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NSE Intra-day chart (15 September 2020)
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Market Commentary 16 September 2020
Markets likely to make negative start on Wednesday


Indian equity benchmarks traded in green throughout the session and ended over half a percent higher on Tuesday, as positive cues from global markets and hopes of an early vaccine kept the mood sanguine. Markets opened on strong note as the government data showed the country's annual retail inflation eased slightly in August, against expectations. India's retail inflation in August of 6.69 percent was lower than the 6.73 percent recorded in July, but it remained above the upper end of the Reserve Bank of India's (RBI) medium-term target for the fifth straight month. However, markets soon trimmed most of gains in late morning session, as traders turned wary with S&P Global Ratings stating that India's Gross Domestic Product (GDP) is likely to contract by 9 percent in the current financial year (FY21).  Earlier, it had a projection of 5 percent de-growth in GDP for FY21. It said that rising coronavirus disease (COVID-19) cases in the country will keep private spending and investment lower for longer. For 2021-22 fiscal, it expects economic growth at 10 percent. Though, benchmark indices regained traction in afternoon session, taking support from Minister of State for Finance Anurag Singh Thakur's statement that the lowering of corporate tax rate has made India a globally competitive and favoured destination for investment and the impact of this landmark reform will be felt in the coming years. The government last year slashed the base corporation tax rate to 22 percent from 30 per cent, leading to revenue implication of Rs 1.45 lakh crore. Market participants took note of SBI's report that the country needs to adopt an activist fiscal policy rather than depending on the monetary accommodation alone for turning the economic fortunes. Meanwhile, the government has introduced a bill in the Lok Sabha to amend the Banking Regulation Act to bring cooperative banks under the supervision of the Reserve Bank of India (RBI) in order to protect the interests of depositors. Finally, the BSE Sensex rose 287.72 points or 0.74% to 39,044.35, while the CNX Nifty was up by 81.75 points or 0.71% to 11,521.80.


The US markets ended higher on Tuesday, amid continued rebound by technology stocks, with big-name companies like Tesla, Netflix, Oracle and Facebook posting standout gains. Meanwhile, the Federal Reserve started its policy-setting meeting on Tuesday, which will be followed by a news conference and policy statement on Wednesday, while central-bank decisions from the Bank of England and the Bank of Japan are due on Thursday. The meeting of the policy-setting Federal Open Market Committee also would be the first since the central bank introduced its new policy framework of average-inflation targeting. Traders largely shrugged off a report from the Fed showing growth in U.S. industrial production slowed by much more than expected in the month of August. The Fed said industrial production climbed by 0.4 percent in August after soaring by an upwardly revised 3.5 percent in July. Street had expected production to jump by 1.0 percent compared to the 3.0 percent spike originally reported for the previous month. Import prices in the US saw another notable increase in the month of August, according to a report released by the Labor Department. The Labor Department said import prices climbed by 0.9 percent in August after jumping by an upwardly revised 1.2 percent in July. Street had expected import prices to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month. The stronger than expected import price growth was partly due to a jump in prices for fuel imports, which surged up by 3.3 percent in August after soaring by 15.1 percent in July. Higher prices for both petroleum and natural gas contributed to the advance. The report said prices for non-fuel imports also climbed by 0.7 percent in August after edging up by 0.2 percent in July, reflecting the biggest increase since April of 2011. Prices for non-fuel industrial supplies and materials led the way higher, spiking by 3.6 percent.


Crude oil futures ended higher on Tuesday s news about the stoppage of energy operations in the Gulf of Mexico due to Hurricane Sally outweighed concerns about the outlook for energy demand. The hurricane is reportedly approaching the northern US Gulf Coast, causing disruptions to oil and natural gas production. The Bureau of Safety and Environmental Enforcement estimates nearly 27% of Gulf oil production and about 28% of natural gas production have been shut down as of now. That's about 5.3% and 2.7% more than Monday's levels. Crude oil futures for October rose $1.02 or 2.7 percent to settle at $38.28 a barrel on the New York Mercantile Exchange. November Brent crude declined 92 cents or 2.3 percent to settle at $40.53 a barrel on London's Intercontinental Exchange.


Indian rupee tumbled against dollar on Tuesday, on account of sustained dollar demand from importers and banks. Sentiments remained fragile as S&P Global Ratings states that the India's Gross Domestic Product (GDP) is likely to contract by 9 percent in the current financial year (FY21). Adding pessimism, Asian Development Bank (ADB) in its latest report has predicted that India's economy is likely to contract by 9 per cent this year -- worse than the 4 per cent contraction it had forecast three months ago. However, ADB expects India to bounce back with 8 per cent growth next year as the country begins to emerge from the economic devastation caused by coronavirus (COVID-19) pandemic. On the global front; yuan jumped to its highest in 16 months versus the dollar on Tuesday after Chinese data pointed to an economic recovery after coronavirus-linked shutdowns, while the dollar dipped as risk appetite improved. Finally, the rupee ended at 73.64, 16 paise weaker from its previous close of 73.48 on Monday.


The FIIs as per Tuesday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 6388.01 crore against gross selling of Rs 5788.00 crore, while in the debt segment, the gross purchase was of Rs 866.55 crore with gross sales of Rs 637.60 crore. Besides, in the hybrid segment, the gross buying was of Rs 28.42 crore against gross selling of Rs 54.30 crore.


The US markets ended higher on Tuesday as investors hoped the Federal Reserve would stick with its supportive policy stance as the central bank's two-day meeting got underway. Asian markets are trading in green on Wednesday as investors awaited a Federal Reserve meeting to gauge the extent of central bank support for the economic recovery. Indian markets ended higher with gins of over half a per cent each on Tuesday, led by buying in financial counters. Today, the markets are likely to make pessimistic start. There will be some cautiousness with the government data showing that contracting for the sixth straight month, India's exports slipped 12.66% to $22.7 billion in August, on account of decline in the shipments of petroleum, leather, engineering goods and gems and jewellery items. The trade deficit for August this year was estimated at $6.77 billion, against $4.8 billion in July 2020 and $13.86 billion in August 2019. Also, rising coronavirus cases may dampen sentiments in the markets. India has crossed the grim 5-million mark by recording over 82,376 cases in the last 24 hours. With this, India is rapidly nearing the US tally of 6.7 million. The death toll has risen by 1,283 to 82,091. Though, some respite may come later in the day as Chief Economic Advisor Krishnamurthy Subramanian exuded confidence that the country would be back to a high growth path through reforms announced by the government, after overcoming the COVID-19 pandemic. Some support may come with a private report that consumer confidence index has shown a marginal uptick of 1.1 percentage points in September 2020. Traders may take note of Foreign Secretary Harsh Vardhan Shringla's statement that India has received over $20 billion in FDI amid the coronavirus pandemic, showcasing the country as one of the most attractive destinations for investment globally. Meanwhile, the Reserve Bank of India (RBI) proposed to introduce exchange-traded and over the counter (OTC) interest rate derivatives products that would be accessible to both foreign investors and retail participants. There will be some reaction in sugar stocks with report that sugar mills owed nearly Rs 13,000 crore to cane farmers as on September 11 for the crop procured during 2019-20 marketing season that started October last year.


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  • ICICI Bank has got exemption from paring stake in its life and non-life subsidiaries to 30 per cent for a period of three years. 
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