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NSE Intra-day chart (24 February 2016)
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Market Commentary 25 February 2016
Markets to make a cautious start ahead of Rail budget and F&O expiry

The bloodbath in Indian equity market prolonged for one more session as the benchmarks continued to sway to the tune of depressing global developments and deposed another over a percentage point on Wednesday. The session was characterized by extreme volatility and marketmen looked at every rise as opportunity to take profits off the table, as there emerged no supporting factor that could halt the unrelenting selling pressure. Investors' confidence was eroded by the continuing conflict between the ruling NDA (National Democratic Alliance) and the opposition, which is seen as having a bearing on some key economic legislations that await parliamentary approval. Further, sentiments remained down-beat 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 without fiscal consolidation going forward, India's government finances will continue to compare poorly to peers. Market participants were also jittery ahead of the Budget amid hopes that policymakers will deliver a fiscally responsible budget that nonetheless steers spending to key areas such as infrastructure. Meanwhile, investors failed to draw any sense of relief with President Pranab Mukherjee describing the country as a haven of ‘stability' in a turbulent global economy, saying the government has simplified procedures for approvals, repealed obsolete laws and put in place a non-adversarial tax regime to attract investments. On the global front, Asian markets ended mostly in red, while European counters also made an awful start with all major counters declining over a percent. Back home, the benchmark got off to a somber opening, extending the downtrend for the second straight session as pessimistic sentiments prevailed across Asian markets. The key indices failed to show any kind of fervor due to lack of encouraging leads and suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Finally, the BSE Sensex plunged by 321.25 points or 1.37% to 23088.93, while the CNX Nifty dropped 90.85 points or 1.28% to 7,018.70.


The US markets closed higher on Wednesday, following a rebound in crude-oil prices. On the economy front, a reading of services activity in the US in February indicated contraction, a worrying sign that the blues that have hurt manufacturing may have spread to more domestically-oriented industries. The Markit flash US services purchasing managers index fell to a seasonally adjusted reading of 49.8 from 53.2 in January, marking the worst reading since the government shutdown in October 2013. Any reading below 50 indicates more respondents said conditions were getting worse than getting better. Meanwhile, sales of new homes sank in January and the median price ticked down. But some details in the Commerce Department's data pointed to underlying strength, and some healthy shifts in the market, that were masked by the weak headline. The Dow Jones Industrial Average added 53.21 points or 0.32 percent to 16,484.99 the Nasdaq was up 39.03 points or 0.87 percent to 4,542.61 while, the S&P 500 gained 8.53 points or 0.44 percent to 1,929.80.   


Crude oil futures despite a volatile trade managed to end higher on Wednesday. Traders were a bit concerned with bearish comments from Ali al-Naimi during the previous session, when the Saudi Arabian oil minister provided further assurances that the kingdom will under no circumstances slash its production levels. However, there was some support with report of US crude inventories rising less sharply than anticipated. US Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that US commercial crude inventories for the week ending on February 19 rose by 3.5 million barrels from the previous week. Benchmark crude oil futures for April delivery gained $0.29 or 0.91 percent to $32.16 a barrel after trading in a range of $30.57 and $32.34 a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery closed at $34.42, up $1.15 or 3.46 percent on the ICE.


Indian rupee, appreciated for second session against dollar on Wednesday on fresh selling of American currency by banks and exporters, amid losses in local equities. The rupee wiped off its initial losses and ended tad strong. Meanwhile, investors got some support with the report that the SBI Composite Index, an indicator for tracking India's manufacturing activity in the country bounced back and entered the expansion territory with the yearly SBI composite index for February 2016 inching up to 51.3 (moderate growth) from 47.3 (low decline) in January 2016. However, investors remained cautious ahead of the Railway Budget on February 25 and Union Budget scheduled on 29 February. On the global front, yen gained against key peers like the dollar and euro on Wednesday as sagging stocks and crude oil drove bids for the safe-haven currency. Finally, the rupee ended at 68.56, 2 paise stronger from its previous close of 68.58 on Tuesday.


The FIIs as per Wednesday'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 4281.25 crore against gross selling of Rs 3469.98 crore, while in the debt segment, the gross purchase was of Rs 1201.39 crore with gross sales of Rs 3050.42 crore.        


The US markets made a bounce back in last session, rebounding along with the crude oil prices and offset the steep loss posted in the previous session. Traders even shrugged off a report from the Commerce Department showing a much bigger than expected pullback in new home sales in the month of January. The Asian markets have made a mixed start and some of the indices are trading in red led by the Chinese market which is down by over a percent. On the other hand the Japanese market was up tracking a late-afternoon rally in the US as crude oil and copper prices stabilized. The Indian markets suffered sharp cuts in last session, as the global markets started melting. Today is the crucial day for the markets with two important events lined up, first the Railway Budget and later the expiry of the volatile February F&O series. The start of the day is likely to be cautious and all eyes will be on the Rail Budget and its announcements. Railway Minister Suresh Prabhu has said that the Rail Budget will cater to the needs of all "satisfactorily" as a lot of effort has gone into its preparation. Meanwhile, in a big development, the Cabinet has approved withdrawal of surcharge, service charge and convenience fee on card and digital payments, with an aim to discourage cash transactions. Later half is likely to see volatility owing to series expiry, markets will be a bit cautious too with a private survey stating that optimism about the overall state of the economy came down in 2015, with households listing unemployment, corruption and rising inflation as major areas of concern. While, all the railways related stocks will be in action, there will be buzz in the solar power related stocks too, as WTO in a matter in which the US had filed a complaint before the global trade body alleging discrimination against American firms, has ruled against India saying that the government's power purchase agreements with solar firms were 'inconsistent' with international norms.


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  • Bharat Heavy Electricals has successfully commissioned a 40 MW hydro electric generating unit in West Bengal.
  • Tech Mahindra, a specialist in digital transformation, consulting and business re-engineering, is planning to build IoT solutions by utilizing the Microsoft Azure Internet of Things Suite.
  • Wipro has entered into a partnership with SugarCRM to offer Customer Relationship Management solutions to enterprise customers.
  • Kotak Mahindra Bank has inked a share subscription and shareholders agreement with Airtel M Commerce Services and Bharti Airtel.
  • Mahindra & Mahindra has firmed up plans to invest around Rs 1,000 crore in developing petrol engines over the next two to three years.
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