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NSE Intra-day chart (11 September 2017)
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Market Commentary 12 September 2017
Benchmarks likely to get positive start on firm cues from US markets

Indian equity benchmarks ended Wednesday's trading session on a positive note, backed by strong gains in Capital Goods, Consumer Durables and Industrials stocks. Markets opened gap up and continued to inch higher throughout the day as traders took encouragement with the Reserve Bank of India (RBI) stating that India's current account deficit declined to $10.5 billion or 1.2 per cent of the GDP in October-December quarter of current fiscal from $11.4 billion in the previous three months and $16.8 billion a year back. Some optimism also came with Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that various initiatives from the government and growing investment are going to create more job opportunities during the decade. Sentiments remained up-beat in afternoon deals, taking support from Engineering Export Promotion Council (EEPC) of India’s statement that India's engineering exports to Russia doubled to $1.22 billion till February during the 2023-24 fiscal. It said the shipments to the country stood at $616.68 million in the previous fiscal. Some solace came as S&P Global Ratings stated that India's financial system regulator, the RBI, is showing serious commitment to improving governance and transparency in the sector. The recent measures by the RBI will curtail lenders' over-exuberance, enhance compliance culture, and safeguard customers, but the drawback will be higher capital costs for institutions. Traders also took a note of Fitch Ratings’ report that the profitability of Indian banks is likely to continue to improve, although net interest margin (NIM) compression will limit earnings upside over the medium term. It also said banks’ rising funding costs are likely to remain an important factor driving NIMs, but it is expected that earnings will be resilient despite the sector’s dependence on net interest income, which contributed 75 per cent of total operating income in the first nine months of the financial year ending March 2024. Finally, the BSE Sensex rose 526.01 points or 0.73% to 72,996.31 and the CNX Nifty was up by 118.95 points or 0.54% to 22,123.65.

The US markets ended higher on Wednesday as traders once again looked to pick up stocks at somewhat reduced levels. A decrease by treasury yields have also contributed to the strength in the markets amid ongoing optimism about the outlook for interest rates following the Federal Reserve's monetary policy announcement last week. On the sectoral front, Gold stocks showed a substantial move to the upside on the day, resulting in a 3.7 percent surge by the NYSE Arca Gold Bugs Index. With the gain, the index reached a nearly three-month closing high. The rally by gold stocks came amid an increase by the price of the precious metal, with gold for June delivery climbing $13.50 to $2,212.70 an ounce. Interest rate-sensitive utilities and commercial real estate stocks also saw considerable strength, driving the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index up by 2.7 percent and 2.3 percent, respectively. Airline, banking and steel stocks also showed strong moves to the upside as the day progressed, moving higher along with most of the other major sectors. Besides, traders were eyeing on economic data such as weekly jobless claims, Chicago business activity and pending home sales are due on Thursday. A report on personal income and spending that includes readings on inflation to be preferred by the Federal Reserve is also due to be released while the markets are closed on Good Friday.

Crude oil futures ended lower on Wednesday after data showed an unexpected increase in U.S. crude and gasoline inventories in the week ended March 22nd. Data from the Energy Information Administration (EIA) showed crude inventories jumped by about 3.2 million barrels last week, after slumping by 2 million barrel a week earlier. Crude inventories were expected to drop by 1.3 million barrels last week. The EIA data also showed that gasoline inventories rose by 1.3 million barrels last week, while distillate stockpiles dropped by 1.2 million barrels. Benchmark crude oil futures for May delivery fell $0.27 or about 0.33% to settle at $81.35 a barrel on the New York Mercantile Exchange. Brent crude for May delivery dropped by $0.16 or about 0.19% to $86.09 per barrel on London's Intercontinental Exchange.

Indian rupee depreciated against the dollar on Wednesday tracking a strong American currency against major rivals overseas and weak Asian peers. Traders overlooked report that Reserve Bank of India (RBI) said India's current account deficit declined to $10.5 billion or 1.2 per cent of the GDP in October-December quarter of current fiscal from $11.4 billion in the previous three months and $16.8 billion a year back. Meanwhile, Engineering Export Promotion Council (EEPC) of India stated that India's engineering exports to Russia doubled to $1.22 billion till February during the 2023-24 fiscal. It said the shipments to the country stood at $616.68 million in the previous fiscal. On the global front, yen dropped to its lowest level on Wednesday before rebounding slightly after Japan's top monetary officials met to discuss the rapidly weakening currency and suggested they were ready to intervene. Finally, the rupee ended at 83.33 (Provisional), weaker by 4 paise from its previous close of 83.29 on Tuesday.

The FIIs as per Wednesday's data were net sellers in equity segment. In equity segment, the gross buying was of Rs 20870.39 crore against gross selling of Rs 24040.98 crore, while in the debt segment, the gross purchase was of Rs 3609.56 crore with gross sales of Rs 1127.31 crore. Besides, in the hybrid segment, the gross buying was of Rs 582.90 crore against gross selling of Rs 17.91 crore.

The US markets ended higher on Wednesday as traders looked to pick up stocks at somewhat reduced levels. Asian markets are trading mixed in early deals on Thursday despite positive cues from the US markets overnight. Indian equity markets ended higher on Wednesday on account of hectic buying in Reliance Industries, Maruti Suzuki, Bajaj Finance, Titan Company and Kotak Mahindra Bank companies’ stocks. Today, markets are likely to make positive start on firm cues from the US markets overnight. Traders may get some support as Union Finance Minister Nirmala Sitharaman said the government will continue the push on its reforms agenda in its third term since political continuity, along with a predictable and stable economic environment and taxation structure, is important to achieve the laid-down developmental goals. Meanwhile, India should be satisfied with the current growth rate unless the external environment improves, Member of Economic Advisory Council to the PM, Sanjeev Sanyal, said, terming economic expansion in the range of 7 per cent perfectly good. Traders may take note with Chairman of the 16th Finance Commission Arvind Panagariya’s statement that India can realistically push its economic growth close to 9 per cent from the current 7 per cent or so, by implementing a few more reforms in the next five years. There may be some buzz in banking and NBFCs industries related stocks on report that in a relief to banks and non-banking financial companies (NBFCs), the Reserve Bank of India (RBI) relaxed the norms it announced on investments in Alternative Investment Funds (AIFs) in December last year. In a circular issued, the RBI said that its regulated entities (REs) will now be required to make provisioning only to the extent of the amount invested by the AIF scheme in the debtor company and not the entire investment.

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

Index

Previous close

Support

Resistance

NSE Nifty

22,123.65

22,053.14

22,193.89

BSE Sensex

72,996.31

72,685.11

73,223.11

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

NTPC

425.09

329.80

326.04

333.84

Tata Steel

352.28

152.60

151.70

153.80

HDFC Bank

310.84

1443.65

1,427.29

1,453.99

SBI

300.88

736.50

729.19

744.84

ONGC

285.63

265.30

260.56

269.11

  • Tata Steel has raised Rs 2,700 crore through allotment of 2,70,000 - 7.79% Fixed rate, Unsecured, Redeemable, Rated, Listed, NCDs having face value Rs 1,00,000 each.
  • NTPC has inked a pact with a Japanese agency for sourcing foreign currency loans of $200 million (JPY 30 billion or around Rs 1,650 crore).
  • Wipro’s wholly-owned subsidiary -- Wipro Holdings (UK) has transferred its entire shareholding in Wipro Gulf LLC (step-down subsidiary) to Wipro IT Services UK Societas (wholly-owned subsidiary). 
  • HCL Technologies has been selected by Oriola Corporation to accelerate Oriola’s digital transformation journey and deliver enhanced customer experiences.

News Analysis