{LONGTERMINVESTORS} Fwd: Morning Market Starter- January 18, 2015

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From: <research@icicibank.com>
Date: Mon, Jan 18, 2016 at 10:34 AM
Subject: Morning Market Starter- January 18, 2015
To: stockdesai@gmail.com

Key Market Developments: Crude prices are trading near fresh lows today, well below the USD 30/bbl mark. Markets now brace for increase in oil supply from Iran post UN's decision to remove erstwhile imposed sanctions on the country. Central Bank watch: People's Bank of China has introduced a new rule requiring all offshore commercial banks to meet reserve requirements on their Yuan deposits held in the country, with the requirements being equivalent to those faced by Chinese commercial banks. The rule will come in effect from January 25th as the PBoC attempts to maintain a stable Yuan. New York Fed President William Dudley seemed bullish on US economic recovery and commented that he sees economic growth in the US pacing faster than expectations and hence, laying the case for aggressive policy normalization by the Fed. Meanwhile, San Francisco Fed President John Williams has cited concerns regarding the recent developments in China. He was quoted as saying, "The reason the Fed is keeping interest rates still so low is because of weakness abroad and the strength of the Dollar". Bank of Japan Governor Haruhiko Kuroda has signalled that inflation in Japan is likely to be 0% in the near term on account of declining energy prices. He has further mentioned that BoJ will continue with an accommodative stance till inflation rises to 2%. Chart: Crude prices are trading well below the USD 30/bbl mark as erstwhile imposed sanctions on Iran were lifted on Friday. Source: Bloomberg, ICICI Bank Research Global market developments: US data on retail sales and industrial production was downbeat o Retail sales in December contracted 0.1% MoM as against November's increase (revised) of 0.4% MoM. o Industrial production remained in negative territory in December, dipping 0.4% MoM, though lower than November's decline of 0.6% MoM. US equities ended in the red on Friday as pessimistic data prints from the US, oil price plunge and bearish run on Asian bourses weighed on sentiment. Dow Jones and S&P tumbled 2.4% and 2.2% respectively. US markets are closed today on account of a holiday. Asian equities are trading in the red this morning, tracking cues from their US counterparts and persistent softness in crude prices. Nikkei (-1.4%), Hang Seng (-1.1%) and Shanghai Composite (-0.7%) are posting losses. Kospi and Australia's ASX have also declined 0.6% and 0.9% respectively. US Treasuries were trading higher on Friday. Steep losses in US equities amid downbeat US data and a sell-off in Asian indices led the 10Y benchmark yield to a low of 1.98%. The benchmark yield saw some retracement later to close at 2.03%. Table: Global market developments Domestic Market Developments: India's trade deficit widened to USD 11.7 bn in December vs. prior of USD 9.8 bn. Exports contracted 14.8% YoY (prior :(-) 24.4% YoY), while imports contracted 3.9% YoY (prior: 30.3% YoY). Indian Oil Corporation (IOC) announced reduction in petrol and diesel prices by 32 paise per litre and 85 paise per litre respectively with effect from January 15th midnight. Rupee is trading slightly stronger against the Dollar, at 67.53 levels relative to Friday's close of 67.60. Regards, ICICI Bank Contact: Niharika Tripathi (+91-22) 4008-1414(extn:6943) niharika.tripathi@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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