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NSE Intra-day chart (12 May 2016)
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Market Commentary 13 May 2016
Markets to start on a soft not reacting to weak IIP and CPI data


A session after displaying a disappointing performance, Indian benchmark indices bounced back on Thursday, as participants opted to buy beaten down but fundamentally strong stocks. Sentiments got a boost with UN report that India is expected to achieve a 7.5 per cent GDP growth in 2017 and the economic prospects of the South Asian region will be contingent on the growth trajectory of India and Iran. According to report, investment demand in India is supported by the monetary easing cycle, rising FDI, and government efforts towards infrastructure investments and public-private partnerships. Furthermore, prospects of a good monsoon improved as the crucial weather system is likely to hit the Kerala coast on the normal date of June 1, while the risk of a lingering El Nino, which disrupts rainfall in the region, has been eliminated by favourable changes in ocean temperatures. This is good news for farmers and policy makers, as vast areas of the country suffered a drought for two years, which has hit farm output and dried up crucial reservoirs, because El Nino continued to haunt South Asian weather since last year. However, Investors remained cautious ahead of Industrial Production (IIP) for March and Consumer Price Index (CPI) data for April due to be released later in the day. On the global front, Asian markets ended mostly in red on Thursday, while the European stocks rose with US equity-index futures. Back home, after getting a gap up start, the local benchmark indices showed some strength in early trades, but the sentiments turned pessimistic in late morning trades and indices start drifting lower, however the markets regained its momentum in the late afternoon trade and surged over half a percent by the end of session. Finally, the BSE Sensex surged 193.20 points or 0.75% to 25790.22, while the CNX Nifty rose 51.55 points or 0.66% to 7,900.40.


The US market closed mostly lower on Thursday, as a slump in technology shares, highlighted by a steep slide in Apple, pressured the market, dragging the S&P 500 and the Nasdaq Composite lower. An unexpected spike in weekly jobless claims of last week also contributed to the weakness in the market. The number of Americans who applied for unemployment benefits in early May rose for the third straight week and hit a 14-month high, reflecting an unusual surge in New York state and perhaps adding to evidence that the US labor market may have softened. Initial claims climbed by 20,000 to 294,000 from May 1 to May 7. The average of new claims over the past four weeks, a less volatile measure, shot up by 10,250 to 268,250. Just a month earlier, initial jobless claims had fallen to a 43-year low. Separately, the cost the US paid for imported goods rose 0.3% in April, largely because of higher oil prices. The increase was the second in a row. The Nasdaq dropped by 23.36 points or 0.49 percent to 4,737.33, S&P 500 lost 0.35 points or 0.02 percent to 2,064.11, while Dow Jones Industrial Average gained 9.38 points or 0.05 percent to 17,720.50. 


Crude oil futures fell from the six-month highs after showing a choppy trade on Thursday. The prices moved higher in early trade amid expectations that the global supply glut will soon be allievated, as the International Energy Agency (IEA) said that global oil inventories will experience a “dramatic reduction” in the second half of the year. In its May Oil Market Report, the IEA said world output rose by 50,000 barrels per day on an annual basis last month, sharply below a yearly gain of 3.5 million bpd in April, 2015. At the same time, the IEA upwardly revised global demand growth for the first quarter of 2016 to 1.4 million bpd, amid strong gains in India, China and in Russia. Benchmark crude oil futures for June delivery declined by $0.39 or 0.84 percent to $46.62 a barrel after trading in a range of $45.63 and $47.02 a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery closed at $47.95, up $0.35 or 0.74 percent on the ICE.


Continuing its early weakness from the early trade, Indian rupee depreciated against dollar on Thursday, ahead of the consumer price index (CPI) inflation and index of industrial production (IIP) data due later in the day. Besides, increased demand for the American currency from importers too weighed on the rupee sentiment. However positive local equities restricted any severe fall of the domestic currency. Investors overlooked the UN report which highlighted that despite delay in domestic policy reforms; India's economy is slowly gaining momentum and is projected to grow by 7.3% this year. On the global front, yen fell on Thursday as investors remained cautious amid speculation that the Bank of Japan could decide to expand its monetary stimulus as soon as next month. Finally, the rupee ended at 66.62, 6 paise weaker from its previous close at 66.56 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity, the gross buying was of Rs 4145.61 crore against gross selling of Rs 4469.17 crore, while in the debt segment, the gross purchase was of Rs 1378.74 crore with gross sales of Rs 1671.08 crore.            


The US markets ended lower along with the crude oil, extending the steep drop seen in the previous session. Traders also remained concerned about the Labor Department report showing an unexpected increase in initial jobless claims. The Asian markets have made mostly a lower start, with some indices leading to their third weekly loss. The Chinese market though was trading higher ahead of the release of details of new loans. The Indian markets bouncing back from the previous session's plunge, posted gains of over half a percent in last session. Today, the start is likely to be soft on weak global cues and traders will also be reacting negatively to the macro data announced late last evening. In a double blow India's industrial production growth slowed to 0.1 percent in March, as compared to 2.5 percent during same month last year, while retail inflation inched up in April to 5.39 percent, compared to 4.83 per cent in March. There will be buzz in the corporate world with RBI proposing tighter norms to mitigate the risk posed to the banking system on account of large aggregate lending to a single borrower. 2017-18 onwards and the banking system should ordinarily keep its future incremental exposure to specified borrowers within the normally-permitted lending limit. In other development India's market regulator is said to be considering more stringent rules for participatory notes as part of efforts to check the flow of black money into stock markets. There will be lots of scrip specific movement with the MSCI rejiging its India index and adding Bajaj Finance, Havells India, Titan Company and Yes Bank to the list, while removing Reliance Communications, REC, and United Breweries. Also there will lots of result announcements to keep the markets in action. Also there will lots of result announcements to keep the markets in action.


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  • Reliance Industries' telecom arm Reliance Jio Infocomm has launched its digital wallet service 'JioMoney Wallet', available on Google Play Store and Apple App Store.
  • Dr Reddys has posted a fall of 85.62% in its consolidated basis net profit  at Rs 74.6 crore for the quarter ended March 31, 2016 as compared to Rs 518.8 crore for the corresponding quarter in the FY15.
  • Bharti Airtel has announced a 25% more stringent voluntary benchmark of 1.5% for mobile call drops versus the current TRAI prescribed norm of 2% under the Quality of Service regulations.
  • Tata Steel has received status of a Special Economic Zone for its Gopalpur project in south Odisha.
  • Mahindra & Mahindra, India's leading SUV manufacturer has launched a more powerful avatar of the TUV300 with the all new mHAWK100 engine.
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