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NSE Intra-day chart (02 November 2017)
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Market Commentary 03 November 2017
Markets to make a cautious start on Thursday

 

Indian equity markets fell hard on Wednesday’s trading session, with Sensex & Nifty plunging by 267 and 98 points, respectively. After a cautious start, key indices traded lackluster throughout the day, amid a private report stating that India's economic growth is set to slow further in the April-June quarter of this year to 5.7 per cent amid contraction in consumption, weak investments and an under-performing service sector. Traders took a note of another report that in a bid to achieve the fiscal deficit target, the government has cut down on its capital expenditure by 80% in February and March. It said the government is contributing to the slowdown rather than uplifting the corporate sector. Markets extended their losses in the second half of the session to settle near day’s low points. The street overlooked the Retirement fund body, Employment Provident Fund Organisation’s (EPFO) latest Provisional Estimate of Net Payroll data report showing that India created 12,23,675 new jobs in the month of June 2019 as against 8,56,870 in May 2019. Also, market participants paid no heed towards the Union Housing and Urban Affairs Minister Hardeep Singh Puri’s statement that the government is set to achieve its target of providing housing for all in 2020 itself, two years before its stated deadline of 2022. Finally, the BSE Sensex lost 267.64 points or 0.72% to 37,060.37, while the CNX Nifty was down by 98.30 points or 0.89% to 10,918.70.

 

The US markets settled higher on Wednesday following the release of the minutes of the Federal Reserve's latest monetary policy meeting, which showed the central bank intends to remain flexible regarding future changes to interest rates. Citing a lack of clarity about when the risks to the US economy will be resolved, the Fed said the members plan to pay close attention to the implications of incoming data for the economic outlook. Besides, the strength on markets also reflected a positive reaction to upbeat earnings news from retail giants Target (TGT) and Lowe's (LOW). Shares of Target spiked by 20.4 percent after the retailer reported better than expected second quarter results and raised its full-year earnings guidance. Home improvement retailer Lowe's also surged up by 10.3 percent after reporting second quarter results that exceeded street estimates on both the top and bottom lines. The better than expected results from the retailers added to optimism that strength in consumer spending will continue to support the US economy despite early indicators of a looming recession. On the economic front, existing home sales in the US showed a notable rebound in the month of July, according to a report released by the National Association of Realtors (NAR). NAR said existing home sales jumped by 2.5 percent to an annual rate of 5.42 million in July after slumping by 1.3 percent to a revised rate of 5.29 million in June. Street had expected existing home sales to surge up by 2.3 percent to a rate of 5.39 million from the 5.27 million originally reported for the previous month. The report said the median existing home price for all housing types in July was $280,800, down 1.6 percent from $285,300 in June but up 4.3 percent from $269,300 in the same month a year ago. Dow Jones Industrial Average surged 240.29 points or 0.93 percent to 26202.73, Nasdaq gained 71.65 points or 0.90 percent to 8020.21 and S&P 500 was up by 23.92 points or 0.82 percent to 2924.43.

 

Crude oil futures ended lower on Wednesday despite the government reported a weekly decrease in domestic crude supplies. The drop in stockpiles was less than expected. The Energy Information Administration (EIA) reported that US crude supplies fell by 2.7 million barrels for the week ended August 16. The EIA data also showed that inventories of gasoline edged up by 300,000 barrels, while distillate stockpiles rose by 2.6 million barrels last week. Besides, concerns over energy demand too continued to pressure prices. Benchmark crude oil futures for October declined 45 cents or 0.8 percent to settle at $55.68 a barrel on the New York Mercantile Exchange. However, October Brent rose 27 cents or 0.5 percent to settle at $60.30 a barrel on London's Intercontinental Exchange.

 

Indian rupee staged a recovery after two sessions of decline and ended higher against dollar on Wednesday, on fresh selling of the American currency by banks and exporters. Traders took a note of the Retirement fund body, Employment Provident Fund Organisation’s (EPFO) latest Provisional Estimate of Net Payroll data report showed that India created 12,23,675 new jobs in the month of June 2019 as against 8,56,870 in May 2019. However, gains remain capped as cautiousness remained in markets with a private report stating that India's economic growth is set to slow further in the April-June quarter of this year to 5.7 per cent amid contraction in consumption, weak investments and an under-performing service sector. On the global front, euro struggled to make headway against a resilient dollar on Wednesday while foreign exchange markets remained largely calm ahead of a crucial meeting of central bankers later this week. Finally, the rupee ended at 71.55, 16 paise stronger from its previous close of 71.71 on Tuesday.

 

The FIIs as per Wednesday’s data were net sellers in equity segment, while they were net buyers in debt segment, In equity segment, the gross buying was of Rs 5380.42 crore against gross selling of Rs 5788.67 crore, while in the debt segment, the gross purchase was of Rs 4489.02 crore with gross sales of Rs 2592.36 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.47 crore against gross selling of Rs 3.58 crore.

 

The US markets rose on Wednesday following the release of minutes from the Federal Reserve’s July monetary policy meeting, as fresh optimism over consumer spending countered recent worries over economic growth. Asian markets are trading mostly higher on Thursday following the overnight gains on Wall Street. Indian markets ended lower for second straight day on Wednesday on the back of heavy selloff as investors remained risk-averse due to uncertainties over economic growth. Today, the markets are likely to make a cautious start. Traders will be concerned with Care Ratings’ report that the ongoing economic slowdown has started hurting corporates as well, with companies reporting a sharp decline in both revenue and profit growth numbers in the June quarter. India Inc's net sales growth for the June quarter slid to 4.6 per cent as against 13.5 per cent for the same period last year, while the net profit growth moderated to 6.6 per cent as compared to last year's 24.6 per cent. There will be some cautiousness with the central bank’s statement that weakening of domestic growth impulses prompted the Reserve Bank of India governor Shaktikanta Das to opt for an unconventional rate cut of 35 basis points to push economic activities early this month. However, some support may come later in the day with report that the government is planning to boost domestic production of chemicals and petrochemicals to cut down imports and make India a manufacturing hub for the sector. Traders may take note of report that public sector banks will embark on second round of two-day bottom-up ideation exercise beginning Thursday for further streamlining the banking sector to help the nation become a $5 trillion economy in five years. Meanwhile, the Securities and Exchange Board of India (SEBI) has eased the process for on-boarding overseas investors. The market regulator also introduced an informant mechanism to gather better evidence and crack down on insider-trading cases. The SEBI board clarified on the debt-to-equity ratio companies need to maintain to be eligible for buybacks. There will be some buzz in the auto stocks with Road Transport Minister Nitin Gadkari's statement that the government has set no deadline to ban the production of petrol, diesel vehicles or for automobile manufacturers to switch to electric vehicles (EVs). There will be some reaction in reality stocks with a private report that investments in the real estate sector tripled to Rs 1.4 lakh crore during 2014-18, mainly backed by institutional investments. As per report, the realty sector witnessed investments to the tune of Rs 46,500 crore between 2009-2013 and Rs 1.4 trillion during 2014-18. Also, telecom stocks will be focus with Telecom Regulatory Authority of India (Trai) report showing that prices of mobile data have fallen drastically by about 95 percent to Rs 11.78 per gigabyte (GB) but cumulative revenue of telecom operators has risen by around 2.5 times to Rs 54,671 crore in the last five years.

 

Support and Resistance: NSE (Nifty) and BSE (Sensex)

 

Index

Previous close

Support

Resistance

NSE Nifty

10,918.70

10,872.17

10,999.72

BSE Sensex

37,060.37

36,919.74

37,303.77

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

2,282.13

65.40

62.80

69.75

Tata Motors

835.10

112.40

106.93

120.43

SBI

282.26

277.40

273.93

283.23

Indiabulls Housing Finance

235.56

483.55

463.20

512.35

ITC

147.36

241.45

239.23

245.28

 

  • HCL Technologies has opened a new delivery centre in Hamilton, New Zealand. 
  • USFDA has issued eight observations to Dr Reddy's Laboratories after the inspection of Formulations Manufacturing plant at Duvvada, Visakhapatnam in Andhra Pradesh. 
  • Hindustan Unilever is all set to launch detergent brand Love & Care, a new India-focused product. 
  • Maruti Suzuki has launched its all new premium MPV, the XL6.
News Analysis