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NSE Intra-day chart (09 May 2019)
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Market Commentary 10 May 2019
Markets to make a cautious start ahead of looming US tariff hike

 

Bears continued to dominate Dalal Street for seventh straight session on Thursday, with the Sensex and the Nifty closing below their crucial psychological levels of 37,600 and 11,350, respectively. The start of day was sluggish, as the Reserve Bank of India warned of the growing risks to fiscal consolidation of the states as their finances are saddled with farm loan waivers, income support schemes and the Ujwal Discom Assurance Yojana (UDAY) bonds for their power distribution companies. Adding more worries among traders, Former Finance Minister P Chidambaram said that macro-economic indicators confirm that the Indian economy has entered a disastrous phase of slowdown. He further said the Finance Ministry's report is a damning indictment of the state of the economy in the country. The street took a note of the statistics ministry's statement that an official committee will examine the NSS technical report on services sector enterprises, which has raised questions over the GDP data. Key equity benchmarks settled the trading session in red terrain but staged some recovery in the last hour of the trade, supported by IHS Markit's statement that the Reserve Bank of India (RBI) is likely to cut interest rates one more time in June before rising inflation pressures and elevated fiscal deficits leave little room for further accommodation in rest of the year. RBI had cut interest rate by 25 basis points each in February and April to boost economic growth. Markets participants also got some relief with Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Ramesh Abhishek's statement that India is hoping to further improve its rank in World Bank's Doing Business report this year especially in indicators of paying taxes, insolvency resolution, trading across borders, issue of building permits and starting a business. Finally, the BSE Sensex slipped 230.22 points or 0.61% to 37,558.91, while the CNX Nifty was down by 57.65 points or 0.51% to 11,301.80. 

 

The US markets ended lower on Thursday as trade tensions ramped up after US President Donald Trump threatened tariff retaliation on China, which he claims broke the deal. Anxiety over the prospect of a deepening trade dispute between the US and China has weighed on stock markets all week. Those fears were compounded Wednesday when the president accused the Chinese of negotiating in bad faith and reneging on commitments made in previous rounds of negotiation. The White House has threatened to raise tariffs on $200 billion in annual Chinese exports to the US to 25% from the current 10% on Friday. However, downside remained capped after Trump said a trade deal with China is still possible. Trump indicated he has set a midnight deadline to reach a trade agreement, calling raising tariffs an excellent alternative. On the economic front, the Commerce Department released a report showing the US trade deficit widened in the month of March. The report said the trade deficit widened to $50.0 billion in March from a revised $49.3 billion in February. Street had expected the deficit to widen to $50.2 billion. The wider trade deficit came as the value of imports surged up by 1.1 percent to $262.0 billion compared to a 1.0 percent jump in the value of exports to $212.0 billion. The Labor Department also released a report showing producer prices increased in line with Street estimates in the month of April. The report said producer price index for final demand rose by 0.2 percent in April after climbing by 0.6 percent in March. The uptick in prices matched expectations. Besides, a separate Labor Department report showed first-time claims for US unemployment benefits pulled back by less than expected in the week ended May 4th. The Labor Department said initial jobless claims dipped to 228,000, a decrease of 2,000 from the previous week's unrevised level of 230,000. Street had expected jobless claims to drop to 220,000. Dow Jones Industrial Average dropped 138.97 points or 0.54 percent to 25828.36, Nasdaq declined 32.73 points or 0.41 percent to 7910.59 and S&P 500 was down by 8.70 points or 0.30 percent to 2870.72.

 

Crude oil futures ended lower on Thursday as hopes for a US-China trade deal faded. Meanwhile, crude-oil production by OPEC edged up by 30,000 barrels a day in April to 30.26 million barrels a day. However, Brent crude ended marginally higher as traders continue to keep watch on growing tensions between the US and Iran, which raises the threat of disruptions to Middle East output. Besides, US natural-gas supplies generally rose as expected last week. The Energy Information Administration (EIA) reported that domestic supplies of natural gas climbed by 85 billion cubic feet for the week ended May 3. Benchmark crude oil futures for June declined 42 cents or 0.7 percent to settle at $61.70 a barrel on the New York Mercantile Exchange. However, July Brent crude added 2 cents or 0.3 percent to settle at $70.33 a barrel on London's Intercontinental Exchange.

 

Indian rupee continued to slip for the second consecutive session against the US dollar on Thursday on increased demand for the greenback from importers and banks. Traders remain worried with Former Finance Minister P Chidambaram said that macro-economic indicators confirm that the Indian economy has entered a disastrous phase of slowdown. He further said the Finance Ministry's report is a damning indictment of the state of the economy in the country. The weak trade in the local equity market also adversely impacted local forex trade. Traders failed to get relief with Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Ramesh Abhishek's statement that India is hoping to further improve its rank in World Bank's Doing Business report this year especially in indicators of paying taxes, insolvency resolution, trading across borders, issue of building permits and starting a business. On the global front, Japanese yen surged to a 3-month high against the dollar on Thursday as investors piled into the safe-haven currency fearing that the U.S.-China trade conflict could escalate. Finally, the rupee ended at 69.94, 23 paise weaker from its previous close of 69.71 on Wednesday.

 

The FIIs as per Thursday'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 4997.39 crore against gross selling of Rs 5765.11 crore, while in the debt segment, the gross purchase was of Rs 1592.81 crore with gross sales of Rs 696.19 crore. Besides, in the hybrid segment, the gross buying was of Rs 34.61 crore against gross selling of Rs 28.59 crore.

 

The US markets ended lower on Thursday amid renewed trade concerns following tough talk from Trump ahead of two days of US-China trade talks in Washington. Asian market traded mostly higher in early deals on Friday despite increased US tariffs on Chinese goods that were due to kick in later today. Falling for the seventh consecutive session, Indian equity markets ended lower on Thursday amid escalating trade tensions between the US and China.  Today, the start is likely to remain cautious as investors wait to see if US President Donald Trump hikes tariff on Chinese imports. Investors will be looking ahead to macroeconomic data such as Index of Industrial Production (IIP) to be announced after the market hours. However, some support may come later in day with Corporate Affairs Secretary Injeti Srinivas stating that the corporate affairs ministry maintains a fairly reliable database that is not a black box. He emphasized that it is up to statistical authorities to decide on which data is representative for GDP calculation. Against the backdrop of concerns over data used for calculating GDP numbers, he said that the ministry's MCA 21 portal is a trust-based system as the information reported there are company disclosures. Meanwhile, India has sought greater access for agricultural and animal husbandry products in Chinese market to boost exports and bridge trade deficit with the neighbouring country. Traders may take note of a report that the 15th Finance Commission will reconcile data from various public sources to come up with its own conclusion of a reliable economic data. The real estate stocks will keep buzzing on report that the GST Council extended by 10 days till May 20 the deadline for realtors to opt for old GST rates with input tax credit for ongoing projects or shift to new lower tax rates. The GST Council had in March allowed real estate players to shift to 5 per cent GST rate for residential units and 1 per cent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019.  There will be some buzz in the Tea stocks on private report that India's tea exports to Pakistan are expected to increase to 20-25 million kg in 2019 from 15.83 million kg in the previous year.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,301.80

11,252.03

11,354.58

BSE Sensex

37,558.91

37,382.72

37,757.78

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

886.54

170.30

160.73

175.63

ZEEL

371.72

357.90

341.58

368.43

Tata Motors

328.42

186.35

182.50

190.00

ICICI Bank

197.40

381.40

377.40

385.55

Reliance Industries

195.07

1,256.45

1,242.53

1,279.58

 

  • JSW Steel has reported Crude Steel production at 13.93 lakh tonnes for April 2019, registering a rise of 2% over corresponding month of previous year.
  •  Maruti Suzuki India has reported 9.6% fall in its production to 147,669 vehicles in April 2019, as compared to 163,368 vehicles in April 2018.
  •  Titan Company has reported a rise of 14.42% in its consolidated net profit at Rs 348.30 crore for Q4FY19 as compared to Rs 304.41 crore for Q4FY18.
  •  L&T has bought shares worth about Rs 368 crore of Mindtree through open market transactions.
News Analysis