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NSE Intra-day chart (01 March 2023)
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Market Commentary 02 March 2023
Markets likely to get pessimistic start amid weak global cues


Halting their eight days of decline, Indian equity benchmarks witnessed a relief rally and logged smart gains on Wednesday as broad-based buying on the back of short covering and uptick in European and select Asian indices aided the sentiment. Markets opened on a positive note and continued to inch higher throughout the day as traders took encouragement with Chief Economic Advisor V Anantha Nageswaran's statement that high frequency data indicate buoyant economic growth momentum and the 7% GDP growth estimate for the current fiscal is very realistic. Some optimism also came as production of eight infrastructure industries - the core sector - expanded 7.8% year-on-year (YoY) in January, its fastest pace in four months, owing to a lower base and a near all-round showing.  Buying further crept in as Moody's Investors Service raised India's economic growth estimate for 2023 to 5.5 per cent from 4.8 per cent pegged earlier, on the back of a sharp increase in capital expenditure in the Budget and a resilient economic momentum. Key indices extended gains in late afternoon deals and settled near day's high points, taking support from the second advance estimates of national income showing that the Gross Value Added (GVA) in agriculture and allied activities is projected to clock its best growth in FY23 during the October-to-December quarter, at 3.7 per cent, on the back of a strong kharif harvest. In the third quarter of FY22, GVA in the sector was 2.3 per cent at constant prices. Traders paid no heed towards reports that India's gross domestic product (GDP) growth rate fell for the second consecutive quarter in October-December, coming in at 4.4%, it is lower than the 6.3% growth in the second quarter of 2022-23.  Traders also overlooked a private survey report showing that India's manufacturing sector expanded at the slowest pace in four months in February amid rising borrowing costs & weakness in the sector. However, the sector remained relatively strong amid buoyant domestic demand, despite higher inflationary pressures. India's S&P Global Manufacturing Purchasing Managers' Index remained largely unchanged at 55.3 in February from January's 55.4. It was well above the 50-mark separating expansion from contraction for a 20th straight month. Finally, the BSE Sensex rose 448.96 points or 0.76% to 59,411.08 and the CNX Nifty was up by 146.95 points or 0.85% to 17,450.90.


The US markets ended mostly in red on Wednesday following the release of a report from the Institute for Supply Management on U.S. manufacturing activity in the month of February. While the ISM said its manufacturing PMI inched up to 47.7 in February from 47.4 in January, a reading below 50 still indicates a contraction. Street had expected the index to edge up to 48.0. The report also showed the prices index jumped to 51.3 in February from 44.5 in January, indicating raw materials prices increased after decreasing for four consecutive months. The notable rebound by the prices index may have added to recent concerns about inflation and the outlook for interest rates. Meanwhile, treasury yields jumped following the release of the report, with the ten-year yield reaching its highest levels in over three months. Bond yields extended their February gains, with the benchmark 10-year yield briefly topping 4% for the first time since November. The 1-year Treasury yield rose above 5%. On the sectoral front, interest rate-sensitive utilities stocks showed a significant move to the downside, dragging the Dow Jones Utility Average down by 1.8 percent to its lowest closing level in over three months. Considerable weakness was also visible among retail stocks, as reflected by the 1.8 percent slump by the Dow Jones U.S. Retail Index. Telecom and commercial real estate stocks also saw notable weakness on the day, while steel, energy and gold stocks moved sharply higher.


Crude oil futures ended higher on Wednesday on growing hopes for higher demand after a jump in manufacturing in top crude importer China. Crude oil prices rose despite data showing a jump in crude inventories in the week ended February 24th. Data released by Energy Information Administration (EIA) showed crude stockpiles rose by 1.165 million barrels in the week ended February 24, rising for a 10th straight week. The increase was nearly 4 times over the level seen a week earlier. Gasoline inventory dropped by 0.874 million barrels last week, as against an expected increase of 0.464 million barrels, while distillate stockpiles rose by 0.179 million barrels versus the expected drop of 0.462 million barrels. Benchmark crude oil futures for April delivery surged $0.64 or 0.8 percent to 77.69 a barrel on the New York Mercantile Exchange. Brent crude for May delivery rose $0.86 or 1 percent to $84.31 a barrel on London's Intercontinental Exchange.


Indian Rupee ended higher against the US dollar on Wednesday as a positive trend in domestic equities and easing crude oil prices supported investor sentiments. Sentiments remained upbeat after Moody's Investors Service has raised India's Gross Domestic Product (GDP) growth estimate for 2023 to 5.5 per cent from 4.8 per cent pegged earlier, on the back of a sharp increase in capital expenditure in the Budget and a resilient economic momentum. Besides, output of eight core industries increased at a four-month high of 7.8 per cent in January 2023 as against 4 per cent in the same month of previous year, led by a sharp uptick in fertiliser production and double-digit growth in coal mining and electricity generation. On the global front, dollar eased and China's yuan gained on Wednesday after China's manufacturing activity expanded at its fastest pace since April 2012, while the euro rose after regional German price data added to inflation worries. Finally, the rupee ended at 82.50 (Provisional), stronger by 8 paise from its previous close of 82.58 on Tuesday.


The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 18425.55crore against gross selling of Rs 23068.15 crore, while in the debt segment, the gross purchase was of Rs 196.03 crore against gross selling of Rs 214.97 crore. Besides, in the hybrid segment, the gross buying was of Rs 16.43 crore against gross selling of Rs 51.95 crore.


The US markets ended mostly in red on Wednesday as Treasury yields jumped after manufacturing data indicated inflation is likely to remain stubbornly high. Asian markets are trading mixed on Thursday tracking lackluster trade overnight on Wall Street. Indian markets snapped an eight-day losing streak and ended higher on Wednesday amid buying across sectors. Today, start of session is likely to be pessimistic on weekly F&O expiry amid weak global cues. Continued foreign fund outflows likely to dent sentiments in the markets. Foreign institutional investors (FII) sold shares worth Rs 424.88 crore on March 1, the National Stock Exchange's provisional data showed. There will be some cautiousness with report that the government collected Rs 1.50 lakh crore as Goods and Services Tax (GST) in February, the finance ministry said on March 1. The GST collections for February fell from Rs 1.58 lakh crore in January. Traders may take note of Chief Economic Advisor V Anantha Nageswaran's statement that the performance of the manufacturing sector and growth rate in private consumption expenditure in the December quarter of 2022-23 is appearing depressed because of higher base. There will be some buzz in auto stocks with private report that the domestic passenger vehicle (PV) industry remained on a steady growth path in February, recording a 10.6 per cent year-on-year (YoY) rise in sales. The wholesale figure of 335,269 units was the best ever for the month of February; it was 303,213 units a year ago. Coal industry stocks will be in focus with report that India's coal production increased by 15.10 per cent to 784.41 million tonnes during April 2022-February 2023 as compared to 681.5 million tonnes produced during the same period of last year. There will be some reaction in gas sector stocks as the latest rise in prices by Rs 50 has taken the prices of domestic cooking gas to their highest levels since February 2014. Banking stocks will be in limelight as India Ratings said the gross non-performing assets (NPA) ratio of banks is expected to improve to 3.3 percent in next financial year from 4.2 percent in FY23. A loan turns to NPA if there are no repayments of interest or principal for a period of 90 days.


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