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NSE Intra-day chart (18 February 2016)
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Market Commentary 19 February 2016
Markets to consolidate after two days of gains on weak global cues

Extending their winning streak for the second day in a row, Indian equity benchmarks ended the session with a gain of over a percent on Thursday. It turned out to be a rather volatile day of trade as the indices rebounded after drifting to lower levels in the noon session and sustained position build up was witnessed across the board. Sentiments got a boost after global ratings agency Moody's Investors Service rehashed faith in the Indian economy. According to agency, country's economy will grow at 7.5% in 2016 and 2017 as it is relatively less exposed to external headwinds, like China slowdown, and will benefit from lower commodity prices.  Some support also came with the report that India's current account deficit (CAD), is likely to narrow to 0.7 per cent of GDP in the current financial year from 1.3 per cent in FY'15. However, investor remained cautious with the report that foreign Institutional Investors (FIIs) continued their selling spree as they sold net Rs 560 crore on February 17, 2015. On the global front, Asian markets ended in green on Thursday as crude oil prices advanced, while European stocks wobbled on Thursday in early deals. Back home, the benchmark got off to a rollicking opening as investors rejoiced after crude oil prices extended gains on hopes that big producers will cap production. Sentiment was also buoyed by a rise on Wall Street, where U.S. shares advanced for the third straight day, helped by some recovery in oil prices and encouraging economic data. The indices in no time climbed to intraday highs and traded around the psychological 23,700 (Sensex) and 7,200 (Nifty) levels through the morning trades. But the optimism soon started showing signs of easing and profit booking in few sectors and mixed trade in European markets weighed down the local bourses. Yet, final hour buying ensured that the key indices not shut shops near the intraday highs. Finally, the BSE Sensex surged by 267.35 points or 1.14% to 23649.22, while the CNX Nifty rose 83.30 points or 1.17% to 7,191.75.


The US markets closed lower on Thursday, snapping a three-day winning streak. The stocks have climbed sharply this week as rising oil prices helped re-inflate battered energy and industrial shares. On the economy front, an early indication of manufacturing conditions in February indicated contraction for the sixth straight month. The Philadelphia Fed stated that its manufacturing barometer of regional manufacturing activity rose slightly to negative 2.8 from negative 3.5. The index for new orders sank to negative 5.0 from negative 1.9, the lowest level since November 2013. Shipments remained positive but slid to 2.5 from 9.6 in the prior month. Inventories slipped to negative 17.1 in February, the lowest reading in almost three years, from negative 15.7 in the prior month. The index of US leading economic indicators decreased in January for a second month, reflecting a slump in stock prices as well as a pickup in jobless claims that has since reversed. The Dow Jones Industrial Average lost 40.40 points or 0.25 percent to 16,413.43, the Nasdaq was down 46.53 points or 1.03 percent to 4,487.54 while, the S&P 500 dropped by 8.99 points or 0.47 percent to 1,917.83.  


Crude oil futures paring most of their early gains ended flat on Thursday after an unexpected build in U.S. inventories last week pushed inventories to near full storage capacity. The prices were also weighed down with Saudi official dashing hopes for a coordinated output cut. Its foreign minister said that if other producers want to limit or agree to a freeze in terms of additional production that may have an impact on the market but Saudi Arabia is not prepared to cut production. Benchmark crude oil futures for March delivery ended up by $0.01 or 0.03 percent to $30.67 a barrel after trading in a range of $30.55 and $31.95 a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery closed at $34.20, down $0.31 or 0.90 percent on the ICE.


Indian rupee trimmed its initial gains and ended flat with positive bias against dollar on Thursday on fresh selling of American currency by banks and exporters. Further, gains in the domestic equity market also helped rupee to strengthen against the dollar. However, dollar's strength against other currencies overseas capped the rupee gains. The sentiments were on optimistic note after Moody's Investors' Service stated that Indian economy will grow at 7.5% in 2016 and 2017. On the global front, euro made tentative gains against its US counterpart on Thursday, as a raft of positive economic data provided a boost to the single currency. Finally, the rupee ended at 68.46, 1 paise stronger from its previous close of 68.38 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyer in debt segment. In equity segment, the gross buying was of Rs 3125.34 crore against gross selling of Rs 3419.03 crore, while in the debt segment, the gross purchase was of Rs 1232.26 crore with gross sales of Rs 1027.32 crore.        


The US markets snapping their gaining streak ended lower in last session, though the crude moved higher but trade remained relatively choppy. There was some concern with a Conference Board report showing a second straight monthly decrease by its index of leading US economic indicators. The Asian markets are mostly in red with some of the indices trading lower by over a percent, led by losses in energy stocks, as crude declined again. Japanese market was down by over two percent as the yen strengthened against euro. The Indian markets despite some mid day choppiness surged in the last session, extending their gains for yet another day. Today the start is likely to be mildly soft tailing the weakness in the other global markets and the major bourses will consolidate. Though, there will be some support to the markets, restricting any major fall, with Moody's Investors Service stating that Indian economy will grow at 7.5 percent in 2016 and 2017 as it is relatively less exposed to external headwinds, like China slowdown, and will benefit from lower commodity prices. The agri related stocks will be in limelight today with Prime Minister Narendra Modi unveiling the operational guidelines for the Pradhan Mantri Fasal Bima Yojana. Textile sector too will be buzzing, as the government is expecting Rs 30,000 crore investment in 74 textile parks and is planning to announce a new textile policy by April this year. Minister of State for Textile Santosh Gangwar has said that we are mainly focusing on manufacturing of value-added products and export-oriented goods that will benefit the economy. There will be some action in NBFC companies too, as the Reserve Bank revised guidelines for NBFC factor companies stipulating that there should be board approved limit for underwriting commitments with a view to mitigate credit risk.


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  • YES Bank has tied up with UltraCash Technologies to launch payments processing through sound waves.
  • Bharat Heavy Electricals has successfully commissioned a 270 MW coal-based power project in Punjab.
  • NTPC has commissioned 2nd Unit of 660 MW of Barh Super Thermal Power Station Stage II on February 18, 2016.
  • Dr Reddy's Labs has received its board's approval to buy back equity shares of the company for an aggregate amount not exceeding Rs 1,569.4 crore at a price not exceeding Rs 3,500 a share.
  • Punjab National Bank is planning to sell up to Rs 3,000 crore bad loans to asset reconstruction companies in the fourth quarter as part of its balance sheet clean-up exercise.
News Analysis