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NSE Intra-day chart (17 August 2016)
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Market Commentary 18 August 2016
Markets to make a cautious start on mixed regional cues


Wednesday's session turned out to be a choppy day of trade for Indian equity markets with frontline gauges ending the session with cut of two tenth of a percent, as investors remained cautious after an influential US Federal Reserve official said interest rates could rise as soon as September. Markets made a flat start but managed to remain in green terrain in first half, as traders took some encouragement with report that Indirect tax collection rose by about 31 percent during April-June to Rs 1,99,970 crore, from Rs 1,52,740 crore collected in the year-ago period. Some support also came with the private report stating that the strong consumption and public investments have kept India's growth recovery on track this year. According to the report, the present recovery is not accompanied by current account and fiscal excesses or strong core inflationary impulses, unlike previous instances of high growth. However, markets reversed direction after hitting intraday high in afternoon session, as traders opted to book profits, as sentiment got affected with the discouraging macroeconomic data of wholesale inflation soared to a 23-month high of 3.55 per cent in July. Meanwhile, industry body Assocham said that the rise in Wholesale Price Index (WPI)-based inflation is in line with the industry's expectation, but added that the government must take "strong action" to address the structural issues of demand and supply within the industry. Weakness in global markets too dampened sentiments with European counterparts making sluggish start, Asian markets ended mostly in red on Wednesday. Closer home, markets extended their southward journey in later part of the day's trade and the indices even went on to test important psychological 28,000 (Sensex) and 8,600 (Nifty) levels, but the key gauges got some support near those intraday low levels. Finally, the BSE Sensex declined by 59.24 points or 0.21% to 28005.37, while the CNX Nifty slipped 18.50 points or 0.21% to 8,624.05.


The US markets closed higher on Wednesday, paring earlier losses as minutes from the Federal Reserve's July meeting showed policy makers remained divided on prospects for a near-term rate increase. Federal Reserve officials at their July meeting were relieved that their concerns over Brexit and the job market eased but were divided over whether that meant they should quickly hike interest rates again. Two Fed officials pushed for a rate hike at the meeting, but more officials judged it was a good idea to wait for additional information. Fed officials voted 9 to 1 to hold rates steady at the meeting. The minutes did not elaborate on the timing of any move. Fed officials said they would be open and flexible about when to take another step. The minutes showed that while the near-term downside risks were lower, Fed officials still seemed worried about developments abroad, in particular the economic outlook for China and the poor health of European banks. The Dow Jones Industrial Average added 21.92 points or 0.12 percent to 18,573.94, Nasdaq was up 1.55 points or 0.03 percent to 5,228.66, while S&P 500 gained 4.07 points or 0.19 percent to 2,182.22. 


Crude oil futures extended their gains for the fifth straight session on Wednesday, helped by a weaker dollar and an unexpected drawdown in U.S. crude and gasoline. The dollar weakened after the minutes of the Federal Reserve's July meeting generated further uncertainty about the interest rate outlook. Meanwhile, the Energy Information Administration (EIA) in its weekly report said that US crude stockpiles fell 2.5 million barrels last week. US gasoline stockpiles also fell 2.7 million barrels, more than a million barrels than forecast. Crude output jumped by 152,000 barrels per day last week representing its largest surge in production in 15 months. Benchmark crude oil futures for September delivery was up by $0.21 or 0.5 percent to close at $46.79 a barrel after trading in a range of $45.86 and $46.89 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery gained $0.62 or 1.30 percent to $49.85 a barrel on the ICE.


Indian Money market remained closed on Wednesday on account of Parsi New Year.


The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5769.30 crore against gross sell of Rs 4496.37 crore. While in the debt segment, the gross purchase was of Rs 1591.09 crore with gross sales of Rs 1183.31 crore. Thus, FIIs stood as net buyers of Rs 407.78 crore in debt.


The US markets recovering from early decline, ended slightly higher in last session, following the release of the minutes of the Federal Reserve's latest meeting, which suggested that officials were divided about the outlook for monetary policy. The Asian markets have once again made a mixed start, with some indices trading marginally in red, while others are trading in green as minutes of the Federal Reserve's last meeting damped prospects for a US interest-rate increase this year. The Indian markets extended their decline in last session on weak global cues and profit taking in some blue-chip stocks. Today, the start is likely to be cautious but in green, as traders will be getting some support with signs that US Fed is embracing a lower-for-longer interest rate regime. Traders will also be getting some encouragement with Jharkhand becoming the third state to ratify the Goods and Services Tax Amendment Bill in a special session of the Legislative Assembly. The government has set a deadline of April 2017 for its rollout. Also, a new UN report which calls for more transparent policies if the country aspires to become a global driver of innovation, has ranked India 66th in a list of most innovative economies, a jump of 15 places from last year. However, there will be some cautiousness too, with India Ratings and Research stating that Industrial output will not return to a sustained and high growth path as long as there is excess capacity in the manufacturing sector and private investment fails to pick up. Steel stocks will be in action, with a Moody's report that steel demand in India will outpace the regional average while the profitability of domestic steel companies will outperform regional peers on account of an increase in domestic demand.


                                Support and Resistance: CNX Nifty and BSE Sensex


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  • Bharti Airtel, a leading global telecommunications company, has reportedly decided to shut down its digital TV broadcast service IPTV from August 31, 2016.
  • Tata Steel has entered into a memorandum of understanding with IIT Madras to set up Tata Steel Advanced Materials Research Center, with initial focus on developing green energy and light weight technologies using carbon-based materials.
  • Idea Cellular has rolled-out high-speed next generation mobile broadband services in 390 towns spread over 32 districts in Maharashtra and Goa.
  • Tata Power Company's wholly owned subsidiary in Singapore - Tata Power International, has completed the sale of its 50% stake in OTP to KS Orka.
  • Global rating agency, Standard & Poor's has raised its long-term corporate credit rating on Tata Motors to a better grade with less vulnerability of non-payment based on the better performance of its British-arm Jaguar Land Rover.
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