Equity benchmarks saw sluggish
trading session on Friday, with Sensex and Nifty closing lower by over half a
percent each. The start of the day was positive, aided by the International
Monetary Fund's (IMF) statement that the country has been one of the fastest
growing large economies in the world, with growth averaging about 7% over the
past five years. IMF said important reforms have been implemented and it feel
that more reforms are needed to sustain this high growth, including to harness
the demographic dividend opportunity, which India has. Some support also came
with report that Finance Minister Arun Jaitley has made a case for setting up
GST Council-like federal institutions to promote healthcare, rural development
and agriculture sectors by optimally utilising resources of the centre and
states. He said agriculture, rural development and healthcare is one area where
the central government spends a lot of money on supporting farmers, creating
infrastructure and building health centres for poor population. But, bourses
failed to hold gaining momentum and turned negative in noon deals, as Fitch
Ratings in its Global Economic Outlook lowered India's Gross domestic product
(GDP) growth forecast to 6.8% for fiscal year 2020 from 7% estimated earlier, on the back of
weaker than expected momentum in the economy. Some anxiety also came in with a
report that India expressed concern over the widening trade deficit with China
which has ballooned to over $58 billion, with the country's new envoy saying
that addressing the issue would be his top priority. Sentiments also remained
downbeat with a private report that the liquidity crisis in the non-banking
finance companies (NBFC) space triggered by the default of infrastructure
ending major IL&FS last September is continuing to have an impact on mutual
fund (MF) deployments in the sector. The overall exposure of debt MFs to NBFCs
stood at Rs 2.2 lakh crore in February, a drop of Rs 45,386 crore since July
2018 when the liquidity stress first emerged. Finally, the BSE Sensex lost
222.14 points or 0.58% to 38,164.61, while the CNX Nifty was down by 64.15
points or 0.56% to 11,456.90.
The US markets ended lower on
Friday on account of profit booking after yesterday's strong upward move. Lingering uncertainty about trade talks
between the US and China weighed on the markets ahead of another round of
high-level negotiations next week. Beside, traders also continued to digest the
Federal Reserve's dovish monetary policy announcement earlier in the week. The
Fed's decision to move away from plans to continue raising interest rates this
year has been described by some participants as an effort to keep the stock
markets afloat amid an expected contraction in first quarter earnings. The
central bank has also been accused of bending to pressure from President Donald
Trump, who has claimed US economic growth would be even stronger if the Fed had
not raised rates last year. Adding to the concerns about the outlook for the
economy, the yield on the benchmark ten-year note fell below the yield on the
three-month bond, which is seen by many as a reliable harbinger of a recession.
On the economic front, wholesale inventories in the US increased by much more
than anticipated in the month of January, according to a report released by the
Commerce Department. The report said wholesale inventories surged up by 1.2
percent in January after jumping by 1.1 percent in December. The bigger than expected
increase in wholesale inventories was partly due to a 1.6 percent spike in
inventories of non-durable goods, which followed a 0.1 percent uptick in
December. The Commerce Department said inventories of durable goods also
climbed by 0.9 percent in January after surging up by 1.7 percent in December.
Meanwhile, after reporting existing home sales at their lowest level in over
three years in the previous month, the National Association of Realtors (NAR)
released a report showing a substantial rebound in existing home sales in the
month of February. Dow Jones Industrial Average plunged 460.19 points or 1.77
percent to 25502.32, S&P 500 declined 54.17 points or 1.90 percent to
2800.71 and Nasdaq was down by 196.29 points or 2.50 percent to 7642.67.
Crude oil futures ended lower on
Friday on concerns about global energy demand. However, US prices managed to
tally a gain for the week, their third in a row, as OPEC output cuts and US
sanctions on Venezuela and Iran look to further tighten supplies. Meanwhile, it
is also possible that less crude oil and oil products will reach the world
market from Russia in the near future. The Russian government decided that
companies will have to sell a certain amount of gasoline and diesel on the
domestic market in order to obtain an export permit. This is intended to
prevent domestic fuel prices rising too sharply as a result of higher crude oil
prices. Benchmark crude oil futures for May declined 94 cents or 1.6 percent to
settle at $59.04 a barrel on the New York Mercantile Exchange. May Brent crude
dropped 83 cents or 1.2 percent to settle at $67.03 a barrel on London's
Intercontinental Exchange.
Erasing
all of the initial gains, Indian rupee ended weaker against dollar on Friday,
on emergence of demand for the greenback from importers. Traders turned
cautious as Fitch Ratings in its Global Economic Outlook lowered India's Gross
domestic product (GDP) growth forecast to 6.8% for fiscal year 2020 from 7% estimated earlier, on the back of
weaker than expected momentum in the economy. Anxiety also persisted with a
report that India expressed concern over the widening trade deficit with China
which has ballooned to over $58 billion, with the country's new envoy saying
that addressing the issue would be his top priority. Losses in domestic equity
markets too weighed on the domestic unit. On the global front, dollar dropped
on Friday, giving up some of its overnight gains and on track for a second
consecutive weekly dip thanks to renewed downward pressure on government bond
yields. Finally, the rupee ended at 68.95, 12 paise weaker from its previous
close of 68.83 on Wednesday.
The FIIs as per Friday's data
were net buyers in equity and debt segments both. In equity segment, the gross
buying was of Rs 7433.57 crore against gross selling of Rs 6082.62 crore, while
in the debt segment, the gross purchase was of Rs 3572.33 crore with gross sales
of Rs 1790.72 crore. Besides, in the hybrid segment, the gross buying was of Rs
0.65 crore against gross selling of Rs 0.25 crore.
The US markets ended sharply
lower on Friday after a US recession indicator blinked red and a report on
German manufacturing raised concerns about Europe's most important economy.
Asian markets are trading in red on Monday as investors fled to the safety of
bonds as on growing worries about an impending US recession, sending global
yields plunging. Indian markets ended Friday's trading session in red territory
as investors booked profits from recent gains. Today, the markets are likely to
make a gap-down opening of the F&O series expiry week tailing the weak
global cues amid growing concerns about an impending US recession. There will
be some cautiousness on the domestic front ahead of the fiscal deficit and
infrastructure output data for the month of February are slated for a release
later in the week. However, some support may come later in the day with the
Reserve Bank of India (RBI) report showing that India's foreign exchange
reserves surged by a whopping $3.602 billion to $405.638 billion in the week to
March 15, driven by rise in foreign currency assets. Traders may also reacting
to the Employees' Provident Fund Organisation (EPFO) data showed that net
employment generation in the formal sector touched a 17-month high of 8.96 lakh
in January. The addition in January was 131% higher as compared with 3.87 lakh
EPFO subscribers added in the year-ago month. Meanwhile, the Government said it
has exceeded its disinvestment target for the current fiscal by Rs 5,000 crore
and the proceeds have touched Rs 85,000 crore. The government has mopped up Rs
9,500 crore from the fifth tranche of CPSE ETF and Rs 14,500 crore from the
REC-PFC deal. There will be some buzz in the banking sector stocks with report
that the RBI has deferred the implementation of the new accounting norms, Ind
AS, indefinitely, as necessary amendments to the relevant law are yet to be
made. The move will bring huge relief to the banks which are yet to recognise
stressed assets and make necessary provisions as that would require higher
capital. There will be some reaction in housing finance companies (HFCs) stocks
with ICRA's report that the liquidity crisis has crimped credit growth for HFCs
and is unlikely to improve much in FY20, even as the weak external environment
will put a pressure on asset quality.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,456.90
|
11,403.37
|
11,541.62
|
BSE Sensex
|
38,164.61
|
37,981.08
|
38,456.43
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
NTPC
|
537.80
|
134.65
|
130.83
|
137.33
|
Yes Bank
|
340.19
|
252.60
|
249.47
|
256.62
|
IOC
|
310.12
|
157.05
|
154.35
|
160.50
|
ONGC
|
267.51
|
152.35
|
149.38
|
154.38
|
SBI
|
178.66
|
298.05
|
294.53
|
303.98
|
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Bharti Airtel has added 1.03 lakh lakh subscribers in January 2019.
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