Domestic Market View
Markets to get a flat-to-positive start on mixed global cues
The Indian markets bounced back in last session supported by gain in IT stocks. Today, the start is likely to be flat-to-positive with not so bullish sentiments from the Asian peers. Traders will be getting some support with Finance Minister Arun Jaitley’s statement that situation is normal as far as remonetisation is concerned and RBI is monitoring cash position on a daily basis. Minister of State for Finance Arjun Ram Meghwal too has said that demonetisation of old high value currency and the government's push towards digital economy will definitely expand India's GDP. He also said that India was on the verge of a transition from a large cash economy to a less cash and digital economy.
However there will be cautiousness too with domestic rating agency India Ratings and Research (Ind-Ra) dosen't expecting the performance of Indian companies to improve substantially in FY18. Pick-up in capital expenditure by the private sector is at least another two fiscal years away. Rise in commodity prices and uptick in interest rates amid rate hikes globally are two important risks to slow-but-improving demand for FY18. There will be some scrip specific action with change announcement of NSE’s benchmark index Nifty, where BHEL and Idea will be making way for HDFC and IOC from March 31, 2017.
Domestic Market Overview
Benchmarks settle near intraday high levels; Sensex surpasses 28,300 mark
Indian equity benchmarks traded with traction and settled near intraday high levels with a gain of over half a percent on Thursday, with key gauges surpassing their crucial 28,300 (Sensex) and 8,750 (Nifty) levels. Traders took encouragement with report that India’s exports continued to grow for the fifth straight month, expanding by 4.32 percent to $ 22.11 billion in January against $ 21.19 billion in the same month of 2016. Imports also rose, by 10.70 percent to $ 31.95 billion, during the month under review. Some support also came after Fed Chair Janet Yellen, who in her second day of economic testimony before Congress, offered no additional insight on the timing of the central bank's next rate hike.
Moreover, investors closely watched GST Council meet scheduled on February 18 and assembly elections in five states that will end on March 8. The performance of Prime Minister Narendra Modi’s party in ongoing state elections will determine if the trickle of foreign money returning to Indian stocks turns into a gush.
There was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. On the sectoral front, IT stocks remained on buyers’ radar after the industry body NASSCOM said that restrictions on H-1B visas in the US and the impact of Brexit are threatening to disrupt the growth trajectory of India’s information technology sector. Buying in realty stocks too aided sentiments on reports that private equity investments in the real estate sector increased by 26 percent during 2016 and touched a nine-year high of nearly Rs 40,000 crore.
Stocks related to oil & gas sector remained in focus, as the Cabinet Committee of Economic Affairs approved the award of 31 contract areas under the Discovered Small Field (DSF) Bid Round 2016. The government expects to monetise 40 million tonnes of oil and 22 billion cubic metres (BCM) of gas reserves over 15 years through the awarding of contracts. In scrip specific development, State Bank of India (SBI) and three of its listed associates rallied with Cabinet approval for a proposal to merge the five subsidiaries with the parent, which will create a mammoth bank with 23,000 branches. SBI, State Bank of Bikaner & Jaipur (SBBJ), State Bank of Travancore (SBT) and State Bank of Mysore (SBM) ended in green, while the rest two associate banks - State Bank of Patiala and State Bank of Hyderabad - are unlisted.
Global Market Overview
Asian markets made a mixed closing on Thursday
Asian equity markets ended mixed on Thursday as upbeat US data coupled with Fed Chair Janet Yellen's hawkish tone in her latest remarks on Capitol Hill helped spur expectations of a faster pace of Fed rate-hike in 2017. US retail sales rose more than expected in January and consumer prices rose at their fastest pace in nearly four years, boosting prospects of an interest rate hike as early as March. Chinese stocks ended up as higher commodity prices and media reports of a pick-up in spending on railways and other infrastructure this year boosted material stocks. Meanwhile, Japanese shares retreated as the dollar slipped against rivals, including the Japanese yen.
US markets closed mostly lower; Dow record minor gains
The US markets closed mostly lower on Thursday, weighed down by a decline in energy stocks, with the Dow industrials the only index to gain another record high at the close. Stocks, which had earlier in the session switched between small gains and losses, started settling in negative territory during President Donald Trump’s news conference as he announced that a proposed replacement to the Affordable Care Act, also known as Obamacare, would come in March, before any proposals on tax reform. On the economy front, the number of Americans who applied for unemployment benefits in mid-February rose by 5,000 to 239,000, but they remained at exceedingly low levels that reflect the resilience of a nearly eight-year-old economic recovery. New claims have registered less than 300,000 for 102 straight weeks, the longest stretch since the early 1970s. The less volatile four-week average of initial claims, meanwhile, rose by a scant 500 to 245,250. Last week the monthly average fell to the lowest level in 44 years. Continuing jobless claims declined by 3,000 to 2.08 million in the week ended February 4.
Nifty spot saw a good recovery for the opening lows but failed to clear hurdle range 8774-8788-8797. At opening again found support at Gann Level of 8710. Bulls are making all out efforts to save 8710 and move above the hurdle cluster. For the day hurdle cluster is placed at 8788-8797-8806. In short Nifty range for the day 8710 - 8806. Upside can see 8860. BankNifty levels to watch 20340 - 20130
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