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NSE Intra-day chart (18 May 2017)
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Market Commentary 19 May 2017
Markets to see some recovery after last session fall

Snapping the record-setting spree, Indian equity benchmarks ended the daunting day of trade with a cut of around a percent, with frontline gauges settling below their crucial 30,500 (Sensex) and 9,450 (Nifty) levels amid selloff as political turmoil in White House spooked investors and dragged the global markets. Major bourses traded in red terrain throughout the session, as traders remained on sidelines eyeing two-day Goods and Services Tax (GST) Council meet beginning in Srinagar, which will see participation from 29 states and union territories, along with Jaitley, and senior officials from the revenue department. In the meeting Finance Ministry Arun Jaitley is likely to finalise the rates that various goods and services will attract from July 1. Meanwhile, the GST Council approved all nine rules for the rollout of the new indirect tax regime. The nine rules finalized by the council pertain to composition, valuation, transition, input tax credit, invoice, payment, refund, registration and return. Market participants failed to get any sense of relief with Commerce and Industry Minister Nirmala Sitharaman's statement that India's exports have been increasing despite global headwinds and efforts are being made to neutralise any impact on them due to implementation of GST. Traders also overlooked a senior UN economic official's statement that the demonetisation policy is not expected to have a long term impact on domestic demand in India, which is projected to clock a 7.9 percent growth in fiscal 2018. Selling intensified in last leg of trade with European markets making a somber start as mounting political uncertainty in the U.S. exacerbated concerns among investors as to whether President Donald Trump would be able to deliver on key pro-growth policies. Asian markets too traded weak and ended mostly in red on Thursday. Finally, the BSE Sensex lost 223.98 points or 0.73% to 30,434.79, while the CNX Nifty was down by 96.30 points or 1.01% to 9,429.45.


The US markets closed higher on Thursday, as investors' sentiment, battered by political uncertainty surrounding President Donald Trump, stabilized on a positive reading on jobless claims. The number of Americans on unemployment fell mid-May to the lowest level since 1988, underscoring the strongest labor market in years. So-called continuing claims, or the number of people collecting jobless benefits, fell by 22,000 to 1.9 million in early May. That's the lowest level in 29 years. The US economy has been creating new jobs at a rapid clip for the past six years, knocking the unemployment rate below 5% and helping millions of Americans to recover from the worst recession in decades. Applications for unemployment benefits have registered less than 300,000 for 115 straight weeks, the longest run since the early 1970s. The more stable monthly average of jobless claims fell slightly to 240,750. Separately, manufacturing in the Philadelphia region showed unexpected strength in May, a sign that the factory sector could be on solid ground. The Philadelphia Fed said its manufacturing index jumped to a reading of 38.8 in May from 22 in April. The Dow Jones Industrial Average gained 56.09 points or 0.27 percent to 20,663.02, Nasdaq added 43.89 points or 0.73 percent to 6,055.13, while S&P 500 edged higher by 8.69 points or 0.37 percent to 2,365.72.


Crude oil futures extended their gains on Thursday as calm returned to Wall Street following yesterday's panic over political turbulence. Also investors remained optimistic that OPEC would reach an agreement to extend the current supply-cut deal beyond June at its meeting next week. OPEC would seek an extension of the current deal to cut global production offsetting concerns over the rising level of U.S. shale production. Though, despite the high level of compliance from OPEC members with the deal to rein in supply, global production remains above the five-year average. Benchmark crude oil futures for June delivery ended higher by $0.28 or 0.6 percent to $49.35 on the New York Mercantile Exchange. In London, Brent crude for July delivery ended up by $ 0.27 to $52.48 on the ICE.


Extending weakness for the third day in a row, Indian rupee fell sharply against US dollar on Thursday as concern over US President Donald Trump spurred a sell-off in emerging market currencies. Investors failed to get solace with a senior UN economic official's statement that the demonetisation policy is not expected to have a long term impact on domestic demand in India, which is projected to clock a 7.9 percent growth in fiscal 2018. The domestic currency started on a weak note and increased losses to end near intraday lows.  Losses in local equity market added to the pessimistic environment of the currency. Besides, dollar's weakness against other currency overseas too failed to cast any impact on the rupee. Finally, the rupee ended at 64.83, 68 paise weaker from its previous close of 64.15 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 6310.87 crore against gross selling of Rs 5147.89 crore, while in the debt segment, the gross purchase was of Rs 2732.32 crore with gross sales of Rs 680.47 crore.


The US markets bounced back in last session and the major averages partly offset the steep losses posted in the previous session. Bargain hunting mainly contributed to the strength and also the release of some upbeat economic data, including a report from the Labor Department showing another unexpected drop in initial jobless claims. The Asian markets though have made a mixed start and some indices are again in red heading for the biggest weekly drop since March. Japanese market too was trading cautiously as the yen headed for its strongest week in a month. The Indian markets reeling under global pressure slumped and major benchmarks dropped close to a percent in the last session. Today, the start is likely to be mildly in green and some recovery can be seen after the sharp fall of last trade. Traders will be cheering the GST Council finalising tax rates of goods and services under the four-slab structure with essential items of daily use being kept in the lowest bracket of 5 percent. The Council fixed the rates for over 1200 items under the Goods and Services tax, amid demand by some states to keep essential items under the lower tax category. Lots of daily consumption items such as milk, fruit and vegetables, jaggery or gur, foodgrain and cereals have been exempted from tax while others such as sugar, tea, coffee, edible oil, mithai, and newsprint have been placed in the lowest slab of 5 per cent.  Luxury cars will attract 28 per cent GST plus a cess of 15 per cent, while small petrol cars will face 28 per cent plus 1 per cent cess, and diesel small cars 28 per cent tax plus 3 per cent cess. Consumer durables, which now face a total tax of about 32 per cent, will be taxed in the 28 per cent slab. The panel will discuss tax rates for gold and some other items today and could meet one more time if necessary to decide rates on remaining items. There will be sector specific buzz based on GST rates and steel stocks may see some uptrend as the GST rate on coal has been fixed at 5 percent. The move will bring down the input cost and would lead to stabilisation of prices. There will be some buzz in banking sector too, as the RBI has eased the norms of setting up bank branches and said branches manned by either bank's staff or its business correspondents where services are provided for a minimum of four hours per day for at least five days a week will be called a banking outlet.


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