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NSE Intra-day chart (11 August 2017)
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Market Commentary 14 August 2017
Markets to make a positive start on supportive global cues

Friday turned out to be a nightmarish session of trade for Indian equity benchmarks with frontline gauges shaving off over a percentage point. Domestic equities witnessed a huge bloodbath, as bears took charge resulting key indices fell below their psychologically important 31,300 (Sensex) and 9,750 (Nifty) levels, respectively, as stock markets across the world went into a tailspin amid an ongoing escalation in tensions between the US and North Korea. Markets made a pessimistic start, as traders remained concerned over SEBI's crackdown on shell companies and a stand-off in the Doklam area of the Sikkim sector between Indian and Chinese troops. Sentiments also remained dampened with report that the Reserve Bank of India (RBI) has halved its dividend payout to the government to Rs 30,659 crore for the fiscal ended June 2017. Last fiscal, the RBI had transferred Rs 65,876 crore surplus as dividend to the government. This would potentially impact the government's fiscal math this financial year, which is under pressure due to state-run banks' sluggish earnings growth. Markets tried to pare some of their losses but another wave of selling in second half of trade dragged markets to intraday lows. Sentiments weighed on report that there were downside risks to India's projected growth of 6.75-7.5 percent growth in 2017-18, the finance ministry's Mid-Term Economic Survey said in a guarded forecast, indicating that multiple pain points continue to hinder growth in the broader economy amid an uncertain fiscal outlook. The second part of the Economic Survey for 2016-17, which besides giving an overview of India's economy, was also critical about ad hoc state-sponsored farm loan write-offs to deal with rural distress. Separately, flows from foreign portfolio investors into India have slowed of late as rich valuations and delay in corporate earnings recovery have reduced their appetite for domestic stocks. Finally, the BSE Sensex tumbled 317.74 points or 1.01% to 31,213.59, while the CNX Nifty was down by 109.45 points or 1.11% to 9,710.80.


The US markets gained some strength during trading on Friday and ended in green terrain, as traders opted to buy beaten down but fundamentally strong stocks after three days of continuous drubbing. Traders took some encouragement with report from the Labor Department showing just a modest uptick in consumer prices in the month of July. The Labor Department said its consumer price index inched up by 0.1 percent in July after coming in unchanged in June. Economists had expected prices to rise by 0.2 percent. Excluding food and energy prices, core consumer prices still crept up by 0.1 percent in July, matching the increases seen in the three previous months. Core prices had also been expected to climb by 0.2 percent. The smaller than expected increase in consumer prices has led to optimism that the Federal Reserve will not be in a hurry to raise interest rates. However, gains remained capped as the ever-escalating war of words between President Donald Trump and North Korea continued to raise geopolitical concerns. Trump suggested in remarks on Thursday that his comments threatening North Korea with ‘fire and fury' may not have been tough enough. Trump continued to ramp up the rhetoric with a post on Twitter indicating that the U.S. is prepared to take military action against North Korea. The Dow Jones Industrial Average gained 14.31 points or 0.07 percent to 21,858.32, the Nasdaq rose 39.68 points or 0.64 percent to 6,256.56, while the S&P 500 was up by 3.11 points or 0.13 percent to 2,441.32.


Crude oil futures though ended higher on Friday but snapped the week in negative terrain, as investor sentiment soured on oil prices this week, following data showing Opec output increased in July as its members failed to adhere to output limits set out in the global deal to curb production. There was some recovery in the prices with IEA report that global oil demand is expected to reach 1.5 million barrels per day this year, up from its July forecast of 1.4 million. Meanwhile, Baker Hughes reported that the number of active U.S. rigs drilling for oil climbed by 3 to 768 rigs this week. However, the total active U.S. rig count including nat gas rigs fell by 5 to 949. Benchmark crude oil futures for September delivery ended up by $0.23 or 0.5 percent to $48.82 on the New York Mercantile Exchange. In London, Brent crude for September delivery ended lower by $0.14 at $52.23 a barrel on the ICE.


Indian rupee continued its downtrend for the third-straight day against the US dollar on Friday, due to strong demand for the American currency from importers amid foreign fund outflows. Investors remained concerned with report that the Reserve Bank of India (RBI) has halved its dividend payout to the government to Rs 30,659 crore for the fiscal ended June 2017. Last fiscal, the RBI had transferred Rs 65,876 crore surplus as dividend to the government. This would potentially impact the government's fiscal math this financial year, which is under pressure due to state-run banks' sluggish earnings growth. Besides, heavy losses in domestic equity markets also weighed on the sentiment of the local currency. On the global front, dollar skidded to an eight-week low against yen on Friday as escalating tensions between the United States and North Korea triggered yet more investor flight to safety. Finally, the rupee ended at 64.14, 7 paise weaker from its previous close of 64.07 on Thursday.  


The FIIs as per Friday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 4528.64 crore against gross selling of Rs 5512.37 crore, while in the debt segment, the gross purchase was of Rs 839.43 crore with gross sales of Rs 625.92 crore.


The US markets made a minor bounce back in the last session and all the major averages managed a positive close, mainly on bargain hunting and report of modest uptick in consumer prices in the month of July. The Asian markets have made mostly a positive start with tensions between the US and North Korea showing signs of easing, though the Japanese market was lower as the yen strengthened against the dollar. The Indian markets ended lower in the last session making it a week of losses by declining for the fifth consecutive trading session. Today, the start of the holiday truncated week is likely to be in green tailing the recovery in the global markets and some stability can be seen with the progress of the trade. Traders will be getting some support with outgoing Niti Aayog Vice Chairman Arvind Panagariya's statement that resolution of bad loans in the banking system is on 'right track' and will 'open the door' to rapid credit expansion and growth. He added that so banks will be better equipped to lend and on the sides of borrowers there will be greater appetite. Traders will also be getting some support with a private report that the Indian economy is at the cusp of entering its strongest growth phase and a full blown bull market is yet to play out with the wide-based Nifty expected to touch 11,500 in 2018. Though, traders will be reacting negatively to report that India's industrial production fell to four-year low of 0.1 per cent in June as manufacturers reduced inventories ahead of the GST rollout. Now all eyes will be on the inflation data, as both Consumer Price Index (CPI) and Wholesale Price Index (WPI) inflation data will be released later in the day. Telecom stocks will be buzzing as the telecom regulator RS Sharma has said that recommendations on contentious interconnect usage charge should be finalised by August end. There will be some important earnings announcements too, to keep the markets in action.


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



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Tata Motors





  • IOC has received the government's nod to buy one very large ship full of crude oil from the US every month this year, as it looks at cheaper alternatives that have emerged due to global supply glut.
  • GAIL (INDIA) has reported a fall of 23.18% in its net profit at Rs 1025.64 crore for the quarter ended June 30, 2017 as compared to Rs 1335.18 crore for the same quarter in the previous year.
  • Tata Steel is hopeful of shortly reaching a final agreement on a deal to separate its UK pension scheme from its businesses.
  • HDFC Bank has launched an in-house state-of-the-art Digital Command Centre in Mumbai to keep pace with digitally savvy customers.
News Analysis