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NSE Intra-day chart (14 May 2018)
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Market Commentary 15 May 2018
Markets likely to make cautious start ahead of Karnataka Election results


Indian equity benchmarks ended the volatile day of trade with modest gains on Monday, as traders remained on sidelines ahead of Karnataka election results due on May 15. Markets started the session on an optimistic note as traders took some encouragement with Fitch's report stating that India's economic growth will accelerate to 7.3% in the current fiscal and 7.5% in the next as money supply has recovered to its pre-demonetisation level and disruptions related to the rollout of GST have diminished. Separately, another foreign brokerage report highlighted that despite moderation in factory output growth in March, India's GDP is expected to grow by 7.7% in January-March, up from 7.2% in the preceding quarter. Some support also came from a report which highlighted that the Finance Ministry has cleared FDI proposal last month which will bring total foreign investment worth Rs 3,250 crore. However, markets took U-turn and entered into red terrain after India's wholesale inflation grew 3.18% in April hitting a 4-month high as prices of some vegetables and fuel & power firmed up. Wholesale Price Index (WPI) witnessed a growth of 2.47% in March and 3.85% April 2017. Primary articles, which accounts for more than a fifth of the entire wholesale price index, grew 1.41% in April from 1.03% year a percent ago and 0.24% in March. Sentiments also remained dampened on report that Industrial output grew by 4.4% in March, the slowest in five months, due to a fall in capital goods production and deceleration in mining activity. Industrial growth measured by the Index of Industrial Production (IIP) in 2017-18 too decelerated to 4.3% from 4.6% in the previous fiscal. But, recovery in final hour of trade helped markets to end slightly in green, supported by a private report stating that India was the largest remittance-receiving country in the world, with migrant workers from the country sending home $69 billion in 2017. Finally, the BSE Sensex gained 20.92 points or 0.06% to 35,556.71, while the CNX Nifty was up by 0.10 points to 10,806.60.


The US markets closed higher on Monday, and the Dow ended with an eighth gain in a row, extending an uptrend on signs of easing trade tensions between the US and China. Optimism over corporate earnings also has helped to keep the markets afloat, though the 10-year Treasury benchmark yield flirting with a level at around 3%, tested investors' comfort levels, keeping the market's advance in check. Rising yields tend to mean higher costs for major corporations and can peel money away from stocks. Cleveland Fed President Loretta Mester said that the Federal Reserve should continue its gradual approach to raising interest rates given that inflation has not yet reached the US central bank's 2 percent goal in a sustained way. Mester said she does not expect inflation to pick up sharply, adding that while it is close to the Fed's symmetric 2 percent target, it will only reach that level on a sustainable basis over the next one to two years. Mester, who has a vote on monetary policy this year under a rotation system, also said the central bank could raise rates more rapidly if the US economy grew faster than expected, though she added it could go slower if inflation weakens again. The Dow Jones Industrial Average added 68.24 points or 0.27 percent to 24,899.41, the Nasdaq gained 8.432 points or 0.11 percent to 7,411.32, and the S&P 500 was up by 2.41 points or 0.09 percent to 2,730.13.


Crude oil futures edged higher on Monday with Brent crude surging to its highest level in three and a half years, as violence in the Middle East fed concerns over the flow of oil in the region. The gain for U.S. benchmark oil prices weren't quite as impressive with traders wary of Organization of the Petroleum Exporting Countries' (OPEC) ability to offset crude supply declines and growing U.S. production. OPEC predicted strong demand from crude oil for the next year, helping fuel crude's modest rally. The cartel downplayed the impact of the U.S. shale boom, but warned about U.S. trade squabbles. Benchmark crude oil futures for June delivery jumped 26 cents or 0.4 percent to settle at $70.96 a barrel on the New York Mercantile Exchange. July Brent crude surged $1.11 or 1.4 percent to settle at $78.23 a barrel on London's Intercontinental Exchange.


Erasing all of the initial gains, Indian rupee ended weaker against dollar on Monday, for the fourth straight session, as a negative set of macroeconomic data weighted down on the rupee sentiments. India's industrial activity slowed in March, after showing signs of sustained growth for four months, due to an unfavourable base effect and a broad-based slowdown in output of goods. The index of industrial production rose 4.4% in March over a year ago, compared to a revised 7% growth in the previous month. Also, the rate of Wholesale Price Index (WPI)-based inflation hit a four-month high in April, as food inflation beat deflationary trends from the month before and energy prices saw a sudden rise. The WPI rose to 3.18% in April, up from the 2.47% rise seen in March. Traders also remained cautious ahead of key economic data that is April CPI, scheduled to be released later in the day. On the global front, the euro headed for a third successive day of gains on Monday as a weak dollar helped the single currency recoup losses, as investors kept a wary eye on political events in Italy. Finally, the rupee ended at 67.51, 18 paise weaker from its previous close of 67.33 on Friday.


The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3952.43 crore against gross selling of Rs 4257.90 crore, while in the debt segment, the gross purchase was of Rs 187.00 crore with gross sales of Rs 2472.57 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.05 crore against gross selling of Rs 0.12 crore.


The US markets ended higher on Monday amid easing trade tensions ahead of a second round of trade talks between the U.S. and China this week. Asian shares were trading mostly in red as investors remained focused on U.S.-China trade ties ahead of second round of negotiations expected this week. Indian shares ended a lackluster session flat on Monday as weak industrial output data disappointed investors and caution set in ahead of Karnataka election results. Today, the markets are likely to make a flat-to-cautious as investors will keep an eye on the Karnataka assembly election results. Early trends suggest the likelihood of a hung assembly with no party landing close to the halfway mark. Traders will also remain concern on report that India's Retail inflation, measured by the consumer price index (CPI) rose to 4.58% in April 2018 as compared to 4.28% in March 2018, while rural inflation increased to 4.67% and urban inflation surged to 4.42% in April 2018. However, CPI food inflation for April eased marginally to 2.80% versus 2.81% in last month. Meanwhile, NITI Aayog CEO Amitabh Kant said India needs to grow at about 10 per cent annually for the next three decades to be able to meet the ever-rising demands of its growing population. Investors may get some support later in the day with private report stating that the Reserve Bank of India is expected to begin its rate hike cycle from December quarter, and may go for three rate hikes by 2019 taking the key policy rate to 6.75 per cent. There will be some important earnings announcements too, to keep the markets buzzing.


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  • NTPC and the Kerala State Electricity Board have signed a MoU for increasing solar power generation in the state.  
  • Lupin has successfully completed an inspection carried out by the USFDA at its Nagpur facility. 
  • Hindustan Unilever has reported a marginal rise of 1.89% in its net profit at Rs 1,351 crore for the quarter ended March 31, 2018. 
  • Wipro Gallagher Solutions, a Wipro company and Precision Risk Management Systems have partnered to deliver advanced mortgage business intelligence and customer experience management solutions to mortgage lenders.
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