{LONGTERMINVESTORS} Fwd: Daily Market Report- February 3, 2016

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From: <research@icicibank.com>
Date: Wed, Feb 3, 2016 at 6:28 PM
Subject: Daily Market Report- February 3, 2016
To: stockdesai@gmail.com

Domestic markets wrap-up Indian equities ended in the red, tracking downbeat global cues. Losses in banking, auto, metals and energy stocks pushed the indices lower, even as services PMI for January registered a notable uptick. Sensex and Nifty lost 1.3% each. Rupee ended weaker against the US Dollar. Trade remained volatile as the domestic currency touched intra-day high of 68.22 before finally settling at 68.07 levels (yesterday's close: 67.98 levels). Reported Dollar demand by importers and banks kept the Rupee under pressure. Losses in domestic equities added to the domestic currency's depreciation. Domestic bonds ended lower today following weakness in the Rupee. RBI's cautious commentary on inflation and liquidity yesterday continued to weigh on gilts. Further, the Central Bank's announcement regarding the purchase of INR 200 bn worth of 2016 bonds has dampened hopes of additional OMO purchases in the near term. The 10Y benchmark yield closed at 7.73% vs. yesterday's close of 7.72%. RBI provided liquidity to the tune of INR 1252.05 bn (net) under LAF (including fixed and variable rate repos and reverse repos), as of February 2nd. It injected INR 22.33 bn and INR 0.70 bn under Special Refinance Facility and Marginal Standing Facility respectively. *Weighted Average (WAR) over the day Global market developments Asian equities ended sharply in the red. Market sentiment remained subdued on the back of pessimistic cues from US indices and fresh declines in crude prices. China's upbeat services PMI also failed to buoy sentiment. Nikkei (-3.2%), Kospi (-0.8%) and Australia's ASX (-2.3%) plummeted sizeably. Shanghai Composite (-0.4%) and Hang Seng (-2.3%) also posted losses. Dollar index continues to trade lower at 98.62 levels. Euro is trading little changed against the US Dollar at 1.0918 levels. Eurozone's retail sales and services PMI print came in line with expectations, keeping the common currency steady. Pound is trading slightly stronger vis-à-vis the greenback at 1.4502 levels. Markets await Bank of England's policy decision due tomorrow. Though the Central Bank is expected to keep policy rates unchanged, the tone of guidance will be crucial for cues. Japanese Yen is also trading stronger vs. the US Dollar at 119 levels on the back of a sell-off in global markets. US Treasuries are trading slightly lower today, albeit holding on to bulk of their recent gains. Sell-off in global equities amid a renewed slump in crude prices and cautious mood ahead of US jobs data have led to increased demand for Treasuries. The 10Y benchmark yield is at 1.87% vs. yesterday's close of 1.84%. Commodity market developments Oil is trading higher today, though erstwhile losses remain overarching. Market sentiment firmed slightly following fresh comments by Russia's foreign minister regarding potential coordination between OPEC and non-OPEC members. The same, however, has not been affirmed by OPEC till now. WTI and Brent are trading at ~USD 30/bbl and ~USD 33/bbl respectively. Gold is trading firm, holding on to recent gains. Elevated levels of risk aversion in global markets have aided the safe haven metal's demand. The bullion is currently trading at USD 1128/oz. Regards, ICICI Bank Contact: Sagrika Gogia (+91-22) 4008-1414 (ext:2180) sagrika.gogia@icicibank.com Sonal Surana (+91-22) 4008-1414 (ext:2087) sonal.surana@icicibank.com

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CA. Rajesh Desai

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