{LONGTERMINVESTORS} Fwd: Morning Market Starter- January 14, 2015

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From: <research@icicibank.com>
Date: Thu, Jan 14, 2016 at 10:46 AM
Subject: Morning Market Starter- January 14, 2015
To: stockdesai@gmail.com

On the radar: Markets await India's December WPI print, Bank of England (BoE) policy decision and minutes from European Central Bank's (ECB) December policy meeting. Key Developments today: Oil prices (Brent) dipped below the psychological USD 30/bbl threshold overnight as EIA inventory data showed a further surge in US crude and gasoline stockpiles last week. Global equities are facing a sell-off amid downbeat cues on global economic recovery and a slump in oil prices. Central Bank watch: Federal Reserve released its Beige Book. The report highlights tepid wage growth and inflation despite some buoyancy in labour markets. It has been further pointed that declining prices of oil are a key factor pushing inflation lower. Market expectations regarding another Fed rate hike in the January meeting also remain low. o Chicago Fed President, Charles Evans has made dovish comments regarding the Central Bank's policy normalization process. He was quoted as saying, "I'm nervous that inflation expectations are not as firmly anchored as we perceived them to be a year ago, that they have drifted down a little bit." o Supporting his stance, Boston Fed President Rosengren has also pointed to the downside risks to Fed's forecasted economic growth and inflation trajectory. He added, "I will remain highly attentive to foreign economic conditions, any weakening of the domestic economic situation, and the path of U.S. inflation." ECB Governing Council member Villeroy has indicated his faith in the "undeniable" economic recovery in Eurozone. He has also commented that events in China don't "amount to a serious illness". Chart:  Crude prices (Brent) slipped below the crucial USD 30/bbl overnight, sending jitters through global markets Source: Bloomberg, ICICI Bank Research Global market developments: US equities ended sharply in the red yesterday, paring previous gains. A downswing in oil prices again yesterday weighed on market sentiment as oil slipped below USD 30/bbl mark twice this week. Dow Jones and S&P plummeted 2.2% and 2.5% respectively. Asian equities are trading in the red this morning, tracking cues from their US peers. Pessimistic Japanese data on machine orders also weighed on sentiment. Nikkei, Hang Seng and Shanghai Composite have declined 3.8%, 1.6% and 1.1% respectively. Kospi (-1.4%) and Australia's ASX (-1.6%) are also posting losses. US Treasuries are trading higher this morning, following weak cues from crude prices and a bearish run in global equities. The 10Y benchmark yield has fallen by 8 bps from yesterday's highs of 2.14% to trade presently at 2.06%. Yesterday's close was 2.09%. Table: Global market developments Domestic Market Developments: Rupee has breached the psychological 67.00 level handle today morning and is trading presently at 67.17 levels.  Yesterday's close was 66.845 levels. Domestic bonds are trading little changed. Traders refrained from building large positions ahead of Government's gilt auction due tomorrow. Steep depreciation in the Rupee has also added to the losses. The old 10Y benchmark yield is unchanged at 7.76% and the new 10Y benchmark yield is at 7.60%. 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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