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NSE Intra-day chart (06 November 2019)
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Market Commentary 07 November 2019
Markets to get slightly positive start amid fall in crude oil prices

 

Indian equity markets resumed the gaining rally on Wednesday, with Sensex and Nifty ending higher by around 225 and 50 points, respectively. After a negative start, key indices remained lackluster during morning deals, amid a private report that the government may discontinue spending on 200-odd schemes in order to stick to its fiscal deficit target of 3.3 percent. Domestic sentiments remained pessimistic, as Fitch Solutions raised India's fiscal deficit forecast to 3.6 percent of the GDP for this fiscal year, from 3.4 percent previously, due to weak revenue collections resulting from sluggish economic growth and government's sweeping corporate tax rate cut. However, markets staged sharp recovery in noon deals to settle in positive terrain, aided with Finance Minister Nirmala Sitharaman's statement that the government will soon use its strong electoral mandate to usher in the next wave of reforms, and not to miss the bus this time. Traders took encouragement with Nasscom's statement that with the addition of more than 1,300 startups this year so far, India continues to reinforce its position as the third-largest startup ecosystem in the world. Adding comfort, Commerce and Industry Minister Piyush Goyal said that India's services sector has huge potential to generate job opportunities and push country's gross domestic product growth. Finally, the BSE Sensex gained 221.55 points or 0.55% to 40,469.78, while the CNX Nifty was up by 48.85 points or 0.41% to 11,966.05.

 

The US markets ended mostly lower on Wednesday after a report said a meeting between President Donald Trump and Chinese President Xi Jinping could be delayed until December. A senior Trump administration official said discussions continue over terms of phase one of the trade deal and a venue for a meeting between Trump and Xi. Sites in Europe and Asia have been suggested for the meeting, with Sweden and Switzerland among the possibilities, while Trump's suggestion of Iowa appears to have been ruled out. The official said China's latest push for more tariff rollbacks was not expected to derail progress toward an interim deal but noted that it was still possible an agreement would not be reached. Besides, the choppy trading on markets also came as traders seemed reluctant to make significant moves amid some uncertainty about the near-term outlook for the markets after the recent run to record highs. On the economic front, labor productivity in the US unexpectedly edged lower in the third quarter, according to preliminary data released by the Labor Department. The report said labor productivity dipped by 0.3 percent in the third quarter after spiking by an upwardly revised 2.5 percent in the second quarter. The drop in productivity came as a surprise to participants, who had expected productivity to climb by 0.9 percent compared to the 2.3 percent jump originally reported for the previous month. The unexpected decrease in productivity, a measure of output per hour, came as output climbed by 2.1 percent compared to a 2.4 percent increase in hours worked. Meanwhile, the Labor Department said unit labor costs soared by 3.6 percent in the third quarter after surging up by a downwardly revised 2.4 percent in the second quarter. Street had expected unit labor costs to increase by 2.2 percent compared to the 2.6 percent spike originally reported for the previous month.

 

Snapping a three-day winning streak, crude oil futures ended lower on Wednesday after US government data revealed that domestic crude supplies rose for a second week in a row. The Energy Information Administration (EIA) reported that US crude supplies climbed by 7.9 million barrels for the week ended November 1. Crude supplies were forecast to increase by 2.7 million barrels. The American Petroleum Institute on Tuesday reported a rise of roughly 4.3 million barrels. Benchmark crude oil futures for December dropped 88 cents or 1.5 percent to settle at $56.35 a barrel on the New York Mercantile Exchange. January Brent fell $1.22 or 1.9 percent to settle at $61.74 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended weaker against the US dollar on Wednesday, on the back of consistent demand for the greenback from state-run banks and importers. Sentiments remained down-beat as Fitch Solutions raised India's fiscal deficit forecast to 3.6 percent of the GDP for this fiscal year, from 3.4 percent previously, due to weak revenue collections resulting from sluggish economic growth and government's sweeping corporate tax rate cut. Market participants paid no heed towards Finance Minister Nirmala Sitharaman's statement that the government is eager to modify rules and boost investment in the infrastructure space. She also said the government is focusing on real estate as part of a broader plan to kick-start economic growth. On the global front, dollar held its ground against other major currencies on Wednesday, supported by rising hopes for a US-China trade deal and an improving outlook for the US economy. Finally, the rupee ended at 70.97, 28 paise weaker from its previous close of 70.69 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 5446.94 crore against gross selling of Rs 5047.95 crore, while in the debt segment, the gross purchase was of Rs 1969.89 crore with gross sales of Rs 1748.20 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.71 crore against gross selling of Rs 9.52 crore.

 

The US markets ended mixed on Wednesday as markets weighed a report that an interim China-US trade deal could be delayed until December and weakness in the energy sector underscored by disappointing corporate quarterly results. Asian markets are trading mostly in red on Thursday as reports of delays in sealing a preliminary Sino-US trade deal left investors frustrated at the lack of concrete progress. Indian markets ended higher on Wednesday, with Sensex settling at its new lifetime high of 40,469.78, led by robust gains in banking stocks. Today, the markets are likely to make flat-to-positive start amid fall in crude oil prices and an Rs 25,000 crore booster dose to the real estate sector announced by Finance Minister. Union Finance Minister Nirmala Sitharaman said the government has approved setting up of an Rs 25,000 crore bailout fund to finance 1,600 stalled housing projects as it looks to boost the economy by kick starting incomplete projects. She said the government will establish a special window to provide priority debt financing for completion of stalled housing projects in the affordable and middle-income housing sector. Some support may also come with Petroleum Minister Dharmendra Pradhan's statement that the government is on track to meet the target of cutting India's oil import dependence by 10 percent by 2020. Traders may take note of report that NITI Aayog Vice-Chairman Rajiv Kumar called for a review of regulations under the Essential Commodities Act to protect the interests of farmers and boost agriculture exports. Though, some cautiousness may come with weakness in global markets. Meanwhile, the International Monetary Fund said that the government needs to become more transparent on the fiscal numbers as it is a laggard among the G20 peers on this front. It added that the government has been missing its budgeted fiscal targets for the past few years and there is a need for a credible fiscal consolidation which is more ambitious as well. There will be some buzz in the infrastructure stocks with Crisil's report that road developers are looking at a massive plunge in their revenue growth to the tune of 50 percent during the current and next fiscals mainly due to the delays in awarding new projects. Metal stocks will be in focus with Union Minister Dharmendra Pradhan's statement that steel consumption in India is set for a quantum jump and investors should come forward and become a partner in the country's growth story.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,966.05

11,876.57

12,029.22

BSE Sensex

40,469.78

40,135.90

40,705.28

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

2,260.83

68.70

67.12

70.72

SBI

321.57

317.55

314.72

319.67

Tata Motors

289.24

174.50

171.22

177.07

ZEEL

284.83

285.80

277.73

298.88

ICICI Bank

249.23

480.70

469.00

488.15

 

  • Wipro has launched its Wipro RAPIDS DXP solution suite, addressing the digital experience and B2X market place requirements of Communication Service Providers. 
  • NTPC is working on electric vehicle charging infrastructure as ultimately mobility through EVs will help. 
  • Hero MotoCorp has presented a glimpse into the future of its premium motorcycle range at the EICMA 2019 in Milan. 
  • Sun Pharmaceutical Industries has entered into a licensing agreement with AstraZeneca UK to introduce certain novel ready-to-use infusion oncology products in China.
News Analysis