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NSE Intra-day chart (10 December 2018)
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Market Commentary 11 December 2018
Markets to make gap-down opening amid uncertainty after Urjit Patel's resignation


Indian equity benchmarks joined global sell-off on Monday, as both Sensex and Nifty ended in red, suffering from their worst losses. The start of day was disappointing, impacted by jitteriness on the street ahead of declaration of elections results of the five major states - Chhattisgarh, Madhya Pradesh, Mizoram, Telangana and Rajasthan - on December 11. The exit polls for five states showed that Prime Minister Narendra Modi's popularity is in doubt going into 2019 election. Domestic sentiments were also got cautious with former chief economic advisor Arvind Subramanian's statement that the new gross domestic product back-series data, released late last month by the Central Statistics Office and NITI Aayog, raised a lot of questions and hurt the credibility of official data. Adding more anxiety, the Reserve Bank of India's (RBI) data showed that India's current account deficit (CAD) widened to 2.9% of the Gross Domestic Product (GDP) in the second quarter of the fiscal compared to 1.1% in the year-ago period, mainly due to a large trade deficit. Some concerns also came with a report that foreign investors have pulled put close to Rs 400 crore from the Indian stock market in the last five trading sessions amid weakness in global equities due to the arrest of a high-profile Chinese executive. The trade remained under pressure throughout the session, following weak global markets amid trade worries. Weakness continued on the markets, despite rise in direct tax collections. As per the data released by finance ministry, revenue from direct tax grew 14.7% to Rs 5.51 lakh crore in the first eight months of the current financial year 2018-19 (April-March). The market participants failed to take any sense of relief with IMF's Chief Economist Maurice Obstfeld's statement that India's growth has been very solid over the past four years and he praised the fundamental economic reforms like the GST and the Insolvency and Bankruptcy Code carried out by the government. The street paid no heed towards RBI's weekly statistical supplement showing that India's foreign exchange (forex) reserves rose by $932.8 million during the week ended November 30. Traders even overlooked Finance Minister Arun Jaitley's statement that the number of income tax payers can double to almost 12 crore, amid increasing formalisation of the economy. He also expects number to go up to 7.6 crore before the present government completes its five year term and noted that as many as 6.86 crore I-T returns have been filed this year. Finally, the BSE Sensex plunged 713.53 points or 2.00% to 34,959.72, while the CNX Nifty was down by 205.25 points or 1.92% to 10,488.45.


The US markets ended marginally higher on Monday as traders went bargain hunting after the early weakness extended the sell-off seen last week. Further, some support also came in as renewed confidence in the strength of the US economy offset lingering worries over the US-China trade dispute. The Dow and the S&P 500 rebounded after hitting their lowest intraday levels in seven and eight months, respectively. However, traders remained on the sidelines amid a lack of major US economic data. The economic calendar remains relatively light throughout the week, although reports on producer and consumer price inflation, retail sales, and industrial production are likely to attract attention in the coming days. Meanwhile, investors were increasingly focusing on the December 18-19 Federal Reserve meeting, where the central bank is widely expected to raise interest rates. On the economic front, a report released by the Federal Reserve on Friday showed a substantial increase in US consumer credit in the month of October. The report said consumer credit spiked by $25.4 billion in October after climbing by an upwardly revised $11.6 billion in September. Street had expected consumer credit to jump by $17.0 billion compared to the $10.9 billion increase originally reported for the previous month. Dow Jones Industrial Average rose 34.31 points or 0.14 percent to 24423.26 and S&P 500 added 4.64 points or 0.18 percent to 2637.72 and Nasdaq was up by 51.27 points or 0.74 percent to 7020.52.


Crude oil futures ended sharply lower on Monday on growing concerns over a slowdown in energy demand, failing to extend last week's rally in prices following the Organisation of the Petroleum Exporting Countries-led agreement among major producers to cut back on production. Both crude benchmarks marked their lowest settlements for a front-month contract since November 30. Meanwhile, prices had fallen by more than 30% by late November, after reaching multiyear highs as recently as early October. Benchmark crude oil futures for January dropped $1.61 or 3.1 percent to settle $51 a barrel on the New York Mercantile Exchange. February Brent crude declined $1.70 or 2.8 percent to settle at $59.97 a barrel on London's Intercontinental Exchange.


Indian rupee ended tumbled on Monday as nagging worries on global trade war front and uncertain crude prices hurt forex market sentiment. Market participants remained concerned about the Reserve Bank of India's (RBI) data showing that India's current account deficit (CAD) widened to 2.9% of the Gross Domestic Product (GDP) in the second quarter of the fiscal compared to 1.1% in the year-ago period, mainly due to a large trade deficit. Adding some anxiety on the street, former chief economic advisor Arvind Subramanian said that the new gross domestic product back-series data, released late last month by the Central Statistics Office and NITI Aayog, raised a lot of questions and hurt the credibility of official data. On the global front, the dollar gained ground against all of its major rivals on Monday. The lack of US economic data is keeping some investors on the sidelines at the start of the new trading week. However, some new Brexit developments have pushed the currency sharply higher against the British pound. Finally, the rupee ended at 71.32, 65 paise weaker from its previous close of 70.67 on Friday.


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 9198.34 crore against gross selling of Rs 4453.17 crore, while in the debt segment, the gross purchase was of Rs 1550.36 crore with gross sales of Rs 414.09 crore. Besides, in the hybrid segment, the gross selling was of Rs 0.75 crore against no buying.


The US markets end higher on Monday as investors overcame concerns over the fate of US-China trade talks, and after U.K. Prime Minister Theresa May delayed a parliamentary vote on Brexit. Asian markets were trading mostly in red on Tuesday as investors shrugged off a rebound on Wall Street from sharp losses, with trade and U.K. political concerns lingering. Indian markets ended in red territory with cut of around two percent, tracking sell-off in global markets over slowdown concerns coupled with weakening rupee and crude oil price rise. Investors also turned jittery over exit poll results. Today, the markets are likely to make gap-down opening for second consecutive session after the Reserve Bank of India (RBI) governor Urjit Patel's unexpected resignation from his post on Monday. The government and the RBI have been fighting for weeks over how much autonomy the RBI should have as the administration of Prime Minister Narendra Modi seeks to reduce curbs on lending and to gain access to the RBI's surplus reserves. Also, traders will be cautious ahead of outcome of assembly elections in five states of Rajasthan, Chhattisgarh, Madhya Pradesh, Telangana and Mizoram later in the day. Traders will also be concerned about Moody's Investors Service's statement that the independence of a country's central bank is an important consideration while assessing a country's institutional strength and any attempt by the government to curtail it would be credit negative. To a query on the sovereign rating impact of the developments around RBI, Moody's said while the motivation for the RBI Governor's resignation is unclear, the independence of a country's central bank is an important consideration in their assessment of a sovereign's institutional strength. Meanwhile, Commerce and Industry Minister Suresh Prabhu stated that the New Industrial Policy, which will replace the 27-year-old existing policy, has been sent for the Union Cabinet's consideration. The new industrial policy aims to resolve bottlenecks arising from inadequate infrastructure, restrictive labour laws and complicated business environment. There will be some buzz in the airline industry stocks after rating agency ICRA assigned a negative outlook to the domestic airline industry even as it expects the passenger traffic growth to remain healthy at about 15-16% in the medium-term. Also, there will be some reaction in gems and jewellery related stocks with the Gems and Jewellery Export Promotion Council's (GJEPC) report that the gems and jewellery exports are likely to grow by up to 5% this financial year, mainly aided by improving demand in the US market during the upcoming Christmas season.


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  • Maruti Suzuki has achieved the milestone of five lakh CNG vehicles sales in India, cumulatively. 
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