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NSE Intra-day chart (19 March 2018)
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Market Commentary 20 March 2018
Markets likely to make negative start on weak global cues


Extending their southward journey for fourth straight session, Indian equity benchmarks ended the Monday's trade in red terrain with frontline gauges declining below their crucial 10,100 (Nifty) and 33,000 (Sensex) levels, as negative global cues on the prospect of global trade wars and caution ahead of the US Federal Reserve's meet on March 20-21, kept denting traders' sentiments. After making a cautious start, markets never looked confidant and extended their southward journey to end at day's low. Traders reacted negatively on report that India's October-December current account deficit sharply widened from a year earlier on higher imports. The October-December current account deficit widened to 2.0% of gross domestic product, or $13.5 billion, compared with 1.4%, or $8.0 billion, in the same period a year ago. Traders also remained on sidelines ahead of an informal World Trade Organization (WTO) ministerial meeting to be held in New Delhi on March 19-20, where Representatives from 50 countries will be participating. The 50 nations will engage in free and frank discussions on global trade to explore the options for resolving various issues and re-invigorating the WTO. Traders failed to get any sense of relief with report that overseas investors have pumped in nearly Rs 6,400 crore in the segment in March so far on expectations of rebound in corporate earnings and easing of global oil prices. Investors took note that holding companies of many Indian business houses, corporates investing in subsidiaries and associates, as well as several large individual investors will have to cough up more tax after a Supreme Court ruling last week. The verdict will prevent many companies and investors from treating their entire outgo of interest on borrowings as ‘expenditure'. Separately, with only 16% of the summary sales returns under GST matching with the final returns, the revenue department has started to analyze major gaps with a view to check any possible tax evasion. According to the GST returns data, 34% of businesses paid Rs 34,400 crore less tax between July-December while filing initial summary return (GSTR-3B). Finally, the BSE Sensex declined 252.88 points or 0.76% to 32,923.12, while the CNX Nifty was down by 100.90 points or 0.99% to 10,094.25.


The US markets closed lower on Monday, with the S&P 500 and the Nasdaq logging their worst days since February 8, as concerns about Facebook Inc.'s management of user data sparked a selloff in technology shares. Facebook's worst drop in nearly four years follows an outcry over its management of third-party access to users' information, and weighed on other social-media stocks and the technology sector, which is the best-performing industry this year. The Federal Reserve has the attention of markets worldwide with an interest-rate hike expected on Wednesday following a two-day meeting of the central bank's policy group, the Federal Open Market Committee. Higher interest rates can make riskier assets such as stocks less attractive. Investors also have been worrying this month about a potential global trade war. Concerns about trade friction come as the Trump administration takes a hawkish stance on trade with China and moves ahead with tariffs on foreign steel and aluminum. Meanwhile, the US Congress, facing a Friday midnight deadline, toiled on Monday to finish writing a $1.2 trillion bill to fund the federal government through September 30, as several thorny issues lingered, including funding President Donald Trump's border wall. A range of other hot-button initiatives was also slowing the unveiling of legislation that the Republican-controlled House of Representatives had aimed to make public late on Monday. The Dow Jones Industrial Average lost 335.6 points or 1.35 percent to 24,610.91, the Nasdaq dropped 137.744 points or 1.84 percent to 7,344.24, while the S&P 500 was down by 39.09 points or 1.42 percent to 2,712.92. 


Crude oil futures edged lower on Monday tracking steep losses in the stock market, as traders fretted over a litany of defections and firings from the Trump Administration. However, tensions between Saudi Arabia and Iran, as well as concerns over Venezuelan crude production, helped to limit oil's losses. Prices saw a steep climb Friday as Saudi Crown Prince Mohammed bin Salman said the kingdom would develop nuclear weapons if arch-rival Iran did. Meanwhile, Russia said today it is committed to seeing its pact with OPEC through to completion. They may even prolong cuts into 2019. Benchmark crude oil futures for April delivery shed 28 cents or 0.4 percent at $62.06 a barrel on the New York Mercantile Exchange. May Brent crude declined 16 cents or 0.2 percent to settle at $66.05 a barrel on London's Intercontinental Exchange.


Caught in a downward spiral for the third straight session, Indian rupee ended considerably weaker against the US dollar on Monday, on increased selling of the US currency by exporters and banks. Sentiments remained dampened with report that India's October-December current account deficit sharply widened from a year earlier on higher imports. The October-December current account deficit widened to 2.0 percent of gross domestic product, or $13.5 billion, compared with 1.4 percent, or $8.0 billion, in the same period a year ago. The fall in the rupee was also triggered by dollar's strength against major global currencies overseas along with extremely bearish local equity markets. On the global front, the dollar edged higher against a basket of rivals on Monday after posting four consecutive weeks of gains as financial markets braced for the first rate hike of the year from the US Federal Reserve. Finally, the rupee ended at 65.17, 23 paise weaker from its previous close of 64.94 on Friday.


The FIIs as per Monday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 15233.38 crore against gross selling of Rs 14182.09 crore, while in the debt segment, the gross purchase was of Rs 1991.42 crore with gross sales of Rs 2558.92 crore. Besides, in the hybrid segment, the gross buying was of Rs 16.69 crore against gross selling of Rs 1.32 crore.


The US markets closed lower on Monday on lingering concerns about a potential trade war as well as political uncertainty following recent developments in Washington. Traders also looked ahead to the Federal Reserve's highly anticipated monetary policy announcement on Wednesday. Asian markets were trading in red on Tuesday, as investors stayed cautious following the overnight pullback on Wall Street and ahead of outcome of two-day Federal Reserve policy meeting. Indian markets edged lower on Monday after data from the Reserve Bank of India (RBI) showed India's October-December current account deficit widened sharply from a year earlier, driven by higher imports. Today, the start of the session is likely to be on the negative side tracking weak global cues. Sentiments will also remain dampen with Bibek Debroy's statement that India's net exports are not doing well even as the global economy is on the recovery path. Debroy further highlighted that India is facing a dilemma from the point of view of pushing exports, as exporters would like exchange rate to depreciate, however exchange rate might not depreciate as much as exporters want because of capital inflows. Meanwhile, RBI in its release said that the country's manufacturing sector witnessed an improvement in sales growth in the third quarter this fiscal on annual basis, though net profit has remained subdued due to lack of support from other income. There will be buzz in telecom related stocks after the Department of Telecom amended licence norms of service providers to increase the number of instalments for spectrum payments and radiowaves frequency holding limit to provide relief to the sector reeling under deep financial stress. Stocks related to steel sector will be in focus after the government said that 8.22 million tonnes finished steel was exported during April-January of 2017-18. India had exported 8.24 MT during 2016-17 and 4.08 MT in 2015-16.


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  • IOC and BPCL may buy 26% stake each in gas utility GAIL India, paying the government over Rs 20,000 crore each to become integrated energy firms.
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