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NSE Intra-day chart (16 February 2018)
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Market Commentary 19 February 2018
Markets to open in green terrain amid firm global cues


Friday turned out to be a dismal day of trade for Indian equity benchmarks, with frontline gauges ending with a cut of around a percent, as disappointing trade balance data and worries over the Rs 11,300 crore fraud case at PNB kept the underlying sentiment cautious. Markets started the session on an optimistic note but failed to gain any momentum and entered into red terrain, as traders turned pessimistic on report that 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. Sentiments also remained dampened on report that the growth of India's debt capital markets moderated by three percent in the current year with a growth of 16 percent in the value of corporate bonds outstanding by December end, driven by a slowdown in bond issuance. Meanwhile, IMF said 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. The market participants also remained worried, as the World Bank identified two global risks that could jeopardise the country's progress towards a global middle-class status. These two risks are anti-international trade sentiment and climate change. The World Bank further noted that India's services exports are being challenged and the climate change is posing threat to the agricultural sector. Meanwhile, Road Transport and Highways Minister Nitin Gadkari stated that the government would not bring any separate electric vehicle policy and would just frame rules for the category. Separately, Union minister D V Sadananda Gowda has said that the government will change the base year to 2017-18 for the calculation of GDP and IIP numbers while for retail inflation the year will be revised to 2018. Finally, the BSE Sensex declined 286.71 points or 0.84% to 34,010.76, while the CNX Nifty was down by 93.20 points or 0.88% to 10,452.30.


The U.S. equity markets paring most of their early gains ended mixed on Friday after Special Counsel Robert Mueller's office revealed that a federal grand jury has indicted several Russian nationals for allegedly interfering in the 2016 presidential election. The indictment does not allege collusion between the Russians and President Donald Trump's campaign but could still cause headaches for the president. The strength seen earlier in the day came, as traders once again shrugged off further indications of rising inflation, with a report from the Labor Department showing import prices jumped by more than expected in the month of January. The import prices surged up by 1.0 percent in January after edging up by a revised 0.2 percent in December. The market participants had expected import prices to climb by 0.6 percent compared to the 0.1 percent uptick originally reported for the previous month. The export prices increased by 0.8 percent in January after inching up by a revised 0.1 percent in December. Export prices had been expected to rise by 0.3 percent compared to the 0.1 percent drop originally reported for the previous month. The Dow Jones Industrial Average added 19.01 points or 0.08 percent to 25,219.38 and S&P 500 rose 1.02 points or 0.04 percent to 2,732.22, while Nasdaq was down by 16.97 points or 0.23 percent to 7,239.46.


Extending winning streak for the third straight day, Crude oil prices settled higher on Friday as global equities headed for their biggest weekly gain in six years and as the dollar slipped to a three-year low. Investor shrugged off data showing that the number of US oil rigs jumped for the fourth straight week. According to data from energy services firm Baker Hughes, US drillers added 16 rigs to bring the count to 798, the highest level since April 2, 2015. The US shale book has offset OPEC's supply quota plan that was intended to end the global oil surplus. Benchmark crude oil futures for March delivery surged 34 cents or 0.6 percent, at $61.68 a barrel on the New York Mercantile Exchange. April Brent crude gained 51 cents or 0.8 percent to settle at $64.84 a barrel on London's Intercontinental Exchange.


Indian rupee ended considerably weaker against the US dollar on Friday, faced with heavy demand for the American currency from importers and banks. Sentiments remained sluggish with the report that the overall trade deficit widened to $16298.47 million during the month under review as against $9904.82 million in January 2017, the highest in more than three years. The rupee sentiment was also hit as the World Bank identified two global risks that could jeopardise the country's progress towards a ‘global middle-class status'. These two risks are anti-international trade sentiment and climate change. The World Bank further noted that India's services exports are being challenged and the climate change is posing threat to the agricultural sector. Moreover, persistent fall in equity markets together with dollar rose to a position of strength overseas added some extra pressure on rupee. On the global front, pound dipped against dollar on Friday following the lower than expected retail sales figures for January. Finally, the rupee ended at 64.21, 30 paise weaker from its previous close of 63.91 on Thursday.


The FIIs as per Friday's data were net sellers in equity and debt segments both, in equity segment, the gross buying was of Rs 4415.89 crore against gross sell of Rs 4550.42 crore, while in the debt segment, the gross purchase was of Rs 738.39 crore with gross sales of Rs 780.32 crore. Besides, in the hybrid segment, the gross selling of Rs 0.56 crore against no buying.


The US markets ended mixed on Friday with the benchmarks paring most of their early gains, as political news sparked late-session turbulence. Asian equities were trading higher, as confidence in equities continued to return, with some markets in the region reopening after the Lunar New Year holiday. Japanese Nikkei edged higher, as the country posted a merchandise trade deficit of 943.417 billion yen in January, an improvement of 13.6 percent from a year earlier. Indian equity markets fell sharply on Friday, as financials succumbed to selling pressure on worries over the Rs 11,300-crore fraud case at Punjab National Bank (PNB) and weak trade data stirred concerns about the economic outlook. Today, markets is likely to start in green terrain, tracking firm global markets, as investors remain optimistic about global growth. However, traders may remain concern with report that an index mapping the country's short-term financial conditions has plunged over 12 points for the fourth quarter of the current fiscal ending March 31, as compared to the previous quarter. Ongoing developments in PNB fraud case may influence trading sentiment. Meanwhile, in lieu of the ongoing fraudulent transaction scam involving Punjab National Bank, the ASSOCHAM demanded that the government to reduce its stake in banks to less than 50 percent. Banking stocks would continue to remain in focus after the government's chief economic advisor Arvind Subramanian underlined the need for more privatization in the banking sector. Steel stocks will remain in focus on report that India's export of finished steel shrank by over 30 per cent to 0.616 million tonnes (MT) during January 2018. Stocks related to coal sector too will be buzzing on report that the country's coal import increased by 12.4 per cent to 18.49 MT in January, against 16.44 MT in the same month of the previous fiscal, according to m-junction, a leading name in the e-auction space.

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