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NSE Intra-day chart (10 June 2016)
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Market Commentary 13 June 2016
Markets to get a gap-down start on weak global cues


Indian benchmark indices were unable to recover after plunging in last session after witnessing a volatile day of trade, finally closing in red with around half a percent cut, extending the declining trend for yet another session. Sentiments remained down-beat with the report that monsoon rains in India were 18 per cent below average in the week to June 8, as the onset of rainfall was delayed by nearly a week from its usual arrival on June 1, 2016.  Besides, weakness in the global equities amid decline in crude oil prices also dented sentiments. Incremental pessimism crept in since rupee was trading lower against the US dollar due to higher demand for the American currency from importers and banks. Indian rupee was trading lower by 8 paise at 66.79 against the US dollar at the time of equity markets closing on Friday. Further, Investors remained anxious ahead of Industrial production data slated to be announced later in the day, the IIP for March 2016 was just 0.1 per cent higher as compared to the level in March 2015. However, losses remained capped with report that a group of central and state government officials set up to frame the law for the proposed goods and services tax (GST) has submitted its final draft that could be taken up at a meeting of the empowered committee of state finance ministers next week. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 234.20 crore on June 09, 2016. Meanwhile, sugar stocks witnessed some spurt despite food minister Ram Vilas Paswan stating that India plans to impose a 25% tax on sugar exports to maintain adequate supplies of the sweetener in the local market. Shares of logistics companies extended gains for the fourth straight session on hopes of clearance of the GST Bill in the upper house of the Parliament. Further, Rail stocks gave a mixed reaction to Railway Minister Suresh Prabhu's announcement that the Indian Railways will invest $140 billion over the next five years in infrastructure and improving the mobility of its services. On the global front, Asian markets ended the final day of week in negative territory, while the European shares slipped for a third straight day to a two-week low. Back home, the key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Thereafter, the key indices failed to show any kind of resistance due to lack of encouraging leads.


US markets extended their losses on Friday with the major averages pulled back further off Wednesday's highs. Profit taking mainly contributed to the weakness on Wall Street, while a drop in global bond yields also weighed on the markets, as sovereign debt yields from Japan to Germany hit record lows, reflecting trepidation ahead of next week's Federal Reserve meeting as well as Britain's referendum later this month on whether to stay in the European Union. On the economic front, the University of Michigan released a report showing a modest drop in consumer sentiment in the month of June. The report said the preliminary reading on the consumer sentiment index for June edged down to 94.3 compared to the final May reading of 94.7. Economists had expected the index to dip to 94.0. The modest decrease by the consumer sentiment index came after it reached its highest level since June of 2015 last month. The Dow Jones Industrial Average declined by119.85 points or 0.67 percent to 17,865.34, the Nasdaq tumbled 64.07 points or 1.29 percent to 4,894.55 and the S&P 500 ended lower by 19.41 points or 0.92 percent to 2,096.07.


Crude oil futures suffered sharp cuts on Friday, unable to hold $50 a barrel level, amid signs the recent rally was overdone. Crude prices were under pressure as the domestic oil rig count moved higher for a second consecutive week. Baker Hughes report showed that rigs drilling for oil in the US rose by 3 to 328, a sign that domestic production will be picking up. At the same time, the gas rig count rose last week by 3 to 85 boosting the overall count up six to 414. Meanwhile, traders continued to closely monitor activities in Southern Nigeria, an area besieged by constant attacks of sabotage on oil facilities in the region over the last month. Benchmark crude oil futures for July delivery declined by $1.48 or 2.93 percent to $49.07, after trading in a range of $48.87 and $50.73 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery ended at $50.54, down $1.41 or 2.71 percent on the ICE.


Extending its weakness for the second straight session, Indian rupee depreciated against dollar on Friday on demand for the American currency from importers and banks. Further, losses in local equity market too hurt rupee sentiment. Besides, investors remained cautious ahead of release of industrial production data later in the day. However, dollar's weakness against some currencies overseas arrested the rupee's losses.  On the global front, yen was high against the dollar as investors opted for its relative safety as they discount chances of a Federal Reserve rate increase in coming months and brace for events next week. Finally, the rupee ended at 66.75, 4 paise weaker from its previous close at 66.71 on Thursday.


The FIIs as per Friday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity, the gross buying was of Rs 3579.76 crore against gross selling of Rs 3316.37 crore, while in the debt segment, the gross purchase was of Rs 877.66 crore with gross sales of Rs 939.51 crore.             


The US markets witnessed sharp cuts in last session, a drop in global bond yields weighed on the markets, while there was profit taking amid fear of slowing global growth that added pressure to the markets. The Asian markets have made a firmly negative start and some of the indices in the region are down by over two percent, led by the Japanese market on anxiety over the looming 'Brexit' vote and forthcoming decisions from the US and Japanese central banks. The Indian markets completely lost their way from the high points of the day, suffering cut of around half a percent in last session. Today, the start is likely to be weak tailing the feeble global cues. Traders across the world are worried about Britain's exit from European Union, with some terming it as a biggest crisis for the financial markets since the collapse of Lehman Brothers. On the domestic front, traders will be concerned with weak industrial production data, as the IIP contracted by 0.8 per cent in April, the first decline in three months, led by sluggish manufacturing. Disappointed over the latest Index of Industrial Production data, India Inc has said that industrial revival is going to be a major challenge going ahead but expressed hope that the growth will pick up on account of the recent measures taken by the government. There will be some somberness in the textile stocks on report that textiles exports for the 2015-16 fiscal stood at $40 billion, way short of the $47.5 billion target. The ministry has set an exports target of $48.5 billion for the current fiscal. There will be some buzz in the telecom and IT space too, as the Telecom Regulatory Authority of India (Trai) has put up a consultation paper that seeks to create policies on cloud computing, including lawful interception and whether to license service providers.


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