{LONGTERMINVESTORS} Fwd: Daily Market Report - August 2, 2016

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From: <research@icicibank.com>
Date: Tue, Aug 2, 2016 at 5:23 PM
Subject: Daily Market Report - August 2, 2016
To: stockdesai@gmail.com

Key developments today Japanese Prime Minister Shinzo Abe's cabinet approved a fiscal stimulus package worth JPY 13.5 trillion today. Domestic market developments Indian equities ended in the red today, erasing early morning gains amid negative cues from their European and Asian counterparts. Indices are expected to track further cues from the development surrounding the GST bill which is expected to be tabled in the Upper House of the Parliament tomorrow. Furthermore, Reserve Bank of India's monetary policy decision (next week) will take centre stage. Nifty and Sensex closed lower by 0.2% and 0.1% respectively. Indian Rupee ended firm vis-à-vis the US Dollar at 66.73 levels vs. yesterday's close of 66.74. Softness in the greenback ahead of PCE inflation data prints later today and reported Dollar sales by foreign banks supported the domestic currency today. However, downbeat finish in local bourses limited the upside. Indian Government bonds ended lower today, trimming yesterday's steep gains. Reported profit booking after yesterday's surge in bond prices, rise in US Treasury yield, slight intraday correction in crude prices and caution ahead of RBI's policy decision, due next week, kept gilts under pressure today. 10Y benchmark yield ended at 7.17% vs. Friday's close of 7.14%. RBI withdrew liquidity to the tune of INR 224.48 bn (net) under LAF (including fixed and variable rate repos and reverse repos), as of August 1st. It injected INR 19.06 bn and INR 7.75 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 largely in the red today, extending early morning losses. Reserve Bank of Australia's decision to cut interest rates today left little impact on Australian markets as the result was largely along expected lines. Stocks in Japan responded to the surge in the Yen today. Nikkei (-1.5%), Australia's ASX (-0.8%) and Kospi (-0.5%) ended lower. On the other hand, Shanghai Composite (0.6%) closed higher. Meanwhile, markets in Hong Kong remained closed today on account of a typhoon warning by the Hong Kong Observatory. The Japanese currency is trading with an appreciation bias relative to the US Dollar as Prime Minister Shinzo Abe's Government approved a JPY 13.5 trillion fiscal stimulus package today.  The Dollar index is trading weaker, weighed down by soft data prints such as Q2 GDP and manufacturing PMI for July. The Pound is trading stronger vis-à-vis the US Dollar today ahead of Bank of England's monetary policy decision later this week, wherein we expect a 25 bps cut. Meanwhile, the Euro is also trading stronger against the US Dollar. US Treasuries are trading lower today. The 10Y benchmark yield is presently at 1.55% vs. the prior close of 1.52%. Commodity market developments Crude oil is trading higher, albeit holding on to its overnight losses. Widespread oversupply concerns are keeping crude under pressure. WTI and Brent are currently trading at USD 41/bbl and USD 43/bbl respectively. Gold is trading higher today, amid tempered risk sentiment in markets. Softness in the US Dollar is also aiding the bullion. Meanwhile, holdings in SPDR Gold Trust rose by 5.94 metric tonnes to 964.03 tonnes. Regards, ICICI Bank Contact: Sonal Surana (+91-22) 2653-1414 (extn: 7243) sonal.surana@icicibank.com Radhika Wadhwa (+91-22) 2653-1414 (extn: 7206) radhika.wadhwa@icicibank.com ​

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CA. Rajesh Desai

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