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Market Commentary 30 September 2019
Benchmarks to make a cautious start amid weak Asian cues

                                          

Weakness hit over Indian equity benchmarks on the last trading day of the week, with Sensex & Nifty closing lower by over 150 and 50 points, respectively. Markets made a negative start of the day, impacted with Fitch Ratings' statement that the steep cut in tax paid by companies may stimulate investments and economic growth only in the medium term, but it will lead to breach fiscal targets in the current fiscal itself. But soon, indices entered into green terrain, as Finance Minister Nirmala Sitharaman said that she is hoping the country's economy will start looking up in the second half of the current financial year as consumption rises and banks increase their lending operations. However, Indian markets failed to hold their heads above their neutral lines and remained lackluster for the whole day, after the Finmin report showed that total liabilities of the government increased to Rs 88.18 lakh crore at end-June 2019 from Rs 84.68 lakh crore at end-March 2019. According to the latest data, public debt accounted for 89.4 per cent of total outstanding liabilities at end-June 2019. The street paid no heed towards IHS Markit's report that the steepest ever cut in tax that companies pay will improve relative competitiveness of India and should help boost corporate investment over the medium-term. Finally, the BSE Sensex fell 167.17 points or 0.43% to 38,822.57, while the CNX Nifty was down by 58.80 points or 0.51% to 11,512.40.

 

Extending their previous session's losses, the US markets ended lower on Friday on reports that Trump administration officials are discussing ways to limit US investors' portfolio flows into China. The move will have repercussions for billions of dollars in investment pegged to major indexes. The reports reflect the ever-changing landscape of US-China relations that has kept traders reluctant to make significant bets. On the economic front, Consumer sentiment in the US rebounded by more than initially estimated in the month of September, according to a report released by the University of Michigan. The report said the consumer sentiment index for September was upwardly revised to 93.2 from the preliminary reading of 92.0. Besides, durable goods orders in the US unexpectedly showed a modest increase in the month of August, according to a report released by the Commerce Department. The Commerce Department said durable goods orders rose by 0.2 percent in August after jumping by 2.0 percent in July. The continued increase surprised participants, who had expected orders to slump by 1.0 percent. Meanwhile, a report released by the Commerce Department showed US personal income rose in line with street estimates in the month of August, although personal spending inched up by less than expected. The Commerce Department said personal income climbed by 0.4 percent in August after ticking up by 0.1 percent in July. Dow Jones Industrial Average fell 70.87 points or 0.26 percent to 26820.25, Nasdaq declined 91.03 points or 1.13 percent to 7939.63 and S&P 500 was down by 15.83 points or 0.53 percent to 2961.79.

 

Crude oil futures ended lower on Friday as news reports tied to Iran sanctions, a cease-fire between Saudi Arabia and Yemen, contributing to a loss of nearly 4% for the week. Oil prices also dropped on reports that Trump administration officials were discussing ways to limit the flow of US investors' portfolio flows into China, potentially raising trade tensions between the two nations that would hurt energy demand. Besides, traders took note of a report that the number of active oil rigs in the US declined to 860, the lowest level in nearly 30 months. The number of active US rigs drilling for oil fell for a sixth straight week, down by six to 713 this week. Benchmark crude oil futures for November dropped 50 cents or 0.9 percent to settle at $55.91 a barrel on the New York Mercantile Exchange. November Brent fell 83 cents or 1.3 percent to settle at $61.91 a barrel on London's Intercontinental Exchange.

 

Continuing strong recovery momentum for the second day, Indian rupee ended higher against US dollar on Friday, on dollar selling by exporters and banks. The rupee sentiment was buoyed with report that Union Finance Minister Nirmala hoped the economy will start looking up in the second half of the current financial year as consumption rises and banks increase their lending operations. Traders also found some support with IHS Markit's report that the steepest ever cut in tax that companies pay will improve relative competitiveness of India and should help boost corporate investment over the medium-term. On the global front, euro held at its lowest level in more than two years on Friday as quarter-end rebalancing flows boosted demand for the dollar, with investors unfazed by the latest political news out of the United States. Finally, the rupee ended at 70.56, 32 paise stronger from its previous close of 70.88 on Thursday.

 

The FIIs as per Friday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 17987.58 crore against gross selling of Rs 6857.25 crore, while in the debt segment, the gross purchase was of Rs 2351.83 crore with gross sales of Rs 3809.93 crore. Besides, in the hybrid segment, the gross buying was of Rs 40.26 crore against gross selling of Rs 40.71 crore.

 

The US markets ended in red on Friday amid report that Trump administration officials are discussing ways to limit US investors' portfolio flows into China. Asian markets are trading mixed on Monday as investors await the release of the China Purchasing Managers' Index expected later in the day. Indian markets ended lower on Friday with losses of around half a percent each on account of selling pressure in metal, pharma and auto stocks. Today, the start of new week is likely to be cautious amid mixed Asian cues and ahead of the Reserve Bank of India's (RBI) monetary policy decision later this week. The RBI is likely to cut the key policy rate again, the fifth in row, to complement the government's measures like reducing corporate tax and promoting credit offtake to spur economic activity during the festive season amid range-bound inflation. There will be some cautiousness with the RBI's data showing that India's forex reserves declined by $388 million to $428.572 billion for the week ended September 20 due to a slide in core currency and gold assets. In the week to September 20, foreign currency assets, a major component of overall reserves declined by $125 million to $396.670 billion. Though, some support may come later in the day with Union road transport minister Nitin Gadkari stating that using bio-fuels can reduce crude oil imports which will help save foreign exchange on one hand also achieve the $5-trillion GDP goal by 2025. Some support may also come with report that after remaining net sellers for the past two months, foreign investors infused a net Rs 7,714 crore into the domestic capital markets in September following a slew of economic reforms by the government. Traders may take note of report that the government will soon constitute a working group on the proposed new industrial policy which is aimed at promoting emerging sectors, reducing regulatory hurdles and making India a manufacturing hub. Besides, in a boost to Prime Minister Narendra Modi's ambitious target of India breaking into top 50 nations on the World Bank's ease of doing business ranking, the country has figured among the 20 countries that have improved the most on the list. Auto stocks will be in focus with report that the much-awaited vehicle scrappage policy that has gone for a Cabinet approval is likely to see stringent registration and fitness norms for pre-2005 manufactured vehicles. Investors will also be eyeing release of September sales data of auto companies. There will be some reaction in consumer durable industry stocks with report that the consumer durable industry hopes to have double-digit growth during the festive season sales, despite concerns of economic slowdown. Meanwhile, Indian Railway Catering and Tourism Corporation (IRCTC), the online ticketing, tourism and the catering arm of railways, is scheduled to launch its initial public offering (IPO) today. The price band has been fixed between Rs 315-320 apiece. Minimum lot size is 40 shares.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,512.40

11,476.90

11,570.75

BSE Sensex

38,822.57

38,700.99

39,025.76

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

3,068.68

48.75

47.13

51.63

Tata Motors

458.76

119.90

117.92

122.17

SBI

378.52

281.20

278.78

284.83

ZEEL

270.27

273.55

266.90

284.95

ICICI Bank

194.33

449.20

444.38

452.93

 

  • Tata Motors' wholly owned subsidiary -- JLR is all set to launch half a dozen electrified models in India over next 12-18 months. 
  • M&M's subsidiary -- Gromax Agri Equipment has launched new deluxe variant of tractors - Trakstar DLX in Madhya Pradesh. 
  • Wipro's subsidiary -- WIN Automation Business has launched industrial automation and factory automation solutions specifically for the tyre industry. 
  • NTPC is all set to start commercial operation of Unit-1 of 800 MW of Lara Super Thermal Power Station with effective from September 30, 2019.
News Analysis