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NSE Intra-day chart (20 June 2019)
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Market Commentary 21 June 2019
Markets to make a cautious start amid mixed cues from Asian peers

 

Indian equity benchmarks bounced back to end the trading session near their intraday high points on Thursday. The markets made a negative start of day, amid reports that the United States has told India it is considering caps on H-1B work visas for nations that force foreign companies to store data locally. The US government plan to cap H-1B visas issued each year to Indians at between 10% and 15% of the annual quota. There is no current country-specific limit on the 85,000 H-1B work visas granted each year and an estimated 70% go to Indians. But, key indices soon staged recovery, taking encouragement with Commerce and Industry Minister Piyush Goyals' statement that the government will not allow foreign companies to operate in multi-brand segment and necessary action will be taken against people indulging in predatory pricing. Bourses extended their gains in the second half of the session, tracking firm global markets. Domestic sentiments remained positive as Central Board of Indirect Taxes and Customs (CBIC) informed that all genuine exporters will continue to get their Indirect Goods and Services Tax (IGST) refunds in a timely manner in a fully automated environment. Traders also took encouragement with President Ram Nath Kovind's statement that the government will soon announce a new industrial policy aimed at promoting the growth of industries and creation of jobs. The street overlooked report that DBS Bank revised India's GDP growth for fiscal year 2020 downwards to 6.8 per cent year-on-year (YoY) from 7 per cent projected earlier, citing headwinds for exports amidst challenging trade outlook. Finally, the BSE Sensex rose 488.89 points or 1.25% to 39,601.63, while the CNX Nifty was up by 140.30 points or 1.20% to 11,831.75.

 

The US markets ended higher with gains of around one percent on Thursday as traders continued to react positively to the Federal Reserve's monetary policy announcement on Wednesday. The Fed left interest rates unchanged as widely expected but signaled that the next change in interest rates is likely to be a rate cut. The FedWatch Tool currently indicates a 65.7 percent chance for a 25 basis point rate cut and a 34.3 percent chance for a 50 basis point rate cut.  Traders are likely to closely watch incoming economic data in the weeks leading up to the meeting for clues about the potential for lower rates. On the economic front, Labor Department released a report showing a modest decrease in first-time claims for US unemployment benefits in the week ended June 15. The report said initial jobless claims dipped to 216,000, a decrease of 6,000 from the previous week's unrevised level of 222,000. Street had expected jobless claims to edge down to 220,000. A separate report from the Philadelphia Federal Reserve showed regional manufacturing activity was nearly stagnant in the month of June. The Philly Fed said its index for current general activity tumbled to 0.3 in June from 16.6 in May. While a positive reading still indicates growth in regional manufacturing activity, Street had expected the index to slip to 11.0. With the much bigger than expected decrease, the Philly Fed Index fell to its lowest level since turning negative in February. The steep drop by the headline index came as the shipments index plunged to 16.6 in June from 27.6 in May, while the new orders index slid to 8.3 from 11.0. The report said the number of employees index also dropped to 15.4 in June from 18.2 in May, indicating a slowdown in the pace of job growth. On the inflation front, the prices received index plunged to 0.6 in June from 17.5 in May and the prices paid index slumped to 12.9 from 23.1. Dow Jones Industrial Average surged 249.17 points or 0.94 percent to 26753.17, Nasdaq rose 64.02 points or 0.80 percent to 8051.34 and S&P 500 was up by 27.72 points or 0.95 percent to 2954.18.

 

Crude oil futures ended higher on Thursday with oil prices scoring their highest settlement this month and posting their biggest one-day gain so far this year, after Iran shot down a US military drone, adding to fears of a deepening conflict and potential disruption to oil supplies. Besides, the Energy Information Administration (EIA) reported that domestic supplies of natural gas rose by 115 billion cubic feet for the week ended June 14. The average forecast by S&P Global Platts had called for an increase of 104 billion cubic feet. Benchmark crude oil futures for July surged $2.89 or 5.4 percent to settle at $56.65 a barrel on the New York Mercantile Exchange. August Brent rose $2.63 or 4.3 percent to settle at $64.45 a barrel on London's Intercontinental Exchange.

 

Indian rupee gained ground against dollar and ended higher on Thursday, on persistent selling of the American currency by exporters. Sentiments remained up-beat with Commerce and Industry Minister Piyush Goyals' statement that the government will not allow foreign companies to operate in multi-brand segment and necessary action will be taken against people indulging in predatory pricing. Traders paid no heed towards DBS Bank revised India's GDP growth for fiscal year 2020 downwards to 6.8 per cent year-on-year (YoY) from 7 per cent projected earlier, citing headwinds for exports amidst challenging trade outlook. Besides, weakness in the dollar against some other currencies overseas along with good going in the local equity markets gave the uptrend some momentum. On the global front, dollar fell on Thursday, skidding to a six-month low versus the yen, after the U.S. Federal Reserve signaled it was ready to lower interest rates to combat growing domestic and global risks. Finally, the rupee ended at 69.44, 24 paise stronger from its previous close of 69.68 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 4562.85 crore against gross selling of Rs 4585.43 crore, while in the debt segment, the gross purchase was of Rs 2959.14 crore with gross sales of Rs 2155.10 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.06 crore against gross selling of Rs 8.51 crore.

 

The US markets ended higher on Thursday as traders continued to react positively to the Federal Reserve's monetary policy announcement on June 19. Asian markets are trading mixed on Friday over US-China trade tensions and rise in crude oil prices. Indian markets rallied on Thursday, with Sensex and Nifty gaining over a percent each, driven by gains in banking, healthcare and auto stocks, amid strong cues from the global markets. Today, the markets are likely to make a cautious start amid mixed cues from Asian peers as well as higher crude oil prices. Investors will be eyeing the Goods and Services Tax (GST) Council meeting later in the day. Finance Minister Nirmala Sitharaman will chair her first meeting of the GST Council which, among other things, would consider extending the tenure of the anti-profiteering authority by a year, setting up a single point refund system and a mechanism for businesses to issue e-invoices. The agenda of the meeting will also include integration of GST e-way bill system with NHAI's FASTag mechanism from April 1, 2020, to help track movement of goods and check GST evasion. There will be some cautiousness with the Reserve Bank of India's report that both bank credit and deposits slowed to 9.92 percent and 12.31 percent at Rs 96.52 lakh crore and Rs 125.40 lakh crore, respectively, for the fortnight ending June 7. Also, the RBI's minutes of the monetary policy meeting showed that the Indian economy has been clearly losing traction and needs a decisive monetary policy to promote growth. However, traders may take note of the State Department's statement that the Trump administration has no plans to cap H-1B work visas for nations that force foreign companies to store data locally. Meanwhile, the RBI said the currency trading platform for retail trading is ready for roll-out by the Clearing Corporation of India (CCIL) on August 5 to enable transparent and fair pricing for retail users, such as individuals and micro, small and medium enterprises. There will be some buzz in infrastructure stocks with report that terming infrastructure as pivotal in propelling prosperity and growth, President Ram Nath Kovind said the government's endeavour is to build 35,000 km of highways, besides expressways, by 2022 and to lay a strong foundation for urban infrastructure that will encourage employment generation.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,831.75

11,696.70

11,905.15

BSE Sensex

39,601.63

39,144.06

39,848.92

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,593.93

114.55

103.53

120.73

Indiabulls Housing Finance

308.08

599.75

567.37

619.57

ICICI Bank

243.16

433.40

423.38

439.03

SBIN

206.27

345.15

338.42

349.07

Tata Motors

192.48

159.25

154.27

162.12

 

  • Wipro Gallagher Solutions, a Wipro company and a leading provider of loan origination software solutions, has released the latest update of NetOxygen Launchpad. 
  • NTPC has participated in the 750 MW tender floated by Solar Energy Corporation of India for Rajasthan. 
  • Tech Mahindra has signed a multi-year contract with Airbus for Cabin and Cargo design engineering. 
  • IndusInd Bank has fixed July 4, 2019, as the effective date for merger with Bharat Financial Inclusion.
News Analysis