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NSE Intra-day chart (19 May 2016)
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Market Commentary 20 May 2016
Markets to see some recovery with a positive start


Stock markets in India capitulated by over a percent on Thursday after showing some signs of consolidation in last session. Discouraging leads from the Asian and European markets proved as a big dampener for the domestic bourses, as investors turned jittery after minutes of the U.S. Federal Reserve's latest monetary policy meeting hinted that the central bank could soon raise interest rates. The minutes of the US central bank's April policy meeting showed that although several policymakers thought there were still risks to the economic outlook, a number of committee members believed it would be 'appropriate' to lift benchmark interest rates on June 15, if economic data and labour market conditions keep strengthening and inflation approaches the 2% target. Besides, a stronger US dollar weighed on commodity prices and dragged down resources stocks. On the domestic front, sentiments got undermined with the reports that Prices of many food items such as pulses, sugar, vegetables and poultry products are set to surge in India in the next three months on thin supplies, which could fuel inflation and give the central bank little room to cut rates. Depreciation in rupee value against the US dollar too weighed down sentiments. Investors failed to draw any sense of relief with global rating agency Standard and Poor's (S&P) statement that India is likely to remain insulated from the developments in the Chinese economy provided the government carries out structural reforms to take the economy to an eight per cent growth path. On the global front, European markets opened sharply lower tracking losses in Asian markets amid concerns that the Fed may raise interest rates in the near term. Back home, the local benchmarks with a somber opening, extended the downtrend for the second straight session as pessimistic sentiments prevailed across Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of selling pressure emerged in the local markets immediately after a somber European market opening. Finally, the BSE Sensex ended lower by 304.89 points or 1.19% to 25399.72, while the CNX Nifty dropped 86.75 points or 1.10% to 7,783.40.


The US markets closed mostly lower on Friday, with the Dow and S&P 500 managing to log their best weekly gains since November. Federal Reserve Bank of Cleveland president Loretta Mester stated that she sees no evidence yet that market volatility and oil's sharp price decline have spilled over to the broader US economy by denting risk-taking and the availability of credit. With her outlook for the economy unchanged, Mester added that the Fed should remain on track for gradual reductions over time in the level of monetary accommodation from the central bank. On the economy front, cheaper gasoline and moderating grocery prices kept inflation in check in January, but expenses for medical care and housing are rising. The consumer price index was flat last month. Over the past 12 months the main CPI has risen by an unadjusted 1.4%, double the rate in December. That's the fastest pace since late 2014. The Dow Jones Industrial Average lost 21.44 points or 0.13 percent to 16,391.99, the S&P 500 was down by 0.05 points to 1,917.78 while, the Nasdaq was up 16.89 points or 0.38 percent to 4,504.43.  


Crude oil futures fell slightly on Thursday led by the dollar's surge on U.S. rate hike expectations which drove commodity players away from the oil market. The dollar surged to its highest level since mid-March amid hawkish indications that the Federal Reserve will likely raise interest rates at a closely-watched meeting next month. Benchmark crude oil futures for June delivery declined by $0.02 or 0.04 percent to  $48.17 a barrel after trading in a range of $46.75 and $48.23 a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery closed at $48.81, down $0.13 or 0.25 percent on the ICE.


Extending its weakness for the sixth straight session, Indian rupee depreciated substantially against dollar on Thursday on strong demand for the American unit from importers and banks, tracking the losses in the Asian currencies markets. Besides, massive losses in the local equity market and appreciation of the American currency overseas too pressurized the domestic currency. Investors even failed to draw any sense of relief with global rating agency Standard and Poor's (S&P) statement that India is likely to remain insulated from the developments in the Chinese economy provided the government carries out structural reforms to take the economy to an eight per cent growth path. On the global front, dollar was higher on Thursday after a perceived increase in chances of a rise in U.S. interest rates by September drove its biggest daily gain against euro in five weeks. Finally, the rupee ended at 67.36, 38 paise weaker from its previous close at 66.98 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity and in debt segments both. In equity, the gross buying was of Rs 3984.43 crore against gross selling of Rs 3988.97 crore, while in the debt segment, the gross purchase was of Rs 273.90 crore with gross sales of Rs 398.55 crore.            


The US markets suffered sharp plunge in last session, with the major averages falling to their lowest intraday levels in about two months on renewed concerns about the outlook for interest rates. The Asian markets have made a positive start taking cues from the oil rally and weakness in dollar. The Indian markets tumbled in last session on worries of impending US rate hike. Today, the start is likely to be in green taking cues from the positive start of the regional markets. Traders will also be taking some encouragement with Indian Meteorological Department's statement that the monsoon has made its much-awaited entry into the Andaman & Nicobar Islands, though it also said that it may get delayed a bit due to an ongoing cyclonic activity in the Bay of Bengal. Also, global rating agency Moody's Investors Service, forecasted Indian economy to grow 7.5 percent in the current and next year and has said the expansion is primarily driven by rising consumption and sustained improvement in private investment was needed to maintain the momentum. However, there will be some cautiousness too, with the market regulator Sebi taking its fight against black money and money laundering to another level and announcing steps to stop suspected illegal money flowing into the country by making issuers of securities known as offshore derivative instruments register their customers. Meanwhile, the Reserve Bank of India (RBI) has issued revised guidelines allowing higher foreign direct investment (FDI) limits in credit information companies (CIC) which have an established track record of running a credit information bureau. There will be lots of result reactions to keep the markets in action.



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  • Tech Mahindra's arm Mahindra Comviva has consolidated its LATAM operations and its recent acquisition ATS Advanced Technology Solutions under a single brand - Mahindra Comviva.
  • Bharat Heavy Electricals has successfully commissioned 250 MW thermal power plant in Maharashtra.
  • Tata Power's arm Tata Power Renewable Energy  has won two solar grid connected photovoltaic projects of 50 MW capacity each in Pavagada Solar Park in the Tumkur district of Karnataka.
  • Kotak Mahindra Bank's arm Kotak Mahindra Prime  will raise Rs 400 crore by issuing secured, redeemable, non-convertible debentures, amounting to Rs 400 crore, on a private placement basis . 
  • In order to facilitate online trade and non-trade transactions between Nepal and India, Nepal SBI Bank, one of the largest overseas subsidiaries of State Bank of India, has launched payment gateway.
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