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NSE Intra-day chart (22 December 2016)
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Market Commentary 23 December 2016
Markets to witness another sluggish start


Extending their recent downtrend, Indian equity benchmark indices witnessed further drubbing on Thursday as the country's cash crunch issue continued to weigh on corporate earnings expectations for the December quarter. The frontline gauges failed to showcase any kind of resilience through the session and kept drifting to lower levels, breaking one technical level after another to eventually settle below the psychological 8,000 (Nifty) and 26,000 (Sensex) levels. Sentiments remained bearish on sustained foreign fund outflows and a weak trend at Asian and European markets. Foreign portfolio investors (FPIs) have already pulled out of equities worth nearly $4 billion (over Rs 25,000 crore) so far in the December quarter, the worst since September 2015, amid uncertainty over US presidential election and prospects of hawkish US Federal Reserve's policies.  Also, investments in domestic capital markets through participatory notes (P-Notes) plunged to its lowest level in nearly three years in November 2016. According to the data available with Sebi, the total value of P-Notes investment in Indian markets -- equity, debt and derivatives -- fell to Rs 1.79 lakh crore in November-end, from Rs 1,99,987 crore at the end of October 2016.  Adding the pessimism among investors, Chief Executive Officer of NITI Aayog Amitabh Kant said that just one per cent of India's more than 1.25 billion population pays Income Tax and the country cannot afford as high as 95 percent of its economy making cash transactions. Furthermore, traders remained cautious with Prime Minister Narendra Modi's top economic adviser Bibek Debroy's statement that the negative shock from demonetisation will last until the end of March, though he also said that improved growth next year should fully compensate for the loss. Also, the minutes of last rate-setting meeting of the Reserve Bank of India's monetary policy committee (MPC) showed that it shifted its focus towards inflation, while playing down concern about economic growth. Moreover, the broader markets too ended on a daunting note with over one percent losses, underperforming their larger peers by quite a margin. Finally, the BSE Sensex declined by 262.78 points or 1% to 25979.60, while the CNX Nifty dropped 82.20 points or 1.02% to 7,979.10.


The US markets closed lower on Thursday, as investors seemed reluctant to bid up prices of indexes that are already hovering near all-time highs. Market reaction to a raft of economic data ahead of the opening bell was muted, with investors reluctant to make big bets ahead of the holiday weekend. On the economy front, US jobless claims jumped to the highest level since mid-June. The Labor Department said jobless claims in the week ending December 17 rose a seasonally adjusted 21,000 to 275,000. The four-week average of claims, a less volatile indicator, rose by 6,000 to 263,750. Even with the increase, this marks 94 consecutive weeks of initial claims below 300,000, the longest streak since 1970. Continuing jobless claims in the week ending December 3 fell by nearly 79,000 to 2.04 million. On the other hand, the US economy grew faster than previously thought between July and September, its best performance in two years, buoyed by stronger consumer spending. The Commerce Department said the economy expanded at a seasonally adjusted 3.5% annualized rate in the third quarter. This is above the government's prior estimate of 3.2% due to upward revisions in consumer spending and business investment. The Dow Jones Industrial Average lost 23.08 points or 0.12 percent to 19,918.88, Nasdaq was down 24.01 points or 0.44 percent to 5,447.42, while S&P 500 dropped 4.22 points or 0.19 percent to 2,260.96.



Crude oil futures rebounded on Thursday on the back of strong U.S. GDP inflated the demand outlook. U.S. GDP growth was revised up to 3.5% rate in the third quarter, a better than expected result. Traders largely overlooked the surprise build in U.S. stockpiles. Pause in the US dollar rally and optimism that crude producers would abide by an agreement to limit output, too supported the prices. Benchmark crude oil futures for January delivery ended up by $0.46 or 0.90 percent to $52.95 on the New York Mercantile Exchange. In London, Brent crude for February delivery ended higher by $ 0.75 or 1.3 percent at $55.21 on the ICE.


Indian rupee pared all of its gains and ended weaker against dollar, on the back of heavy capital outflows from the domestic equity market. Foreign portfolio investors (FPIs) have already pulled out of equities worth nearly $4 billion (over Rs 25,000 crore) so far in the December quarter, the worst since September 2015, amid uncertainty over US presidential election and prospects of hawkish US Federal Reserve's policies. Also, the minutes of the December 6 and 7 meeting of the Monetary Policy Committee (MPC) showed that most members think the withdrawal of high denomination notes could transiently interrupt industrial activity in the short term. However, dollar weakened against other currencies overseas capping the rupee fall. On the global front, dollar dipped for a second day as traders booked profits ahead of a batch of US data later in the day. Finally, the rupee ended at 67.99, 8 paise weaker from its previous close of 67.91 on Wednesday.


The FIIs as per Thursday'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 3622.73 crore against gross selling of Rs 4730.88 crore, while in the debt segment, the gross purchase was of Rs 1222.13 crore with gross sales of Rs 176.45 crore.


The US markets extended their weakness for the second straight day and ended modestly lower in last session with trading activity remaining relatively light ahead of the holiday weekend. Traders even overlooked the report showing a sharp pullback in durable goods orders in the month of November. The Asian markets have made mostly a lower start following the decline in the overnight US markets, flurry of positive data about the American economy bolstered rate hike case. The Indian markets continued their slide in the last session with Nifty making its longest losing streak in over a year and the Sensex slipped below the crucial psychological levels of 26000 on sustained capital outflow. Today, the last trading day before Christmas is not likely to be much different and the markets tailing the weak global cues will make a soft-to-cautious start. Traders may however get some support with thaw appearing on the GST issue, and the prospects of early roll out of goods and services tax (GST) brightening with the states and the Centre making progress on a crucial legislation, amid indications that the states may get concessions to tide over possible demonetisation-related revenue loss. The draft Bills for integrated GST and compensation as well as administrative control over businesses will be taken up for discussion on today. Meanwhile, NITI Ayog vice-chairman Aravind Panagariya has termed Prime Minister Narendra Modi's demonetisation scheme as a "frontal attack" on black money and said that more such actions are in store to curb corruption. There will be some buzz in the auto sector on reports that the Centre is looking at introducing a law where one may not be allowed to register new car or any other vehicle unless he produce proof that he has adequate parking space for it.



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Axis Bank






  • Sun Pharmaceutical Industries plans to acquire a branded oncology product, Odomzo, from Novartis.
  • ONGC has reportedly tied up with Hughes Communications India to revamp and upgrade its existing satellite network across India.
  • Tech Mahindra's subsidiary - Mahindra Comviva has reportedly unveiled the new version of mobiquity Wallet.
  • State Bank of India has decided to grant special leave of two days to its employees as reward for having taken additional stress since November 8 when demonetisation was announced.
  • Bharti Airtel has launched their latest broadband technology V-Fiber in Mumbai that aims to provide an internet speed of 100 Mbps over its existing broadband footprint in the city.
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