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NSE Intra-day chart (18 April 2017)
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Market Commentary 19 April 2017
Markets to make a soft-to-cautious start

Indian equity markets showed a volte-face on Tuesday as what started on a promising note ended as a dismal show. The optimism in local markets petered out completely by the end of trade and the indices even drifted in to the negative territory despite getting off to a gap-up opening. Marketmen were optimistic for most part of the morning session as World Bank in its report said that Indian economy will claw back to 7.2 percent growth this financial year and rise further to 7.5 percent in 2018-19. It also said that timely and smooth implementation of the GST could prove to a significant benefit to economic activity. However, sentiments got spooked in early afternoon trades following the sell-off in European markets as British Prime Minister May called a snap election for June 8, 2017. The shock announcement comes nearly one month after the UK triggered Article 50 to leave the European Union. Besides, profit booking in Realty and Metal counters exerted downside pressure on the frontline indices and dragged them even below to the psychological 9,150 (Nifty) and 29,400 (Sensex) levels. Sentiments weakened further after Indian Meteorological Department (IMD) released its prediction for this year's monsoon and said that monsoon rainfall may be 96% of the normal with an error margin of 5% on either side. IMD also said that there is more than 50% chance of El-Nino developing from August. Monsoon predictions are considered to be vital for Indian economy as agriculture still largely is dependent on the weather phenomenon. Finally, the BSE Sensex decreased 94.56 points or 0.32% to 29319.10, while the CNX Nifty was down by 34.15 points or 0.37% to 9,105.15. 


The US markets closed lower on Tuesday, as a spate of tepid corporate earnings weighed on the broader market. A decline in shares of Goldman Sachs Group shaved more than 70 points off the Dow industrials after the investment bank's first-quarter results missed expectations. The overall tone of the latest batch of corporate reports was generally lackluster. Meanwhile, tensions between the US and North Korea remain elevated with both countries exchanging threats. On the economy front, manufacturing output lost momentum in March, dragged down by weakness in the auto sector. Factory output fell 0.4%, the first decline since last August, and the drag would have lowered overall March industrial production if it wasn't for utilities output. A steep 3% decline in the production of autos and auto parts accounted for the drop in manufacturing. It's a reading consistent with the slower pace of auto sales. The decline was not all autos, however, as manufacturing ex-motor vehicles was down 0.2% in March. For the first quarter as a whole, factory output is up at a 2.7% annual rate, despite the drop in March. The Dow Jones Industrial Average lost 113.64 points or 0.55 percent to 20,523.28, the Nasdaq dropped 7.32 points or 0.12 percent to 5,849.47, while S&P 500 ended lower by 6.82 points or 0.29 percent to 2,342.19.


Crude oil futures extended their fall on Tuesday despite expectations that U.S. stockpiles dropped last week. US crude oil inventories are expected to have fallen by 1.5 MMbbls from April 7-14, 2017. Traders also overlooked the note from IMF which boosted the demand outlook. It said that global economic growth is strengthening, thanks to a long-awaited cyclical recovery in investment, manufacturing, and trade, though downside risks remain. Meanwhile, the EIA's monthly Drilling Productivity report showed U.S. shale production was set to rise to 5.19 million barrels a day in May. Benchmark crude oil futures for May delivery ended lower by $0.24 or 0.5 percent to $52.41on the New York Mercantile Exchange. In London, Brent crude for May delivery ended down by $0.11 at $54.76 on the ICE.


Indian rupee extended its weakness for the second consecutive day on Tuesday, due to fresh demand for the American currency from banks and importers. Sentiments remained dampened with India Meteorological Department's (IMD) statement that monsoon rainfall may be 96% of the normal with an error margin of 5% on either side. Besides, weakness in domestic equities markets and capital outflows in small lots also weighed on the rupee. On the global front, dollar steadied against yen on Tuesday, with worries that U.S. currency manipulation complaints could touch Japan offset by U.S. Treasury Secretary Steven Mnuchin's favoring of a strong dollar in the long term. Finally, the rupee ended at 64.63, 11 paise weaker from its previous close of 64.52 on Monday.


The FIIs as per Tuesday'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 1960.91 crore against gross selling of Rs 2028.18 crore, while in the debt segment, the gross purchase was of Rs 1898.45 crore with gross sales of Rs 418.41 crore.


The US markets despite coming off the day's low ended in red in the last session. The negative sentiment was generated in reaction to quarterly results from Goldman Sachs, as the financial giant reported weaker than expected first quarter earnings. The Asian markets made mostly a lower start tailing the decline in the US markets. Uncertainty coupled with weaker-than expected results have pushed some investors away from riskier assets. The Japanese market too was marginally in red despite weakness in yen. The Indian markets losing their pace in the final hours, posted loss of over a quarter percent in the last session, as investors remained worried about North Korea's nuclear intentions. Today, the start is likely to remain cautious on weak global cues and traders will also be concerned about IMF trimming India's annual growth forecast by 0.4 percentage points to 7.2 percent for 2017, citing the temporary negative consumption shock induced by cash shortages and payment disruptions from the recent demonetization move. Also, there will be negative reaction on not only the IT sector but the whole market after the country's largest software services exporter, Tata Consultancy Services (TCS) missed estimates on both the profit and revenue front with negative growth in the BFSI and retail segments. The company's net profit for the Q4 fell 2.5% sequentially to Rs 6,608 crore, while revenues declined 0.3% to Rs 29,642 crore. It's for the second consecutive quarter that it has underperformed Infosys. Traders may however get some support with good monsoon expectation, as the Indian Meteorological Department (IMD) has said that the country would receive 'normal' monsoon this year, with a fair distribution of rainfall across major parts of country. Banking stocks will be under pressure, as the Reserve Bank of India (RBI) has released a series of guidelines with a view to tighten norms concerning recognition of and provisioning for bad assets at banks.


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  • NTPC has brought down its cost of electricity generation by an average 39.5 paise. It does not include taxes and cess primarily imposed to finance protection of environment.
  • IndusInd Bank has launched IndusForex.com, a one-stop portal for all foreign exchange needs of Indian consumers.
  • Tata Consultancy Services has received its shareholders approval for Rs 16,000 crore share buyback plan.
  • Mahindra & Mahindra's North American Technical Center is working on a new-generation Scorpio that is expected to hit the roads in 2020.
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