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NSE Intra-day chart (20 September 2019)
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Market Commentary 23 September 2019
Benchmarks likely to open in green on Monday

                                          

Indian equity benchmarks cheered corporate tax cut announcement on Friday's trading session, with the Sensex and the Nifty garnering huge gains of 5.32% each. Key indices made a flat start of the day, as the Organisation for Economic Co-operation and Development (OECD) slashed India's gross domestic product (GDP) growth forecast by 1.3 percentage points to 5.9 per cent for 2019-20 from 7.2 per cent projected earlier. However, bourses soon gained traction, after the government cut corporate tax rate to 22% to revive investment. The government also decided to not levy enhanced surcharge introduced in Budget on capital gains arising from the sale of equity shares in a company liable for securities transaction tax (STT). Equity benchmarks hold their strong gains till the end of the day, aided with Commerce minister Piyush Goyal's statement that he hopes the tax relief measures announced by the government for the corporates will give the necessary fillip to growth that has been sputtering for long. Besides, Union Home Minister Amit Shah said the Modi government is committed in making India a big manufacturing hub and the slashing of corporate tax rates would make the country's markets much more exciting for potential investors. Some support also came with report that Reserve Bank governor Shaktikanta Das exuded confidence that second-quarter GDP numbers will be better than the previous one as the government has started spending again. Finally, the BSE Sensex gained 1921.15 points or 5.32% to 38,014.62, while the CNX Nifty was up by 569.40 points or 5.32% to 11,274.20.

 

The US markets wipeout all of their early gains and ended lower on Friday amid report that Chinese trade negotiators canceled a scheduled visit to US farm states next week. The Chinese delegation was in Washington this week for deputy-level trade talks and had been scheduled to visit American farms next week as a gesture of goodwill. However, the Montana Farm Bureau revealed that the visit has been canceled, as the delegation is heading back to China sooner than expected. The news offset some of the recent optimism about a potential end to the US-China trade war, with the deputy-level talks expected to help pave the way for more productive high-level talks next month. Comments from President Donald Trump indicating he is not interested in a partial deal with China also dashed hopes of a possible interim deal. Trump also said he doesn't think he needs to reach a trade deal with China before the 2020 elections, claiming the US is not being affected by the trade war. Uncertainty about the outlook for interest also weighed on stocks, with Boston Federal Reserve President Eric Rosengren arguing that it is not necessary and potentially risky for the central bank to continue lowering rates. Rosengren noted in a speech at the Stern School of Business at New York University that the US economy has held up well in the face of trade-related impediments. Dow Jones Industrial Average slipped 159.72 points or 0.59 percent to 26,935.07, Nasdaq fell 65.21 points or 65.21 percent to 8,117.67 and S&P 500 was down by 14.72 points or 0.49 percent to 2,992.07.

 

Crude oil futures ended slightly lower on Friday as traders weighed the impact of last week's attack on Saudi oil infrastructure and the likely scenario of lower energy demand due to the ongoing trade dispute between the US and China. Besides, According to a report from Baker Hughes, the US oil rig count declined for a fifth straight week, with the number of active rigs falling by 14 to 719 this week. The total rig count dropped to 868, down 18 from previous week. Benchmark crude oil futures for October declined 4 cents or 0.07 percent to settle at $58.09 a barrel on the New York Mercantile Exchange. November Brent fell 12 cents or 0.2 percent to settle at $64.28 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended significantly higher against dollar on Friday, on persistent selling of the American currency by exporters. Sentiments were also buoyed after Finance Minister Nirmala Sitharaman announced several measures to promote investment and growth. Additional support also came with Reserve Bank governor Shaktikanta Das exuding confidence that second-quarter GDP numbers will be better than the previous one as the government has started spending again. A spectacular relief rally in local equities also supported the forex sentiment. On the global front, dollar nursed losses against most major currencies on Friday, as central banks in Switzerland and the UK refrained from following the Federal Reserve in cutting rates, while risk appetite ebbed on caution about US-China trade talks. Finally, the rupee ended at 70.94, 40 paise stronger from its previous close of 71.34 on Thursday.

 

The FIIs as per Friday'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 2523.30 crore against gross selling of Rs 3268.08 crore, while in the debt segment, the gross purchase was of Rs 1656.21 crore with gross sales of Rs 1364.02 crore. Besides, in the hybrid segment, the gross buying was of Rs 34.96 crore against gross selling of Rs 33.88 crore.

 

The US markets ended in red on Friday as Chinese trade officials canceled a planned visit to the US, sparking fears that Thursday's trade negotiations may not have brought the two countries closer to striking a deal. Asian markets are trading mostly lower on Monday as investors watch for developments on the US-China trade front. Indian markets ended at record highs on Friday with Sensex and Nifty gaining over 5% each after the government announced deep cuts in corporate taxes to revive flagging India's economic growth. Today, the start of the crucial F&O series expiry week is likely to be in green as traders continue to take support with report that corporate tax rate cuts rekindle hopes of a revival in demand and growth as well as earnings boost. Traders will be taking encouragement as Reserve Bank governor Shaktikanta Das exuded confidence that second-quarter GDP numbers will be better than the previous one as the government has started spending again. Some support will also come with Finance Minister Nirmala Sitharaman's statement that India has become a highly competitive investment destination post corporate tax reduction as the rates are now lower than that in China and most Southeast Asian countries. Traders may take note of a private report that the credit from banks must grow by 12% every year to meet the Centre's target to achieve a $5-trillion economy within the next five years and the step taken for mergers of the PSBs is in the right direction to meet the goal. However, some cautiousness may come with rating firm S&P Global's statement that India's move to cut corporate tax rates was a credit negative development despite potentially boosting the broader economy as it will widen its fiscal deficit. Investors may be also concerned with the RBI's data showing that the country's foreign exchange reserves declined by $649 million to $428.96 billion in the week to September 14, mainly on account of a drop in the value of foreign currency assets and gold holdings. Meanwhile, the all-powerful GST Council on Friday more than doubled the tax on caffeinated beverages to 40 per cent and slashed the rate on hotel room tariffs. Auto stocks will be in focus as Automobile industry body Society of Indian Automobile Manufacturers (SIAM) said the auto industry would have to find its own balance to boost demand, with the GST Council declining to cut rates for the sector. There will be some reaction in insurance stocks with Irdai data showing that India's non-life insurance companies registered a rise of 17% in their combined new premium collection at Rs 15,964 crore in August.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,274.20

10,849.50

11,540.40

BSE Sensex

38,014.62

36,607.57

38,899.85

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

3,983.47

55.50

52.17

59.37

Tata Motors

892.23

133.25

124.65

139.80

SBI

844.82

301.70

277.52

316.77

ICICI Bank

752.18

417.50

394.77

432.12

ITC

635.68

238.05

232.07

246.27

 

  • TCS has launched the official mobile app for TCS Lidingoloppet, which will be held in Stockholm on September 27-29. 
  • ZEE5, a video on demand website run by Zee Entertainment Enterprises, has partnered with OnePlus for its upcoming OnePlus TV. 
  • L&T is planning to create more technology jobs in New Jersey, US to help global enterprises achieve their digital transformation goals. 
  • Morgan Credits, part of the Promoter Group of Yes Bank, has sold 2.3% shareholding in the Bank.
News Analysis