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NSE Intra-day chart (26 August 2016)
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Market Commentary 29 August 2016
Markets to make a soft start on weak global cues


Wary investors, hesitant to carry large positions ahead of a speech by Federal Reserve chairwoman Janet Yellen that may shed light on the US interest-rate outlook, turned sellers on Friday, sending the frontline indices southward for the second consecutive day. The day was the first day of new F&O series and normally this day heavy build up of long positions are observed, but fall in the frontline indices indicated that some FIIs and DIIs were shedding their positions. Anxiety among the market participants also increased by the report that India Inc's overseas borrowings fell by 44 percent to $1.2 billion in July this year as against $2.14 billion in the same period a year ago, indicating slowdown in capital expenditure (capex) plans by many major firms.  Indian firms raised $183.7 million via approval route, while rest $1.02 billion was raised by way of automatic channel. Also, India Meteorological Department (IMD) in its latest monsoon update said that for the country as a whole, cumulative rainfall during this year's monsoon so far (till 24 August 2016) was 2% below the long period average (LPA), adding pessimism among the local investors. Market participants failed to drew any solace with the RBI's package of measures for the development of fixed income and currency markets.  The central bank has decided to enhance the aggregate limit of partial credit enhancement (PCE) provided by banks, permit brokers in corporate bond repos, authorise the platform for repo in corporate bonds and encourage credit supply for large borrowers through market mechanism. On the global front, Asian markets ended mixed on Friday. Back home, the local benchmarks got off to an optimistic opening, shrugging the sluggish sentiments prevailing in Asian markets post weak closing of US markets overnight. However, the indices slipped into the negative territory in late morning trade and even went on to test important psychological 27,700 (Sensex) and 8,550 (Nifty) levels in afternoon trade. Finally, the BSE Sensex declined by 53.66 points or 0.19% to 27782.25, while the CNX Nifty dropped 19.65 points or 0.23% to 8,572.55. 


US equity indices ended mostly in red terrain on Friday after a speech by Federal Reserve head Janet Yellen indicated that an increase in interest rates may be coming soon. She said "in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months." Sentiments also remained dampened with the Commerce Department release showing a slight downward revision to the pace of U.S. economic growth in the second quarter. The report said gross domestic product increased by 1.1 percent in the second quarter, reflecting a downward revision compared to the originally reported 1.2 percent growth. The downwardly revised GDP growth in the second quarter still reflects acceleration from the 0.8 percent increase seen in the first quarter. A separate report from the University of Michigan unexpectedly showed a slight deterioration in consumer sentiment in the month of August. The Dow Jones Industrial Average lost 53.01 points or 0.29 percent to 18,395.40 and S&P 500 slipped 3.43 points or 0.16 percent to 2,169.04. However, Nascaq was up by 6.71 points or 0.13 percent to 5,218.92.


Crude oil futures recovering from their early fall managed a modestly higher close on Friday, following reports that missiles from Yemen had struck oil facilities in Saudi Arabia and after the dollar weakened following remarks by Federal Reserve Chair Janet Yellen. Benchmark crude oil futures for October delivery rose by $0.50 or 1.06 percent to close at $47.83 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery was up by $0.49 or 0.93 percent to $50.16 a barrel on the ICE.


Indian rupee ended unchanged compared to its previous close on Friday, as traders remained on sidelines ahead of a highly-anticipated speech today by Janet Yellen of the US Federal Reserve in an annual meeting of central bankers from around the world in Jackson Hole, Wyoming. Traders also stayed cautious ahead of the gross domestic product (GDP) data for the June quarter due on August 31. However, domestic currency got some support with the Reserve Bank of India (RBI) announcing a raft of measures to boost investor participation and market liquidity in the currency markets. On the global front, yen gained against dollar after consumer prices data from Tokyo showed the core measure down more than expected. Finally, the rupee ended unchanged from its previous close of 67.06 on Thursday


The FIIs as per Friday'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 5650.89 crore against gross selling of Rs 5955.98 crore, while in the debt segment, the gross purchase was of Rs 1062.24 crore with gross sales of Rs 760.02 crore.  


The US markets ended mostly lower in the last session on hawkish statement from Federal Reserve Chairwoman Janet Yellen that asserted the case for a rate increase is gathering steam. The Asian markets have made mostly a lower start, with many of the indices trading lower by over half a percent; however a rally in the US dollar weakened the Japanese yen, sending the Nikkei sharply higher. The Indian markets after much of dilly-dallying ended modestly in red in last session, with traders remaining on sidelines. Today, the start of the new week is likely to be soft amid weak global cues after Janet Yellen and Fed Vice Chairman Stanley Fischer hinted for a rate hike. However, markets may get some support with reports that in order to ensure that GST is rolled out by April 1, 2017, the government is trying hard to get the winter session of Parliament advanced by a fortnight to pass the bill. Winter Session of Parliament is normally convened in the third or fourth week of November. Meanwhile, US Commerce Secretary Penny Pritzker ahead of his three day visit to India has said that US-India bilateral trade has reached $109 billion and it will get a further boost from new reforms including GST even as it flagged persisting concerns American firms have on issues related to business climate in the fast-growing economy. Also, the Economic Affairs Secretary Shaktikanta Das has said that India is expected to clock a GDP growth of nearly 8 percent this fiscal on the back of good monsoon rains. He said that Agriculture production is expected to be much better than previous two years and definitely agriculture will contribute significantly to the GDP. There will be some buzz in the rate sensitive stocks, as Union Minister Nirmala Sitharaman has defended her demand for 2 per cent cut in interest rates by RBI, saying it is essential to boost SMEs and create jobs.


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  • HDFC has decided to issue secured redeemable non-convertible debentures worth Rs 500 crore on a private placement basis for a tenor of one-and-a-half years.
  • M&M has launched DiGiSense, a technology solution that connects M&M vehicles, tractors, trucks and construction equipment to the cloud.
  • Larsen & Toubro is aiming to achieve a top-line of Rs 2 lakh crore and order inflow in excess of Rs 2.5 lakh crore per annum by 2021.
  • Coal India has reported a rise of 1.1% in coal dispatch to the power sector to 131.1 million tonnes in the April-July period of this fiscal even as the PSU workers announced to go on a nationwide day-long strike next week.
  • Bharti Airtel has upgraded over 9,000 sites at various locations and over 30,000 existing sites have been optimized by the company's network team to resolve network-related issues.
News Analysis