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NSE Intra-day chart (23 February 2016)
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Market Commentary 24 February 2016
Markets to make a weak start on penultimate session of F&O expiry

Tuesday's session turned out to be a disappointing session for the Indian benchmarks which crumbled like a ‘house of cards' and went on to breach various key technical levels in the over one and half  percent freefall. The frontline indices which appeared to be on a southbound journey, desperately kept searching for a bottom through the session, but to no avail as the downward journey only halted with the session's close. Sentiments turned pessimistic on report that exports of over half of the sectors, out of the 30 closely monitored by the Commerce Ministry, were in the negative zone in January due to a fall in global prices and demand. Investors were also jittery ahead of the government's 2016/17 budget, which is due on February 29, though hopes are high that policymakers will deliver a fiscally responsible budget that nonetheless steers spending to key areas such as infrastructure. Sentiments weakened further after Moody's Investors Service stated that India's fiscal metrics will remain weaker than its peers in the near term even if the Finance Minister Arun Jaitley was to stick to the fiscal consolidation roadmap. The global credit rating agency added that the importance of the upcoming Budget 2016 lies in its message on the government's fiscal consolidation plans. Meanwhile, foreign institutional investors (FIIs/FPIs) continued their selling spree on Monday as well, and were net sellers of Indian equities worth Rs 656.93 crore, indicting diminishing trust over market fundamentals. On the global front, Asian markets ended mostly lower, while the European shares too retreated on Tuesday, with falling commodities prices. Back home, after making a flat but positive start, Indian benchmark indices dropped into the red terrain sooner than later, lacking any significant upside cues. Thereafter, the frontline indices lost the plot and kept tumbling down the hill without any stoppage. The steep fall turned even acute after the opening of European markets in the noon trades, as one negative report after another from the continent kept creating havoc for the local bourses. Finally, the BSE Sensex plunged by 378.61 points or 1.59% to 23410.18, while the CNX Nifty dropped 125.00 points or 1.72% to 7,109.55.


The US markets closed lower on Tuesday, erasing most of their gains from Monday's session, as a fresh selloff in crude-oil prices weighed on Wall Street investors, who have viewed plunging energy prices as a signal that the health of the global economy is on shaky footing. On the economy front, consumers' confidence fell in February to the lowest level in seven months, as Americans became a bit more pessimistic about job prospects and business conditions. The consumer confidence index dropped to 92.2 from a revised 97.8 in January. Last fall, confidence effectively matched a post-recession high as the index hit 102.6 before tapering off. But it still falls short of the 111.9 peak reached during the 2001-2007 expansion, and it's well below an all-time high of 144.7 achieved in mid-2000. On the other hand, US home prices were steady in December, but home values in 2015 increased much faster than inflation on a combination jobs growth and low inventories. The Dow Jones Industrial Average lost 188.88 points or 1.14 percent to 16,431.78, the Nasdaq was down 67.03 points or 1.47 percent to 4,503.58 while, the S&P 500 dropped 24.23 points or 1.25 percent to 1,921.27.   


Crude oil futures just after a day of rally, suffered sharp slump on Tuesday reacting to bearish comments from officials in Saudi Arabia and Iran, which dampened hopes of forthcoming reductions in the massive global supply glut in the near-term future. Iranian Oil Minister Bijan Namdar Zanganeh said that any Iranian involvement in the plan is ridiculous. Benchmark crude oil futures for March delivery plunged by $1.58 or 4.73 percent to $31.81a barrel after trading in a range of $31.66 and $33.52 a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery closed at $33.24, down $1.43 or 4.18 percent on the ICE.


Indian rupee recouped early losses and ended stronger against dollar on Tuesday on fresh selling of American currency by banks and exporters. Besides, the dollar's weakness against some other currencies overseas too supported the rupee. Some support came in with reports that the total collection from direct taxes stood at Rs 5.47 lakh crore as on February 13, which is 68.7% of the budget target for the fiscal. Though the government is likely to face a shortfall of Rs 40,000 crore in direct tax collection for the current fiscal, the shortfall would be made good as the indirect tax revenues are likely to overshoot budget target by a similar margin. However, losses in domestic equity market capped the rupee gains. Meanwhile, investors remained on the sidelines ahead of the Railway Budget on February 25 and government's 2016/17 union budget, which is due on February 29. On the global front, yen gained largely on Tuesday as a recent rally in risky assets and crude oil fizzled out reviving demand for the safe-haven currency. Finally, the rupee ended at 68.58, 3 paise stronger from its previous close of 68.61 on Monday.


The FIIs as per Tuesday's data were net sellers in equity and in debt segments both. In equity segment, the gross buying was of Rs 2750.12 crore against gross selling of Rs 3031.82 crore, while in the debt segment, the gross purchase was of Rs 805.63 crore with gross sales of Rs 2203.52 crore.        


The US markets suffered sharp slump in last session, following a rally of previous day, the decline of the day was partially contributed by the profit taking and partially by the drop in crude oil prices. The Asian markets have made mostly a weak start with some indices trading lower by around a percent, with revival in demand for low-risk assets once again. The Japanese market too was in red despite the yen steadying against the dollar. The Indian markets as usual initiated the southward journey of the global equity markets and slumped in last session. Today, the start of the penultimate session of the February F&O series and the rail budget is likely to be in red, tailing the slump in the global markets. Traders will be concerned with Moody's Investors Service's statement that India's fiscal metrics will remain weaker than its peers in the near term even if Finance Minister Arun Jaitley was to stick to fiscal consolidation roadmap. It said that the government's fiscal deficits have reduced over the last five years, and this has supported the stabilisation of government debt ratios. Without fiscal consolidation going forward, India's government finances will continue to compare poorly to peers. Meanwhile, the industry body Ficci has said that Indian economy is expected to grow at 7.4 percent in the current fiscal, slightly lower than 7.6 percent projected in advance estimates of Central Statistics Office. However, there will be some support too, with President Pranab Mukherjee, in a joint sitting of Parliament at the start of the Budget session, stating that India is a haven of stability in an increasingly turbulent global economy. GDP growth has increased making India the world's fastest growing economy among large economies. There will be some buzz in the steel stocks, on report that the steel production has fallen by 1.5 percent to 7.4 million tonnes (MT) in January 2016 compared with the output in the same month last year. The railways related stocks will remain in action a day ahead of the Rail Budget.     


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Tata Motors











  • Maruti Suzuki India has resumed production at its two manufacturing facilities in Haryana after two days of suspension due to the Jat reservation agitation in the state.
  • Tata Steel is planning to restructure its Indian business to reduce costs and increase productivity as poor demand and heightened competition from imports have weighed on profits.
  • Reliance Industries' step down unit Ojasvi Trading has bought nearly 5% stake in Mahendra Nahata-promoted Media Matric Worldwide for about Rs 40 crore.
  • Government has decided to sell 5% stake in NTPC via offer-for-sale.
  • Wipro has partnered with Verveba Telecom, a telecom network engineering company that specializes in network planning, design, deployment of mobile radio network optimization services for telecom service providers.
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