{LONGTERMINVESTORS} Fwd: Daily Market Report- October 26, 2016

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From: <research@icicibank.com>
Date: Wed, Oct 26, 2016 at 6:05 PM
Subject: Daily Market Report- October 26, 2016
To: stockdesai@gmail.com

Domestic market developments: Indian equities ended today's session in the red. Trade remained stock-specific amid earnings results and the recent removal of Cyrus Mistry as Tata Group chairman. Bank shares were the major laggard. Nifty and Sensex ended down 0.9% each. Indian Government bonds ended little changed today. Intraday, trading volumes remained subdued. While the recent fall in oil prices has aided gilts, the same has been limited by a pickup in US Treasury yields. Going ahead, developments in the US will remain in focus. The benchmark 10Y yield closed at 6.77% same as yesterday's close. Indian Rupee ended largely flat today, erasing early session gains. Global risk sentiment remains cautious ahead of US FOMC policy decision and US Presidential elections due in upcoming weeks. Further, weak performance in local indices weighed on the domestic currency. USDINR pair closed at 66.83 (prior: 66.82). RBI injected liquidity to the tune of INR 652.77 (net) under LAF (including fixed and variable rate repos and reverse repos), as of October 25th. It injected INR 0.05 bn and INR 16.78 bn under Marginal Standing Facility and Special Refinance Facility respectively. Global Market Snapshot *Weighted Average (WAR) over the day Global market developments: Asian equity indices ended in the red today, tracking global cues, as energy firms were dragged down by tumbling oil prices. Losses were led by Australia ASX (-1.5%), Kospi (-1.1%; after local reports said that travel agencies in mainland China were reportedly ordered by provincial Governments to reduce the number of tourists visiting South Korea), Hang Seng (-1.0%), and Shanghai Composite (-0.5%). In contrast, Nikkei rose by 0.2%, with a weak Yen shoring up market sentiment. Dollar index is trading slightly weaker today, albeit holding on to recent gains. Developments in the US- FOMC policy and Presidential elections- will take centre-stage going ahead. While we expect the Fed to stay put in the November policy, cues on the next rate hike and pace of normalisation will be critical. Upbeat US data and hawkish commentary by Fed officials have caused the market implied probability of a rate hike in December 2016 to rise from ~55% a month back to ~72% currently; thereby aiding the Dollar. The Euro, British Pound and Japanese Yen are all trading slightly stronger vis-à-vis the greenback amid weakness in the latter. In the line-up for this week, Q3 2016 GDP (advance estimates) for US, Eurozone and UK are due and will be closely tracked. US Treasuries are trading lower today, amid improved risk appetite, with 10Y Treasury yield hardening to 1.78% vs. yesterday's close of 1.75%. Commodity market developments: Crude oil dipped lower today, in the wake of Russia's emphasis on production freezes instead of cuts, while uncertainty still prevailed regarding Iraq's willingness to join OPEC's planned output cuts. WTI and Brent are currently trading at USD 49.2/barrel and USD 50.1/barrel respectively. Gold edged mildly lower today amid broad-based Dollar strength, even as reported robust demand from India in the run up to Diwali capped the downside. Gold is currently trading at USD 1272/oz. Regards, ICICI Bank Contact: Niharika Tripathi (+91-22) 2653-1414 (extn: 6943) niharika.tripathi@icicibank.com Sumedha Dasgupta (+91-22) 2653-1414 (extn: 7243) sumedha.dasgupta@icicibank.com ​

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CA. Rajesh Desai

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