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NSE Intra-day chart (20 February 2019)
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Market Commentary 21 February 2019
Benchmarks to make pessimistic start amid weak Asian cues


Indian equity bourses bounced back on Wednesday to end the trading session with strong gains of over a per cent. The start of day was a fabulous, aided by Care Ratings' report that signalling an end to the liquidity crisis that NBFCs have been facing since last September, corporate bond issuances by them have risen by 30% in January, reflecting renewed confidence among both issuers as well as investors. Trading sentiments also got boost, after Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu cleared a proposal aiming at simplifying the process of exemptions for Start-ups under Section 56 (2) (viib) of Income Tax Act, which will encourage investments in Start-Ups. Adding comfort among traders, the government said the revised GDP figures for demonetisation year was not cooked up and, in fact, the growth rates are likely to go up further due to the GST. On January 31, the government revised the GDP growth rates by 110 basis points (bps) from 7.1% to 8.2% for 2016-17, the year of demonetisation, and by 50 bps from 6.7% to 7.2% for fiscal 2017-18. In the last leg of the trade, the key indices extended gains to settle near their intraday high points, tracking positive global markets. Street got encouragement as the Cabinet approved a new electronics policy which aims to create a $400 billion electronic manufacturing ecosystem by 2025 and generate 1 crore jobs in the country. The National Electronics Policy 2019 proposes to boost mobile manufacturing in the country to 1 billion units worth $190 billion of which 600 million units worth $110 billion will be exported from the country. Street overlooked a private report stating that despite the almost loose fiscal and monetary policies, the economy is likely to slow down to 6-6.5 percent in the first half of 2019, due to weak global demand, political uncertainty and tighter financial conditions. Finally, the BSE Sensex gained 403.65 points or 1.14% to 35,756.26, while the CNX Nifty was up by 131.10 points or 1.24% to 10,735.45.


The US markets ended higher on Wednesday after the minutes of the latest Federal Reserve meeting, which provided further insight into the central bank's decision to change the forward guidance language and indicate a patient approach to raising interest rates. The minutes described the Fed's discussions regarding changing the language in its statement from referencing further gradual increases in rates to a sentence indicating patience. Meeting participants pointed to a variety of considerations that supported a patient approach to monetary policy as an appropriate step in managing various risks and uncertainties in the outlook. The Fed said additional data would help policymakers gauge the trajectory of business and consumer sentiment, whether the recent softness in core and total inflation and inflation compensation would persist, and the effect of the tightening of financial conditions on aggregate demand. The Fed said that information arriving in coming months could also shed light on the economic impact of the prolonged government shutdown as well as the results of budget negotiations occurring in the wake of the shutdown, including the possible implications for the path of fiscal policy. The minutes of the January meeting also showed officials discussed a plan to end the reduction of bonds on the Fed's balance sheet before the end of 2019. Dow Jones Industrial Average gained 63.12 points or 0.24 percent to 25954.44, Nasdaq added 2.30 points or 0.03 percent to 7489.07 and S&P 500 was up by 4.94 points or 0.18 percent to 2784.70.


Crude oil futures ended higher on Wednesday as signs of tighter global crude supplies outweigh pressure from a continued rise in US production. Nigerian President Muhammadu Buhari is reportedly considering cutting crude output in pursuit of higher prices. He added that such a decision would signal a conscious effort by an OPEC member to supplement recent crude production cuts by the Organization of the Petroleum Exporting Countries (OPEC). Meanwhile, Saudi Aramco said it would temporarily close its 400,000 barrel-per-day Yanbu refinery for maintenance. Benchmark crude oil futures for March surged 83 cents or 1.5 percent to settle at $56.92 a barrel on the New York Mercantile Exchange. April Brent crude gained 63 cents or about 1 percent to settle at $67.08 a barrel on London's Intercontinental Exchange.


Halting a four-day slide, Indian rupee ended stronger against dollar on Wednesday, due to increased selling of the American currency by exporters and banks. Traders took some encouragement with the government's statement that the revised Gross Domestic Product (GDP) figures for the demonetisation year was not cooked up and, in fact, the growth rates are likely to go up further due to the GST. On January 31, the government revised the GDP growth rates by 110 basis points (bps) from 7.1% to 8.2% for 2016-17, the year of demonetisation, and by 50 bps from 6.7% to 7.2% for fiscal 2017-18. A spectacular relief rally in local equities also supported the forex sentiment. On the global front, dollar was capped against its peers on Wednesday on falling US yields and before the Federal Reserve's policy meeting minutes, though it managed to gain on the yen as stronger investor risk appetite curbed demand for the Japanese currency. Finally, the rupee ended at 71.10, 24 paise stronger from its previous close of 71.34 on Monday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 10460.91 crore against gross selling of Rs 12019.56 crore, while in the debt segment, the gross purchase was of Rs 528.35 crore with gross sales of Rs 639.77 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.67 crore against gross selling of Rs 10.41 crore.


The US markets ended higher on Wednesday after Federal Reserve minutes further signaled the US central bank's dovish posture on monetary policy. Asian markets were trading mostly lower on Thursday despite US Federal Reserve minutes affirmed it would be patient on interest rate rises. Snapping eight-day losing streak, Indian markets made a strong come back on Wednesday, with Sensex and Nifty recapturing their crucial 35,700 and 10,700 levels, respectively, on account of a short covering. Today, the markets are likely to make negative start amid weak cues from Asian peers. Traders will be concerned with the commerce and industry ministry's data showing that foreign direct investment (FDI) into India contracted by 7% to $33.49 billion during April-December in the current fiscal. Foreign fund inflows during April-December 2017-18 stood at $35.94 billion. A decline in foreign inflows could put pressure on the country's balance of payments and may also impact the value of the rupee. There will be some cautiousness with report that the Goods and Services Tax (GST) Council has deferred a decision on tax rates on real estate and lottery till February 24, and extended the deadline for businesses to file sales returns for January till February 22 for all states; and February 28 for Jammu & Kashmir. However, traders may take some encouragement later in the trade with private report that India will remain the fastest growing major economy, much ahead of China, in the next decade 2019-28. Some support may also come with the Finance Ministry expecting bad loan recoveries to touch Rs 1.80 lakh crore during the current fiscal with two major cases at the final stage of resolution. Besides, the latest EPFO payroll data showed that employment generation in the formal sector almost trebled to touch a 16-month high of 7.16 lakh in December 2018 compared to 2.37 lakh in the year-ago month. Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das would be holding a meeting, later in the day, with the CEOs and MDs of the banks, both public and private sector, to discuss the issue of transmission of rate cuts by the central bank to the actual loans being disbursed by the banking sector. There will be buzz in the banking sector stocks with report that the government announced final recapitalisation tranche amount of Rs 48,239 crore for as many as 12 public sector banks, in a bid to take them out of RBI's prompt corrective action framework. There will be some reaction in sugar sector stocks with ISMA's report that sugar production as on February 15 in the current sugar season has increased nearly 8% to 21.93 million tonne (MT), against 20.35 MT in the same period last year. It said the recent 7% increase in the minimum selling price (MSP) of sugar, from Rs 29 per kilo to Rs 31 per kilo, will generate additional revenue for mills and help these in the payment of cane arrears.


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  • Tata Motors has signed a long-term wage settlement agreement with its employees.  
  • Infosys has settled with the SEBI a case of alleged disclosure lapses regarding severance payment made to its former chief financial officer Rajiv Bansal. 
  • HCL Technologies has won a five year IT infrastructure and application services contract with EDF Luminus. 
  • Tech Mahindra and Rakuten Mobile Network have opened the Rakuten Cloud Innovation Laboratory, a world-class next generation software-defined network lab located in Tokyo.
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