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From:
<research@icicibank.com>Date: Wed, Dec 23, 2015 at 10:26 AM
Subject: Morning Market Starter - December 23, 2015
To:
stockdesai@gmail.com | On the radar: Markets await UK Q3 2015 GDP (final reading) and November PCE deflator for the US
Central Bank Watch: - ECB board member Peter Praet has commented that the biggest risk for the Euro is the "seeping pessimism" regarding the common currency in the political arena. He pointed out that the ECB would continue with an accommodative stance of monetary policy till the situation warranted so and the timespan for the same seemed "fairly long".
Chart: US Q3 2015 GDP print (third reading) was revised to 2.0% QoQ (annualized) vs. prior reading of 2.1% QoQ. Source: Bloomberg, ICICI Bank Research
Global market developments: - US data on GDP and home sales came in later yesterday
o Q3 GDP (third reading) data came in higher than expected (though lower than the second revision reading); at 2.0% QoQ (annualized) vs. prior print of 2.1% QoQ. o Existing home sales in November slumped 10.5% MoM vis-à-vis October's decline (revised) of 4.1%.
- US equities ended in the green yesterday. US Q3 GDP data that was released yesterday gave the markets some positive cheer. Additionally, some stability in oil prices in the last two days anchored market sentiment. Gains were led by energy and industrial stocks. Dow Jones and S&P 500 rose 1.0% and 0.9% respectively.
- Asian equities are trading largely in the green this morning, in line with US indices. Further, markets appear bullish regarding the news of possible easing in China after top authorities met at the Central Economic Work Conference on Monday. Hang Seng (1.1%), Kospi (0.7%) and Australia's ASX (1.0%) are trading in the green. Shanghai Composite has gained 0.2%, while Nikkei has edged 0.2% lower.
- US Treasuries are trading flat this morning, although holding on to the losses posted overnight. Higher than expected revised US GDP number has tapered slightly the prevailing bearish bias in equities seen this week. Trading volumes remain thin on account of Christmas holidays ahead. The benchmark 10Y yield is presently 2.23%, same as yesterday's close.
Global market developments
Domestic Market Developments: - India's BoP data for Q2 FY2016 was released yesterday
o CAD came in at 1.6% of GDP in Q2 FY2016, higher on a sequential basis but lower as compared to same period last year. Balance of Payments posted a deficit of USD 0.9 bn after a gap of seven quarters. o Foreign investment remained muted despite strong FDI flows. Portfolio segment witnessed an outflow amid volatile global environment o Wider trade deficit led to the higher CAD during the quarter. External environment remained challenging as exports and imports contracted by 18.7% YoY and 14.4% YoY respectively in Q2 FY2016.
- Rupee opened stronger relative to the greenback, at 66.25-26 levels as against yesterday's close of 66.32.
| Regards, ICICI Bank
Contact: Kamalika Das (+91-22) 4008-1414 (extn:6280) kamalika.das@icicibank.com Sagrika Gogia (+91-22) 4008-1414 (extn:2180) sagrika.gogia@icicibank.com
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CA. Rajesh Desai
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