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NSE Intra-day chart (08 January 2020)
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Market Commentary 09 January 2020
Benchmarks to make gap-up opening on firm global cues

 

Indian equity bourses ended Wednesday's trade on lower note. The start of the day was in deep red, as National Statistical Office in its First Advance Estimates of National Income, 2019-20, stated that India's GDP growth is expected to fall to an 11-year low of 5% in the current fiscal year, as compared to the growth rate of 6.8% in 2018-19, mainly due to poor showing by manufacturing and construction sectors. Losses got intensified in noon deals, amid a report that company boards are operating under increased political and regulatory pressure to improve their governance standards, and the resultant risk averseness is a prime reason for the growth slowdown. However, in the last leg of the trading session, key benchmarks managed to stage recovery to settle the day marginally lower, taking support with Finance minister Nirmala Sitharaman's statement that the government is taking various steps to simplify the taxation system and eliminate harassment of honest taxpayers. Market participants took a note of Union Minister of Commerce and Industry Piyush Goyal's statement that the Micro, Small and Medium Enterprises (MSME) sector has better adaptability to cater to the export market due to its smaller size and can adapt to market change sooner. Finally, the BSE Sensex lost 51.73 points or 0.13% to 40817.74, while the CNX Nifty was down by 27.60 points or 0.23% to 12025.35.

 

The US markets ended higher on Wednesday following remarks by President Trump, who responded to Tuesday night's attacks by Iran by minimizing their importance, saying that no US casualties were sustained and that only minimal damage was done to US military facilities in Iraq. The President did say that he was imposing further economic sanctions on Iran, while stating categorically that As long as I am President of the United States, Iran will never be allowed to have a nuclear weapon. The markets also benefited from the release of a report from payroll processor ADP showing much stronger than expected private sector job growth in the month of December. ADP said private sector employment surged up by 202,000 jobs in December after climbing by a substantially upwardly revised 124,000 jobs in November. Street had expected employment to increase by about 160,000 jobs compared to the addition of 67,000 jobs originally reported for the previous month. The S&P set a new intraday record Wednesday, while the Nasdaq set both record intraday high and close. Besides, with a drop in revolving credit partly offsetting an increase in non-revolving credit, the Federal Reserve released a report showing US consumer credit rose by less than expected in the month of November. The Fed said consumer credit climbed by $12.5 billion in November after jumping by $18.9 billion in October. Non-revolving credit, such as student loans and car loans, surged up $14.9 billion in November following an $11.1 billion increase in October. Meanwhile, the report said revolving credit, which largely reflects credit card debt, fell by $2.4 billion in November after climbing by $7.9 billion in the previous month.

 

Crude oil futures ended lower with cut of over four and half percent on Wednesday as worries about US-Iran tensions eased a bit and official data showed an unexpected rise in US crude inventories. President Donald Trump delivered a statement responding to last night's attack by Iran, indicating the US would hit Iran with new sanctions but not respond militarily. Besides, the Energy Information Administration (EIA) said that US crude supplies edged up by 1.2 million barrels for the week ended January 3. That followed declines in each of the previous three weeks. S&P Global Platts had forecast a decrease of 3.7 million barrels, while the American Petroleum Institute on Tuesday reported a 5.95 million-barrel decline. Crude oil futures for February dropped $3.09 or 4.9 percent to settle at $59.61 a barrel on the New York Mercantile Exchange. March Brent fell $2.83 or 4.2 percent to settle at $65.44 a barrel on London's Intercontinental Exchange.

 

Erasing all of its initial losses, Indian rupee ended marginally higher against dollar on Wednesday on selling of dollars by banks and exporters. Traders took some support with the government data on national income showed that the country's per-capita monthly income is estimated to have risen by 6.8% to Rs 11,254 during 2019-20. Market participants also took note of Finance minister Nirmala Sitharaman's statement that the government is taking various steps to simplify the taxation system and eliminate harassment of honest taxpayers. However, gains remain capped as anxiety remained among the traders with the first advance estimates released by the Central Statistics Ministry showing that the government has estimated India's GDP growth during fiscal 2019-20 at 5% as compared to 6.8% in the year-ago period. On the global front, pound erased early gains on Wednesday as investors refocused their attention towards Brexit talks and a European Central Bank policymaker said Britain could crash out of the European Union without a deal in place by the end of 2020. Finally, the rupee ended at 71.70, 12 paise stronger from its previous close of 71.82 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 3881.46 crore against gross selling of Rs 4494.36 crore, while in the debt segment, the gross purchase was of Rs 2354.17 crore with gross sales of Rs 2916.33 crore. Besides in the hybrid segment, the gross buying was of Rs 76.15 crore against gross selling of Rs 101.41 crore.

 

The US markets settled higher on Wednesday after President Donald Trump said there were no American casualties in the Iranian missile strikes and that Tehran appeared to be standing down, sparking a relief rally in markets. All the Asian markets are trading in green on Thursday and oil beat a retreat, as the US and Iran backed away from the brink of further conflict in the Middle East and investors reversed their safety plays. Indian markets ended slightly lower on Wednesday as a retaliatory attack on US-led forces by Iran spurred another crude rally, stoking fears of rising inflation at one of the world's top oil importers. Today, benchmarks are likely to make gap-up opening tracking firm cues from global markets. Some support will come with the Industry body Ficci's statement that the government should infuse capital in the economy without worrying about the fiscal deficit target as the GDP growth is estimated to slip to 11-year low of 5 percent during 2019-20. Ficci President Sangita Reddy said the 5 per cent GDP growth estimate for the current financial year is on expected lines as the economic expansion in the first half of the year has been moderate. However, there may be some cautiousness as the World Bank has projected a 5 per cent growth rate for India in the 2019-2020 financial year, but said it was likely to recover to 5.8 per cent in the following financial year. Besides, State Bank of India's economic research department has cut its projection for gross domestic product (GDP) for FY20 to 4.6 per cent, based on current available trends, against 5 per cent projected earlier, even as it assessed that India could be now staring at a sub-6-per-cent growth for two successive years. Meanwhile, the cabinet committee on parliamentary affairs has recommended holding the Budget session in two phases from January 31 to April 3, with the Union Budget to be presented on February 1. Oil stocks will be in focus with Oil Minister Dharmendra Pradhan's statement that in only the second instance of the government directly funding a gas pipeline, the Cabinet Committee on Economic Affairs (CCEA) approved a Rs 5,559 crore viability gap funding for the proposed North-East gas grid. There will be some reaction in coal stocks with report that in a bid to attract investments and boost domestic coal production, the government has approved promulgation of an ordinance to open up coal mining in the country to non-coal companies while removing restrictions on end-use of the fuel.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,025.35

11,954.98

12,070.33

BSE Sensex

40,817.74

40,574.07

40,963.88

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,400.74

46.05

45.17

47.07

SBI

445.27

319.80

313.37

323.87

Tata Motors

218.63

182.55

180.43

184.43

Vedanta

180.95

157.35

153.80

159.55

ICICI Bank

160.94

525.95

518.18

530.53

 

  • Tata Steel's wholly-owned subsidiary -- T S Alloys has been issued with Letter of Intent by the Government of Odisha as the Successful Bidder for grant of mining lease for Saruabil block for chromite ore for 50 years. 
  • Eicher Motors' motorcycle arm -- Royal Enfield has unveiled the BS VI-compliant version of its model Classic 350, with price starting at Rs 165,000.
  • Maruti Suzuki has increased its production by 7.88 percent in December 2019.  
  • Bajaj Finance has launched Systematic Deposit plan-a monthly savings plan, for those looking to invest in Fixed Deposit through small monthly savings.
News Analysis