross selling of Rs 2620.54 crore, while in the debt segment, the gross purchase was of Rs 209.50 crore with gross sales of Rs 299.98 crore.      


The US markets made a mixed closing in last session after another day of volatility, as the price of crude oil once again showed wild swings during the day, with traders keeping an eye on Federal Reserve Chair Janet Yellen's semi-annual monetary policy report to the House Financial Services Committee. The Asian markets have made a weak start as crude oil extended its rout. Japanese markets are closed but traders are not getting any support with Janet Yellen's statement that Federal Reserve may delay policy tightening. The Indian markets unable to get any respite continued their plunge, ending near their 21 months low in last session. Today, the start is likely to remain cautious and another soft start is expected for the markets lacking any supportive cues. US Fed chief may have acknowledged weakness in global economies, but showed faith in the US economy, sounding that there will be further rate hikes during the rest of the year. There will be some buzz in the power sector stocks on report that Australia is willing to look at a regulatory framework for facilitating supply of gas at lower prices for India's gas-fired power stations, which may hold the key to the success of government's 100 GW (giga watt) solar dream envisaging round-the-clock clean and affordable power to all. Meanwhile, India and Australia agreed on enhancing cooperation in clean coal technology, renewable power and LNG in a bid to meet the burgeoning demand for cheap and environment-friendly energy. PSU banking stocks will again be in focus with largest PSU lender SBI, announcing its Q3 numbers later in the day. There will be lots of major auto companies too, announcing their numbers along with many others today.


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  • Gail has reported 9.96% rise in its net profit at Rs 664.26 crore for the quarter ended December 31, 2015 as compared to Rs 604.08 crore for the same quarter in the previous year.
  • KUV100, the new mini sports utility vehicle from Mahindra & Mahindra is proving to be a challenge for carmakers whose hatchbacks are threatened by the new rollout.
  • Bharti Airtel has migrated 40,000 of its network sites across India to Green technology.
  • Housing Development Finance Corporation has opened a new branch at Karimnagar, in the Telangana state.
  • Dr Reddys Labs has reported over three fold jump in its net profit at Rs 236.8 crore for the quarter ended December 31, 2015 as compared to Rs 71.6 crore for the same quarter in the previous year.
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