{LONGTERMINVESTORS} Fwd: Daily Market Report - August 22, 2016

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From: <research@icicibank.com>
Date: Mon, Aug 22, 2016 at 5:30 PM
Subject: Daily Market Report - August 22, 2016
To: stockdesai@gmail.com

Domestic market developments Indian equities ended in the red today amid hawkish comments by Fed officials which renewed market expectations of a Fed rate hike this year. IT and banking stocks were the major laggards. Sensex and Nifty ended lower by 0.3% and 0.4% respectively. Indian Rupee ended stronger vis-à-vis the US Dollar, closing at 67.19 levels vs. Friday's close of 67.07. Urjit Patel's appointment as the next RBI Governor dampened market expectation of a rate cut in the near future as the new Governor is expected to continue Raghuram Rajan's policies. Broad based Dollar strength further weighed on the domestic currency. Indian Government bonds ended significantly lower today. Relatively high US Treasury yields and the appointment of the new RBI Governor put pressure on gilts. The 10Y benchmark yield ended at 7.16% vs. Friday's close of 7.10%. RBI withdrew liquidity to the tune of INR 606.73 bn (net) under LAF (including fixed and variable rate repos and reverse repos), as of August 19th. It injected INR 19.06 bn and INR 0.60 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 mixed today as markets remained cautious ahead of Fed Chair Janet Yellen's speech at Jackson Hole this Friday. A relatively weaker Yen aided Japanese stocks today. Hang Seng (+0.3%) and Nikkei (+0.3%) closed lower, while Kospi (-0.7%), Australia's ASX (-0.2%) and Shanghai Composite (-0.8%) ended lower. The Dollar index strengthened further today in continued response to hawkish comments from Fed Vice Chairman Stanley Fischer advocating a rate hike in 2016 amid improved growth prospects in the US economy. Going ahead, commentary by Fed Chair Janet Yellen at the symposium of Central Banks in Jackson Hole, Wyoming will be watched out for. The British Pound is trading little changed vis-à-vis the US Dollar today, albeit holding on to the bulk of its losses from yesterday. Reports suggesting that Brexit proceedings may begin early next year is likely to keep the Sterling under pressure, going ahead. UK's Q2 2016 GDP print, due next week, will provide crucial cues.  On the other hand, the Euro is trading with a depreciation bias vis-à-vis the greenback amid gains in the latter. The Yen continues to trade with a bearish bias with respect to the US Dollar today. Bank of Japan (BoJ) Governor Haruhiko Kuroda's comments citing "sufficient chance" of further easing policy action in BoJ's next meeting, taking key rates further into the negative territory, is weighing on the currency today. US Treasuries are holding on to the bulk of their overnight losses. Recent commentary from Fed officials (William, Dudley and Stanley Fischer) hinting at a rate hike this year weighed on sovereign bonds. Commodity market developments Crude is trading sharply lower today, halting seven straight sessions of gains. Oil slipped over ~2.6% as OPEC's second largest producer, Iraq signaled a ramp up of oil production by about 5% in the coming sessions. Furthermore, Baker Hughes data indicating an increase in oil rig count by 10 to 406 rigs is keeping the commodity under pressure. Gold prices are trading lower today amid strength in the US Dollar. Moreover, increased bets of a rate hike amid comments from Fed officials are keeping the bullion under pressure today. 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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