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NSE Intra-day chart (13 September 2017)
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Market Commentary 14 September 2017
Markets to make a positive start on firm global cues

Selling in last hour of trade forced markets to end mixed on Wednesday, as traders remained on sidelines ahead of Wholesale Price Index (WPI) data slated to be released tomorrow. Though, markets traded in fine fettle for most part of the day's trade with traders getting support from report that Index of Industrial Production (IIP) or factory output for the month of July 2017 stood at 1.2% compared to negative 0.1% in June 2017 and 5.2% in the similar month of the previous year. Markets extended gains to hit intraday high in noon deals with Sensex extending its gains to surpass its crucial 32,300 level with investors taking note of the joint report by ASSOCHAM-EY, which highlighted that if India has to maintain a sustained gross domestic product (GDP) growth of 9-10 per cent per annum, it is crucial that the manufacturing sector grows steadily at 14-15 per cent per annum over the next three decades. However, markets took U-turn from that levels and ended mixed, as traders opted to book profit at higher levels amid report that India Inc's foreign direct investment (FDI) dropped 14.82 per cent to $1339.26 million during August 2017 from $1572.23 million in the same month of last year. Investors also maintained a cautious approach with the report that the Consumer Price Index (CPI)-based inflation surged to five-month high in August, mainly due to an increase in foods prices and higher services costs, indicating Goods and Services Tax's (GST's) inflationary impact. Separately, a private report based on the latest annual earnings, showed that India's corporate debt rose to a seven-year high at the end of March. More than a fifth of large companies did not earn enough to pay interest on their loans and the pace of new loans fell to the lowest in more than six decades. Finally, the BSE Sensex gained 27.75 points or 0.09% to 32,186.41, however the CNX Nifty was down by 13.75 points or 0.14% to 10,079.30.

 

The US markets closed higher on Wednesday, with all three major stock indices closed at a record for a second straight session, though trade remained subdued as investors searched for catalysts that could breathe new life into the rally. According to a study released, US President Donald Trump and Republicans in Congress would have a hard time slashing the corporate tax rate to below 26 percent, even if they eliminated nearly every business tax preference. Republicans have vowed to slash business tax rates, saying it would boost economic growth and help create jobs. On the economy front, US inflation at the wholesale level rebounded toward the end of summer, but most of the increase reflected higher gasoline prices. The producer price index rose 0.2% last month. A nearly 10% jump in the cost of gas accounted for most of the increase in wholesale inflation last month. The Dow Jones Industrial Average added 39.32 points or 0.18 percent to 22,158.18, the Nasdaq edged higher by 5.91 points or 0.09 percent to 6,460.19, and the S&P 500 gained 1.89 points or 0.08 percent to 2,498.37.

 

Crude oil futures continued its northward journey to hit monthly highs on Wednesday after government data showed a massive drop in gasoline stockpiles. Demand for crude oil is likely to rise in the coming weeks, as refineries are looking to cover-up the shortfall caused by Hurricanes Harvey and Irma. Meanwhile, Crude inventories rose 5.9 million barrels, compared with analysts' expectations for an increase of 3 million barrels. However, gasoline stocks fell 8.4 million barrels, the largest draw on record. Oil prices were also lifted with world's energy watchdog saying that global oil supplies fell in August for the first time in four months. Global output was down by 720,000 barrels a day last month from July, to 97.7 million barrels a day. Benchmark crude oil futures for October delivery rose $1.07 or 2.2% to settle at $49.30 a barrel on the New York Mercantile Exchange. Brent crude for October delivery rose 88 cents or 1.6% to $55.15 a barrel on the ICE.

 

Indian rupee ended marginally higher against dollar on Wednesday, as banks and exporters continued to sell the US currency amid persistent capital inflows. Traders took some support with report that Index of Industrial Production (IIP) or factory output for the month of July 2017 stood at 1.2% compared to negative 0.1% in June 2017 and 5.2% in the similar month of the previous year. Moreover, dollar weakness against other currencies overseas, too lent support to rupee. However, gains were limited as investors maintained a cautious approach with the report that the Consumer Price Index (CPI)-based inflation surged to five-month high in August, mainly due to an increase in foods prices and higher services costs, indicating Goods and Services Tax's (GST's) inflationary impact. On the global front, dollar steadied on Wednesday, with investors expecting another quiet day for the currency ahead of key inflation data due on Thursday that will be closely watched by the US Federal Reserve as it considers when to raise interest rates. Finally, the rupee ended at 63.99, 5 paise stronger from its previous close of 64.04 on Tuesday.

 

The FIIs as per Wednesday'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 4015.30 crore against gross selling of Rs 5248.29 crore, while in the debt segment, the gross purchase was of Rs 628.99 crore with gross sales of Rs 617.99 crore.

 

The US markets ended marginally higher, reaching new record closing highs. The gains remained capped as traders expressed some uncertainty about the near-term outlook for the markets following recent strength. The Asian markets have made an optimistic start taking cues from the US markets which closed marginally in green. However, gains remained capped as investors remained on sidelines ahead of China's retail sales, industrial production and fixed asset investments numbers. The Indian equity markets ended mixed in last session after the release of dismal industrial output and retail inflation data. Today, the start is likely to be mildly in green tailing positive global cues, though traders will be eyeing Wholesale Price Index (WPI) data to be released later in the day. Traders may get some support with private report stating that India's GDP growth is expected to be around 7.1 per cent this fiscal following a likely pick up in industrial production as firms resort to restocking post GST especially ahead of festive season. However, traders may remain cautious on report that India has been placed at a low 103 rank, the lowest among BRICS economies, on the WEF's Global Human Capital Index, which has been topped by Norway. India also ranks among the lowest in the world when it comes to the employment gender gap. There will be some buzz in the chemical and fertilizers stocks, as the government has imposed an antidumping duty of up to $60.35 per tonne for five years on a chemical used in fertiliser industry from four countries -- Russia, Indonesia, Georgia and Iran. The move would help guard domestic players from below- cost imports of ammonium nitrate from these countries. The companies engaged in development of road and infra too will be buzzing on ICRA's report that Government's focus on developing roads with policy initiatives like awarding projects after securing 80 per cent right of way, has revived the sector and execution pace.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10079.30

10050.98

10119.78

BSE Sensex

32186.41

32092.69

32314.22

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

Tata Power

314.85

84.80

83.30

86.50

Bank of Baroda

154.67

143.80

141.63

145.93

Reliance Industries

134.30

849.00

827.37

865.27

ITC

121.26

271.50

269.13

275.68

Sun Pharma

114.40

503.35

485.33

515.93

 

  • Infosys is planning open its North Carolina Technology and Innovation Hub in Raleigh. This innovation Hub is expected to hire 2,000 American workers by 2021.
  • Dr. Reddy's Laboratories' wholly owned subsidiary - Aurigene Discovery Technologies, is planning to initiate a Phase 2 trial of CA-170, a PDL1-VISTA inhibitor to be conducted at sites in India.
  • NTPC will complete the takeover of the first phase of Chhabra Thermal Power Plant from Rajasthan government and the deal for the 1,000 MW will be sealed in a month or two
  • Wipro has joined Hyperledger to design and develop open source-based blockchain solutions for enterprise-grade blockchain deployments.  
News Analysis