Weakness hit the Dalal Street on
Friday, with Sensex & Nifty losing over 150 & 50 points, respectively.
After a lackluster opening, indices remained negative for the whole day,
impacted with a private report indicating that India's real GDP growth would
weaken further in Q3 of the financial year due to slow economic activity in the
first two months of the second half and the GDP for FY20 could be around 4.5%.
Adding more worries, think-tank Centre for Monitoring Indian Economy (CMIE)
stated that India's unemployment rate increased to 7.7% in December, slightly
higher than 7.48% reported in the previous month. In the second half of the
session, losses got intensified, on the back of negative cues from European
markets. Traders remained pessimistic, even after a private report stated that
the Indian economy benefited from 'favourable external environment' in 2019,
following which portfolio inflows into equity and debt touched a multi-year
high, and if this momentum is sustained it will bode well for the country's
external balance. The street overlooked a report that India can explore an annual
$82-billion export potential in twenty products, including electrical equipment
and ferro alloys, in the world's second largest economy China. Finally, the BSE
Sensex fell 162.03 points or 0.39% to 41,464.61, while the CNX Nifty was down
by 55.55 points or 0.45% to 12,226.65.
The US markets settled lower with
notable losses on Friday following escalating tensions in the Middle East and
US manufacturing activity that fell to its lowest reading in about a decade.
The US Department of Defense said in a statement that it had killed the head of
the Islamic Revolutionary Guard's elite Quds Forces in an airstrike on the
Baghdad International Airport in Iraq. The Pentagon claims Soleimani was behind
the recent attacks on the US embassy in Baghdad and said the strike was aimed
at deterring future Iranian attack plans. Iranian leader Ayatollah Ali Khamenei
said there would be revenge for Soleimani's death, while President Donald Trump
said Iran never won a war, but never lost a negotiation. Trump later claimed
that he does not want to start a war with Iran but said he is ready and
prepared to take whatever action is necessary to protect American lives.
Separately, the Institute for Supply Management (ISM) released a report showing
US manufacturing activity unexpectedly contracted at a faster rate in the month
of December. The ISM said its purchasing managers index slid to 47.2 in
December from 48.1 in November, with a reading below 50 indicating a
contraction in manufacturing activity. The modest decrease came as a surprise
to street, who had expected the manufacturing index to inch up to 49.0. With
the unexpected drop, the index pointed to the fastest rate of contraction in
manufacturing activity since June of 2009.
Crude oil futures rallied and
ended at their highest finish in more than seven months on Friday, with gains
of over 3%, amid an escalation in tensions in the Middle East after an
airstrike by the US killed Iranian military leader Qassem Soleimani. The US
Department of Defense said that it had killed Qassem Soleimani for his alleged
role behind the recent attacks on the US embassy in Baghdad. Moreover, data
showing a sharp drop in US crude stockpiles last week and China's recent policy
easing move also contributed to oil's uptick. As per the Energy Information
Administration (EIA) data, crude stockpiles fell by 11.5 million barrels last
week, about 3.5 times the expected drop. Meanwhile, data released by Baker
Hughes said crude oil rigs in the US decreased to 670 in the week to January 3,
from 677 in the previous week. Crude oil futures for February jumped $1.87 or
3.1 percent to settle at $63.05 a barrel on the New York Mercantile Exchange.
March Brent rose $2.35 or 3.6 percent to settle at $68.60 a barrel on London's
Intercontinental Exchange.
Extending
weakness for the second day, Indian rupee ended considerably lower against
dollar on Friday, as good demand for the greenback from importers. Traders
remain concerned with a private report indicating that India's real GDP growth
would weaken further in Q3 of the financial year due to slow economic activity
in the first two months of the second half and the GDP for FY20 could be around
4.5%. Some pessimism also came with think-tank Centre for Monitoring Indian
Economy (CMIE) stated that India's unemployment rate increased to 7.7% in
December, slightly higher than 7.48% reported in the previous month. Also, weak
trade in the local equity market and rising crude oil prices kept pressure on
the Indian rupee. On the global front, Sterling pound fell against the US
dollar on Friday as tensions between the US and Iran escalated overnight and
investors dumped riskier assets such as the pound. Finally, the rupee ended at
71.80, 42 paise weaker from its previous close of 71.38 on Thursday.
The
FIIs as per Friday's data were net buyers in equity segment, while they were
net sellers in debt segment. In equity segment, the gross buying was of Rs
3066.58 crore against gross selling of Rs 1978.34 crore, while in the debt
segment, the gross purchase was of Rs 885.80 crore with gross sales of Rs
2234.63 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.92
crore against gross selling of Rs 3.17 crore.
The US markets ended in red on
Friday after a US airstrike killed a top Iranian general, reigniting
geopolitical tensions in the Middle East coupled with weak US factory data.
Asian markets are trading mostly lower on Monday following heightened
geopolitical tensions in the Middle East. Indian markets ended lower on Friday
as oil prices surged after US airstrikes killed a top Iranian commander,
intensifying geopolitical tensions in the Middle East. Today, the start of new
week is likely to be negative tracking weakness in global peers amid US-Iran tensions.
Investors will be eyeing Services Purchasing Managers Index (PMI) for the month
of December to be out later in the day. There will be some cautiousness with
report that foreign portfolio investors (FPIs) began the year with profit
booking as they withdrew a net sum of Rs 2,418 crore from the Indian capital
markets in the first three trading sessions of January. Traders will be
concerned with apex exporters body FIEO's statement that further escalation in
the tension between the US and Iran will have implications on India's exports
to the Persian Gulf nation. However, some support may come later in the day
with the Reserve Bank of India's (RBI) data showing that the country's foreign
exchange reserves swelled by $2.520 billion to touch a record high of $457.468
billion in the week to December 27. Some support may also come on report that
the Commerce and Industry Ministry has prepared a blueprint to further improve
India's ranking in the World Bank's ease of doing business index with a focus
on six parameters, including enforcing contracts and starting a business.
Meanwhile, the RBI will carry out its third round of simultaneous purchase and
sale of government securities today. The central bank would purchase Rs 10,000
crore worth of long-term government bonds and sell an equivalent amount of
short-term securities. There will be some buzz in the auto stocks as rating
agency ICRA maintained a negative outlook on the passenger vehicle (PV) and
commercial vehicle (CV) segments. It said the negative outlook on the PV sector
was due to the slowing economic growth, the sharp decline in wholesale
despatches to destock dealership inventory as well as tepid retail demand. IT
stocks will be in focus with a private report stating that the US Citizenship
and Immigration Services' (USCIS), the department in charge of issuing the
coveted H-1B visas, will switch to a new system come April that could hurt the
Indian IT industry. There will be some reaction in banking stocks with report
that the government is unlikely to announce capital infusion for the public
sector banks (PSBs) in the upcoming Budget and will rather encourage them to
expedite recovery of bad loans and raise funds from the market.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
12,226.65
|
12,190.13
|
12,264.38
|
BSE Sensex
|
41,464.61
|
41,330.13
|
41,617.63
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
948.28
|
47.10
|
46.55
|
47.95
|
Tata Motors
|
475.73
|
191.10
|
188.35
|
194.75
|
ONGC
|
313.82
|
128.45
|
126.53
|
131.88
|
ZEEL
|
230.62
|
273.70
|
267.67
|
284.37
|
SBI
|
218.53
|
333.70
|
331.15
|
337.10
|
Bharti Airtel has launched its high speed 4G and 2G services in 26 villages in Ladakh.
SBI is looking to sell its non-performing loans for Rs 1,554.87 crore to banks, asset reconstruction companies and other financial institutions.
ONGC has secured all the blocks on offer in the fourth round of Open Acreage Licensing Policy.
Wipro 3D, the additive manufacturing arm of Wipro, has tied up with Hindustan Aeronautics, to design, develop, test, manufacture, and repair of aerospace components using metal additive technology.