{LONGTERMINVESTORS} Daily Market Report- July 11, 2016

 

Key developments today UK Home Secretary Theresa May becomes the sole contender for the position of UK's next Prime Minister as the rival candidate, Andrea Leadsom withdrew from the contest.  Domestic market developments Indian equities ended lower today, tracking cues from their global counterparts. Gains were led by banking and IT stocks. On the domestic front, crucial data this week (CPI, IIP and WPI) are expected to provide further cues to indices. Sensex and Nifty closed 1.8% and 1.7% higher respectively. Indian Rupee strengthened against the US Dollar, closing at 67.12 levels vs. Friday's close of 67.36. A rally in local bourses coupled with improved risk sentiment in global markets post the release of US labour market data aided the domestic currency. However, Dollar bids by importers limited the gains. Indian Government bonds ended little changed today as market participants refrain from taking major positions ahead of the CPI release tomorrow. A strong Rupee and low US Treasury yields supported gilts today. The 10Y benchmark yield ended at 7.38%, same as Friday's close. RBI withdrew liquidity to the of INR 37.35 bn (net) under LAF (including fixed and variable rate repos and reverse repos), as of July 8th. It injected INR 19.04 bn and 5.0 bn under Special Refinance Facility and Marginal Standing Facility respectively. Global Market Snapshot *Weighted Average (WAR) over the day Global market developments Asian equities ended in the green today. Victory of the Shinzo Abe led coalition in Japan's upper house elections, sparked hopes of additional fiscal stimulus by the Government, thereby supporting Japanese stocks. Sentiment also remains upbeat as markets expect the Bank of England to cut interest rates in its policy meeting this week in response to Brexit. However, lower oil prices during trading hours likely capped the upside. Hang Seng (1.5%), Kospi (1.3%), Nikkei (4.0%) Australia's ASX (2.0%) and Shanghai Composite (0.3%) closed higher. The Pound Sterling is trading stronger, reversing its intraday trend amid reports that Theresa May could become the next UK Prime Minister and lead the country's exit from the EU as the rival, Andrea Leadsom quit the race. Further, the Dollar index is trading with an appreciation bias at 96.61 levels. A higher than expected NFP data outweighed the negative impact of a rise in unemployment levels to anchor the greenback today. Meanwhile, the Japanese Yen weakened steeply today vis-à-vis the greenback today. The currency lost 1.9% today amid hopes of further fiscal stimulus under the PM's 'Abenomics' programme following the landslide victory of the ruling coalition in the upper house elections in Japan. On the other hand, Euro is trading flat today. US Treasuries are trading lower, albeit holding on to the bulk of its recent gains. The 10Y benchmark yield is currently trading at 1.39% vs. the previous close of 1.36%. Commodity market developments Crude continues to decline today. Resurfacing of oversupply concerns after a recent report indicated increase in rig counts in the US and resumption in supply from Canada are weighing on oil today. WTI and Brent are presently trading at USD 45/bbl and USD 46/bbl respectively. Gold is trading lower today. Slight decline in safe-haven demand for the bullion as upbeat jobs data from the US calmed concerns regarding the US economy, even as post-Brexit impact remains to the seen. The yellow metal is presently trading at USD 1358/oz.   Regards, ICICI Bank Contact: Sonal Surana (+91-22) 4008-1414 (ext: 7243) sonal.surana@icicibank.com Radhika Wadhwa (+91-22) 4008-1414 (ext: 7206) r ​

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CA. Rajesh Desai

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