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NSE Intra-day chart (15 February 2017)
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Market Commentary 16 February 2017
Markets to make a cautious start, may see recovery in latter trade

Indian benchmark indices extended their downfall for second consecutive day on Wednesday and finished the choppy day of trade with a cut of over half a percent on account of sustained selling by investors amid the dismal earnings by some blue-chip companies. Auto major Tata Motors slipped as much as ten percent after the company reported 96.22% fall in its consolidated net profit at Rs 111.57 crore for the quarter ended December 31, 2016, as compared to Rs 2952.67 crore for the same quarter in the previous year. India's largest drug maker Sun Pharmaceutical Industries declined over four percent after the company reported 4.73% drop in its consolidated net profit at Rs 1471.82 crore for Q3 FY17, as compared to Rs 1544.85 crore for the same quarter in the previous year. Further, investors turned jittery after the US Federal Reserve Chair Janet Yellen hinted at a likely rate hike in the forthcoming policy review. In her semi-annual monetary policy testimony before the Senate Banking Committee, Yellen said that the Fed will probably need to raise interest rates at an upcoming meeting in March and that delaying rate increases could leave the Fed's policymaking committee behind the curve. On the domestic front, sentiments remained dismal as India Ratings (Ind-Ra) cautioned the government that its strategy to revive economic growth by focusing on infrastructure may not yield results unless real estate and manufacturing sectors recover. Revising down economic growth by one percentage point to 6.8% from earlier 7.8% for the current financial year, due to demonetisation, the rating agency pegged economic expansion in the next financial year to 7.4%. Some market participants remained on the sidelines and refrained from any buying activity, ahead of the 10th meeting of the all-powerful GST Council this weekend, where a critical anti-profiteering clause in the draft Goods and Services Tax law to ensure that the benefit of lower taxes gets shared with consumers is likely to be finalized. Meanwhile, banking stocks came under pressure on the private report that India may cut the amount of capital it plans to inject into state-controlled lenders this fiscal year by as much as Rs 7,800 crore ($1.2 billion) because of slow loan growth. Finally, the BSE Sensex declined by 164.71 points or 0.58% to 28174.60, while the CNX Nifty was down by 67.60 points or 0.77% to 8,724.70.


The US markets closed higher on Wednesday, for the fifth session in a row, marking the longest record-setting streak for all three benchmarks since January 1992, as President Donald Trump promised a massive tax plan in the not-too-distant future. Trump's latest comments echo his pledge last week to deliver a phenomenal tax plan that would be revealed soon. Meanwhile, Federal Reserve Chairwoman Janet Yellen appeared to reinforce the market's optimism when she testified in front of the Senate Banking Committee that investors are expecting a more growth-supportive fiscal policy and a boost corporate earnings. On the economy front, most US retailers posted strong sales in January, even beleaguered department stores, perhaps a sign that higher consumer confidence since the election has encouraged Americans to spend more for now. Retail sales rose 0.4% last month following a much bigger gain in December than originally reported. The Dow Jones Industrial Average added 107.45 points or 0.52 percent to 20,611.86, the Nasdaq was up 36.87 points or 0.64 percent to 5,819.44, while S&P 500 gained 11.67 points or 0.50 percent to 2,349.25. 


Crude oil futures settled lower on Wednesday after government data confirmed U.S. inventories at record highs. The Energy Information Administration (EIA) said US stockpiles rose 9.5 million barrels last week. Gasoline stocks rose 2.8 million barrel and distillate stockpiles fell by 689,000 barrels. Total inventories are at an all-time peak of 518.12 million barrels, while gasoline stocks also touched a record. The builds come against more upbeat estimates of reduce oil output globally. Benchmark crude oil futures for March delivery was down by $0.09 or 0.16 percent to $53.11 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended lower by 0.39 percent at $55.75 on the ICE.


Indian rupee ended marginally stronger against the US dollar on Wednesday on fresh selling of American currency by banks and exporters. Domestic currency got some support with India Ratings and Research (Ind-Ra) latest report that the Indian economy is likely to grow by 7.4 percent in the next fiscal year. However, there was some cautiousness too with the US Federal Reserve Chair Janet Yellen hint at a likely rate hike in the forthcoming policy review. In her semi-annual monetary policy testimony before the Senate Banking Committee, Yellen said that the Fed will probably need to raise interest rates at an upcoming meeting in March and that delaying rate increases could leave the Fed's policymaking committee behind the curve. Besides, a weak domestic equity market too kept pressure on the domestic currency. Finally, the rupee ended at 66.91, 1 paise stronger from its previous close of 66.92 on Tuesday.


The FIIs as per Wednesday'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 4397.88 crore against gross selling of Rs 4414.31 crore, while in the debt segment, the gross purchase was of Rs 1908.56 crore with gross sales of Rs 841.88 crore.


The US markets moved further high in last session extending the upward trend seen in recent sessions, following the release of a slew of economic data, including a Commerce Department report showing stronger than expected retail sales growth. The Asian markets have made mostly a lower start with some indices trading down by over half a percent in early deals. The Japanese market was trading lower as the yen jumped and the dollar slipped against most major currencies. The Indian market giving up their early gains ended with sharp cuts in last session as the traders turned jittery on US Fed's hint of an early rate hike. Today, the start is likely to remain cautious on mostly soft regional cues, traders however will be getting some support with report that India's exports continued to grow for the fifth straight month, expanding by 4.32 percent to $ 22.11 billion in January against $ 21.19 billion in the same month of 2016. Imports also rose, by 10.70 percent to $ 31.95 billion, during the month under review. There will be some support with oil prices softening and weakness in dollar against all other currencies. There will be some action in the oil & gas sector, as the Cabinet Committee of Economic Affairs approved the award of 31 contract areas under the Discovered Small Field (DSF) Bid Round 2016. The government expects to monetise 40 million tonnes of oil and 22 billion cubic metres (BCM) of gas reserves over 15 years through the awarding of contracts. There will be buzz in the PSU banking stocks specially SBI and its associate banks as the nion Cabinet has approved a proposal to merge the five subsidiaries of State Bank of India with the parent, kickstarting consolidation among public sector lenders.



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