{LONGTERMINVESTORS} Fwd: Daily Market Report - August 16, 2016

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From: <research@icicibank.com>
Date: Tue, Aug 16, 2016 at 5:48 PM
Subject: Daily Market Report - August 16, 2016
To: stockdesai@gmail.com

Key developments India's WPI inflation rose to a 23 month high of 3.55% YoY in July from 1.62% YoY in June. Domestic market developments Indian equities ended in the red today, in line with their Asian peers. A higher than expected WPI print in July weighed on investor sentiment. Losses were led by pharma, auto and IT stocks. Sensex and Nifty ended 0.3% lower each. Indian Rupee closed stronger vis-à-vis the US Dollar at 66.77 levels vs. Friday's close of 66.89 levels. Broad based weakness in the US Dollar and reported Dollar sales by banks aided the Rupee today. However, Dollar demand by foreign banks and PSUs limited the upside. Indian Government bonds ended little changed today amid lack of fresh triggers. Higher than expected WPI and CPI prints for the month of July weighed on gilts, though reported value buying provided support. The 10Y benchmark yield is currently at 7.10%, same as the previous close. RBI withdrew liquidity to the tune of INR 111.80 bn (net) under LAF (including fixed and variable rate repos and reverse repos), as of August 12th. It injected INR 19.06 bn and INR 6.0 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 red today, shrugging off cues from their US counterparts. A surging Yen weighed on Japanese stocks. Japan's Q2 2016 GDP print came in sharply lower at 0.2% QoQ (ann.) vs. the prior (revised) print of 2.0% QoQ (ann.), further weighing on sentiment. Nikkei (-1.6%), Hang Seng (-0.1%), Shanghai Composite (-0.5%), Kospi (-0.1%) and Australia's ASX (-0.1%) ended lower.  The Dollar index is trading lower at 94.66 levels today as San Francisco Fed President John Williams said in a paper that the Fed must raise inflation targets and focus on growth and much looser fiscal policy. The overall dovish tone of the paper weighed on the reserve currency. Minutes of the July FOMC meeting, scheduled to be released tomorrow, will guide further movements in the Dollar. The British Pound is trading stronger vis-à-vis the US Dollar today, aided by weakness in the latter. UK's July CPI grew at 0.6% YoY from 0.5% YoY previously. The Euro is also trading stronger vs. the US Dollar today. Meanwhile, the Japanese Yen is trading with an appreciation bias relative to the greenback today. The Yen is surging as risk sentiment remains subdued. US Treasuries are trading higher today ahead of the minutes of the July FOMC meeting, due tomorrow. The 10Y benchmark yield is currently at 1.53% vs. the previous close of 1.56%. Commodity market developments Crude is trading higher today, extending its recent rally. Oil prices are gaining amid expectations of a production freeze by major producers. WTI and Brent are currently hovering at around USD 46/bbl and USD 49/bbl. Gold prices are trading higher today. A weak US Dollar on account of mixed US data prints is aiding the bullion today. Tempered risk sentiment in markets further supported prices. The yellow metal is currently trading at USD 1354/oz.   Regards, ICICI Bank Contact: Radhika Wadhwa (+91-22) 2653-1414 (extn: 7206) radhika.wadhwa@icicibank.com ​

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CA. Rajesh Desai

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