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NSE Intra-day chart (12 January 2017)
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Market Commentary 13 January 2017
Markets to make a positive start ahead of Infy numbers

Thursday's trading session was clearly of consolidation as the Indian frontline equity indices appeared a bit fatigued and remained in tight band throughout the day. However, the benchmarks managed to extend the winning momentum for the third consecutive day of trade as local sentiments continued to show signs of improvement. Sentiments remained up-beat with Finance Minister Arun Jaitley's statement that the implementation of the Goods and Services Tax (GST), coupled with a digitised economy ushered in by demonetization, will make India's economy look much cleaner and bigger. Finance Minister reiterated that the Centre is still aiming to roll out the Goods and Services Tax (GST) regime from April 1 if all pending issues are sorted out. Besides, appreciation in rupee value against the dollar also fuelled the domestic market sentiments. Some support also came with Reserve Bank of India's (RBI's) suggestion of uniform rate of withholding tax for overseas borrowings, irrespective of type and currency. If the government agrees, this could lower the cost of overseas borrowing for Indian companies. Simplifying the levy will improve the ability of Indian companies to raise money. Meanwhile, Footwear stocks rallied on the repot that government may announce package for leather sector in forthcoming Budget. The government is expected to announce an incentive package for labour intensive leather sector in the forthcoming Budget with a view to give a boost to the segment and generate jobs. On the other hand, Pharma stocks came under pressure after US president-elect Donald Trump attacked the pharmaceutical industry for high drug prices and for manufacturing overseas, saying he will create new procedures for bidding on drugs, reports AFP. On the global front, Asian markets ended mostly in red on Thursday, with Japanese shares coming under heavy selling pressure, after President-elect Donald Trump failed to provide clarity on future fiscal policies in a highly-awaited press briefing. Back home, finally, the BSE Sensex surged 106.75 points or 0.39% to 27247.16, while the CNX Nifty rose 26.55 points or 0.32% to 8,407.20.

The US markets closed lower on Thursday, with the Nasdaq snapping a seven-day winning streak as investors paused before the start of earnings season and a lack of policy detail in President-elect Donald Trump's first formal news conference a day ago. Equity markets have been trading mostly sideways as investors begin to question the run-up in stock prices following the election on Trump's promises of fiscal stimulus. On the economy front, the federal government ran a budget deficit of $28 billion in December, double the shortfall from the same month a year ago as both receipts and spending fell. Total receipts were down 9% for the month, with individual income tax collection flat and gross corporate tax collection lower. A decline in Federal Reserve earnings remitted to the Treasury also contributed to the smaller amount of receipts. Moreover, the number of Americans who applied for unemployment benefits in the first week of 2017 rose by 10,000 to 247,000, but they remain near the lowest level in decades. The Dow Jones Industrial Average lost 63.28 points or 0.32 percent to 19,891.00, Nasdaq dropped 16.16 points or 0.29 percent to 5,547.49, while S&P 500 was down 4.88 points or 0.21 percent to 2,270.44.

Crude oil futures strengthened further on Thursday amid hopes that there will be demand improvement from China and also on reports showing OPEC production fell sharply in December. The oil prices got a lift with reports saying that Saudi Arabia cut output by more than agreed. Saudi Energy Minister Energy Minister Khalid Al-Falih said that the kingdom's output is now below 10 million barrels a day. Saudi Arabia had agreed to cut output by 486,000 barrels a day to 10.058 million. Kuwait also has reportedly reduced production by more than it agreed. Benchmark crude oil futures for February delivery was up by $0.76 or 1.5 percent to $53.01 on the New York Mercantile Exchange. In London, Brent crude for March delivery added $0.85 or 1.54 percent to end at $55.95 on the ICE.

Indian rupee appreciated against US dollar on Thursday ahead of key economic data i.e. November IIP and December CPI data, scheduled to be released later in the session. Gains of local equities and dollar selling by exporters and banks mainly aided the currency's appreciation. Traders took some support with Reserve Bank of India's (RBI's) suggestion of uniform rate of withholding tax for overseas borrowings, irrespective of type and currency. If the government agrees, this could lower the cost of overseas borrowing for Indian companies. Simplifying the levy will improve the ability of Indian companies to raise money. On the global front, dollar slipped against yen after President-elect Donald Trump's news conference failed to offer details on his plans to boost fiscal spending and cut taxes. Finally, the rupee ended at 68.08, 25 paise stronger from its previous close of 68.33 on Wednesday.

The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3936.03 crore against gross selling of Rs 4621.48 crore, while in the debt segment, the gross purchase was of Rs 1543.63 crore with gross sales of Rs 1543.67 crore.

The US markets closed modestly in red but were well off the days' low. The decline was mainly due to profit taking, with traders cashing in on some of the strength seen in the last couple of days and also due to continued uncertainty about Trump's policies following his highly-anticipated press conference. The Asian markets have once again made a mixed start; though the Japanese market has bounced back with yen weakening against dollar. The Indian markets strengthened further in last session on expectations surrounding Q3 earnings and the upcoming Union Budget that helped investors shrug off mixed global cues. Today, the start is likely to be in green and traders will be reacting positively to some positive macro data. The Index of Industrial Production rose to a 13-month high of 5.7% in November, belying expectations of an adverse impact from demonetization and against a contraction of 1.8% in October, mainly due to base effect. Also, the Inflation measured by the Consumer Price Index (CPI) eased to 3.41% in December versus 3.63% seen in November 2016, mainly due to softening of food prices. There will be some cautiousness too, especially in the IT sector as all eyes will be on Infosys numbers slated to be announced during the day. The IT bellwether is expected to scale down its full-year dollar revenue growth for the third time this year. Its third quarter earnings are expected to be subdued due to seasonal weakness and RBS's contract cancellation. There will be some buzz in infra sector stocks, as the Industry body FICCI has said in the forthcoming Budget, the Centre should prioritise measures that will boost spending on infrastructure creation to shore up local demand. The Tata group stocks will keep buzzing, as Tata Sons has named Natarajan Chandrasekaran, the CEO and MD of TCS, as their new chairman.

Support and Resistance: NSE (Nifty) and BSE (Sensex) 


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  • NTPC has received an investment approval for Dulanga Coal Mining Project having rated production capacity of 7 MTPA at an appraised estimated cost of Rs 1,053.41 crore.
  • ICICI Bank has successfully executed the country's first digitised invoice discounting transaction on the ‘Receivables Exchange of India'.
  • HDFC Bank has helped five temples in Kanyakumari district in southern Tamil Nadu to introduce digital wallets and point of sale to enable their devotees pay donations.
  • State Bank of India has signed memorandum of understanding with the Gujarat government for extending bank credit especially in priority sector.
  • Adani Ports and Special Economic Zone has raised $500 million by selling bonds to overseas investors as the company aims to refinance its existing debt at a lower cost.  

News Analysis