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NSE Intra-day chart (15 February 2018)
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Market Commentary 16 February 2018
Markets to open in green terrain amid firm global cues


Thursday turned out to be a fabulous day of trade for Indian equity benchmarks, with frontline gauges settling just shy of their crucial 10,550 (Nifty) and 34,300 (Sensex) levels. Markets after an optimistic start gained momentum and traded jubilantly on private report that the RBI's revised framework for quicker and time-bound resolution of stressed assets is a long-term positive for banks. The report stated that the new framework has the potential to bring about a big change in the approach of banks to monitor their exposures and resolution of NPAs. Markets managed to reconquer their psychological 10,600 (Nifty) and 34,500 (Sensex) levels in noon deals after India's inflation on wholesale level softened for the second consecutive month in January 2018. Wholesale price inflation (WPI) stood at 2.84 percent (provisional) in January as against 3.58 percent (provisional) for the previous month and 4.26 percent during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 2.30 percent compared to a build-up rate of 4.55 percent in the corresponding period of the previous year. Despite some profit booking in last leg of trade, markets managed to end the session with a gain of around half a percent as sentiments remained up-beat with Chief Economic Advisor Arvind Subramanian's statement that although India has made a lot of progress towards achieving financial inclusion, a lot more needs to be done. He added that providing essential goods and services to citizens was only the first policy step towards financial inclusion. Meanwhile, a private report highlighted that consumption is reviving as the effect of demonetization fades and companies get used to the Goods and Services Tax (GST), with some recording multi-quarter highs in volume and sales in the October-December period, exceeding street expectations. Finally, the BSE Sensex surged 141.52 points or 0.41% to 34,297.47, while the CNX Nifty was up by 44.60 points or 0.42% to 10,545.50.


The US markets closed higher on Thursday, with Dow closing above the 25,000 mark for the first time in nearly two weeks as US stocks finished higher for a fifth straight session in volatile trade. Wall Street opened solidly higher but subsequently lost ground before recouping losses, supported by the latest data on inflation and the labor market, which pointed to an economy that was growing but in no imminent danger of overheating. On the economic front, initial US jobless claims increased by 7,000 to 230,000 in the seven days ended February 10. The more stable monthly average of claims rose by 3,500 to 228,500. Last week they touched a 45-year low. The number of people already collecting unemployment benefits climbed by 15,000 to 1.94 million. By comparison, 2.4 million people were receiving benefits in the same week a year earlier. US jobless claims have now been under the key 300,000 threshold that signals a strong labor market for 154 straight weeks. And soon the streak will pass the longest stretch of sub-300,000 readings since the government started monitoring the unemployment rolls in the 1960s. New claims were below 300,000 for 160 weeks from 1967 to 1970. The Dow Jones Industrial Average added 306.88 points or 1.23 percent to 25,200.37, the Nasdaq gained 112.815 points or 1.58 percent to 7,256.43, the S&P 500 edged higher by 32.57 points or 1.21 percent to 2,731.20.


Crude oil prices rallied for second day Thursday, rising back near January's 4-year highs, on the back of weakness in dollar. Prices are back above $60 despite expectations that U.S. shale production will remain robust this year and next. Meanwhile, Organization of the Petroleum Exporting Countries (OPEC) is reportedly telling its members to produce enough oil that to buffer the market in the case of a surge in demand. OPEC does not want to see oil prices rise so fast that U.S. production gets even more rampant. Benchmark crude oil futures for March delivery surged 74 cents or 1.2 percent, at $61.34 a barrel on the New York Mercantile Exchange. April Brent crude slipped 3 cents to settle at $64.33 a barrel on London's Intercontinental Exchange.


Exhibiting strength against the dollar for the third straight day, Indian rupee ended higher on Thursday on continued selling of the greenback. Sentiments remained optimistic on report that Inflation based on wholesale prices eased to a six-month low of 2.84% in January on cheaper food articles even as vegetable prices continued to rule high. Calculated on the basis of Wholesale Price Index (WPI), the inflation was 3.58% in December 2017 and 4.26% in January 2017. Some support also came with private report stating that the RBI's revised framework for quicker and time-bound resolution of stressed assets is a long-term positive for banks. The report stated that the new framework has the potential to bring about a big change in the approach of banks to monitor their exposures and resolution of NPAs. Besides, a muted show by the dollar against other currencies overseas also supported the rupee's uptrend. On the global front, dollar lost further ground against yen on Thursday, hitting new 15-month lows, after US consumer price data for January fueled worries about accelerating inflation in the country. Finally, the rupee ended at 63.91, 17 paise stronger from its previous close of 64.08 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 6464.31 crore against gross sell of Rs 7063.33 crore, while in the debt segment, the gross purchase was of Rs 755.10 crore with gross sales of Rs 2362.33 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.14 crore against gross selling of Rs 0.47 crore.


The U.S. markets edged higher to extend their recent winning streak to five sessions on Thursday, as traders largely shrugged off further indications of rising inflation even though the data could lead to faster interest rate hikes by the Federal Reserve. Asian equities were trading higher on the last day of the week, tracking gains on Wall Street, but trading in the region was subdued with many markets shut for the Lunar New Year holiday. Indian equity markets settled into green terrain on Thursday, as positive global cues and easing inflation worries helped outweigh a selloff in Punjab National Bank (PNB) shares for the second straight session. Today, the start is likely to be on positive side tracking firm global cues. However, disappointing trade balance data and worries over the Rs 11,300 crore fraud case at PNB may keep underlying sentiment cautious to some extent. India's merchandise trade deficit for January widened from a year ago. The visible trade deficit increased to a 56-month high of $16.30 billion in January from $9.90 billion in the same month last year as export growth slowed down and imports of precious stones and crude oil surged. Exports grew an annual 9.07 percent while imports jumped 26.10 percent. Traders will remain little concerned with the IMF's statement that the tax collection assumptions in India's budget is ambitious but there is a need to look into the fiscal implications of some of the initiatives that are presently unfunded. Driven by a slowdown in bond issuance, the growth of India's debt capital markets moderated by three per cent in the current year with a growth of 16 per cent in the value of corporate bonds outstanding by December end. Meanwhile, media reports suggest that as many as 17 banks lent about Rs 3,000 crore to various firms of Nirav Modi, the man at the center of the alleged $1.77 billion banking fraud at PNB. There will be lots of important earnings announcements too, to keep the markets buzzing.


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