{LONGTERMINVESTORS} Fwd: Daily Market Report - August 23, 2016

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From: <research@icicibank.com>
Date: Tue, Aug 23, 2016 at 5:24 PM
Subject: Daily Market Report - August 23, 2016
To: stockdesai@gmail.com

Key developments today The Indian Railway Board raised freight rates by 19% today in order to stem the declining freight and passenger revenue. Domestic market developments Indian equities ended flat with an upward bias, after witnessing a choppy session intraday. Investors remained on the sidelines for Fed Chair Janet Yellen's speech, slated for later this week. In other news, the Indian Railways raised freight rates by about 19% today, posing upside risks to inflation and thereby dampening market sentiment today. Indian Rupee ended stronger vis-à-vis the US Dollar, closing at 67.06 levels vs. yesterday's close of 67.19. The domestic currency extended gains today as markets pulled back expectations of an RBI rate cut this year after Urjit Patel's appointment as the next RBI Governor. Further, some downward correction in the Dollar index aided the Rupee. Indian Government bonds ended little changed today, holding on to yesterday's losses. Broadly high US Treasury yields and the appointment of the new RBI Governor continued to keep gilts under pressure. However, the auction of state development loans worth INR 147.75 bn capped the downside today. The 10Y benchmark yield ended at 7.16%, same as yesterday's close. RBI withdrew liquidity to the tune of INR 331.74 bn (net) under LAF (including fixed and variable rate repos and reverse repos), as of August 22nd. It injected INR 17.06 bn and INR 4.85 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. Broadly, markets remained cautious ahead of Fed Chair Janet Yellen's speech at Jackson Hole this Friday. Australia's ASX (0.7%), Shanghai Composite (0.2%) and Kospi (0.4%) settled higher, while Hang Seng ended flat. However, Nikkei (-0.6%) ended lower on the back of a stronger Yen. The Dollar index weakened marginally today on account of caution ahead of the upcoming speech by Fed Chair at Jackson Hole this week, which will be watched for cues regarding the pace of monetary tightening by the Central Bank this year. On the other hand, the British Pound is trading stronger vis-à-vis the US Dollar today. Softness in the greenback is aiding most currencies today. Going ahead, UK's Q2 2016 GDP print, due next week, will remain crucial. The Euro is also trading with some appreciation bias vis-à-vis the greenback. The Yen rebounded from its recent losses that followed comments from Bank of Japan Governor Haruhiko Kuroda signaling another rate cut by as early as the next meeting of the Central Bank. US Treasuries are trading lower today on the back of increased market bets of a Fed rate hike this year after Fed officials (William, Dudley and Stanley Fischer) recently hinted at the same recently. Commodity market developments Crude continued its declining trend today as oversupply concerns weighed on market sentiment. Expectations of a production freeze by the OPEC next month, however, continued to cap losses. Going ahead, weekly oil inventory report by the API and EIA will be keenly tracked for cues. Gold prices remain little changed today as markets wait on the sidelines ahead of Janet Yellen's speech later this week. 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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