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NSE Intra-day chart (30 April 2018)
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Market Commentary 02 May 2018
Markets likely to start slightly in red on Wednesday

 

Extending northward journey for third straight session, Indian equity benchmarks ended the Monday's trade with a gain of around half a percent with frontline gauges recapturing their crucial 35,100 (Sensex) and 10,700 (Nifty) levels, as tensions in the Korean Peninsula eased after a spectacularly successful inter-Korean summit. Markets started the session on an optimistic note and traded in tight band throughout the session. Sentiments remained upbeat with Niti Aayog Vice Chairman Rajiv Kumar's statement that India's economy to grow by at least 7.5 per cent in 2018-19 on the back of improvement in investment cycle and capacity utilisation. The government should now concentrate on consolidating the reform initiatives undertaken in the last 47 months, he added. Traders also took some encouragement with report stating that the Reserve Bank of India (RBI) is withdrawing a restriction that limited foreign investors to only investing in government and corporate bonds with tenures of three years or more, a move that could bolster the domestic bond market. Some support came with Economic Affairs Secretary Subhash Chandra Garg's  statement that the process of economic reforms is still continuing in reasonably major way and noted that there are no signs of de-reform in the system. Meanwhile, Fitch has kept India's rating unchanged with a stable outlook, saying the rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still-difficult, but improving, business environment. Some optimism also came with report that the Centre has a surplus of Rs 20,000 crore in the GST cess fund as of March 31 which will be used to compensate the states for revenue shortfall suffered due to the roll out of the Goods and Services Tax. Finally, the BSE Sensex surged 190.66 points or 0.55% to 35,160.36, while the CNX Nifty was up by 47.05 points or 0.44% to 10,739.35.

 

The US markets closed mostly higher on Tuesday, as a sharp rally in technology stocks helped the S&P 500 and the Nasdaq shake off an early decline. However, the Dow fell for a third straight session as caution remained high ahead of the conclusion of a Federal Reserve policy meeting and fresh developments in global trade. The Federal Reserve began a two-day meeting Tuesday. When it wraps, the central bank is expected to leave interest rates on hold and signal no change to a tightening path of two more rate increases in 2018. Changes to Fed policy - in addition to interest rates, the US central bank is shrinking the size of its balance sheet - are widely seen as one of the biggest headwinds facing markets. The US tariffs on aluminum and steel imports were in focus again. President Donald Trump late Monday gave top allies - the European Union, Canada and Mexico - an extension to the tariff exemption to allow more time negotiate a new pact to avoid the levies. The tariffs of 25% on steel and 10% aluminum - already in effect against China, Russia, Japan and others - were slated to come into effect on May 1, but have now been pushed back to June 1. On the economy front, American manufacturers grew at a slower pace in April, hindered by the highest prices since 2011 for raw materials such as steel as well as supply and labor shortages. The Institute for Supply Management said its manufacturing index fell to 57.3% last month from 59.3% in December. The ISM's index for new orders was little changed at 61.2%, but production fell 3.8 points to 57.2% and the employment gauge slipped to 54.2% from 57.3%. The Nasdaq gained 64.438 points or 0.91 percent to 7,130.70, the S&P 500 was up by 6.75 points or 0.25 percent to 2,654.80, while the Dow Jones Industrial Average lost 64.1 points or 0.27 percent to 24,099.05.

 

Crude oil futures edged lower on Tuesday amid concerns about possible sanctions in Iran in the wake of complaints it continues to pursue nuclear weapons. Meanwhile, other Organization of the Petroleum Exporting Countries (OPEC) members are reducing output in order to offset the U.S. shale boom. The U.S. Energy Information Administration (EIA) reported on Monday that oil production rose to a record 10.264 million barrels a day in February. The EIA will issue its weekly figures on petroleum supply and production on May 2, 2018. There are expectations that the EIA will report a rise of 1.8 million barrels in crude stockpiles, along with supply declines of 1 million barrels for gasoline and 1.3 million barrels for distillates. Benchmark crude oil futures for June delivery dropped by $1.32 or 1.9 percent to settle at $67.25 a barrel on the New York Mercantile Exchange. July Brent crude declined $1.56 or 2.1 percent to settle at $73.13 a barrel on London's Intercontinental Exchange.

 

Rupee remain closed on April 30 and May 1 on account of holiday. Extending gains for the second straight day, Indian rupee ended stronger against the US dollar on Friday, on continued selling of the US currency by banks and exporters. Traders took some solace with a private report stating that India's economic growth will accelerate to 7.2% in the current fiscal buoyed by manufacturing activity even as rising oil prices and high government debt remain a challenge. The agriculture sector is expected to grow higher than the estimated 2.1% in the current fiscal year on account of positive prospects on Rabi harvest and a normal monsoon. Besides, good going in the local equity markets too supported the domestic unit. On the global front, dollar edged higher on Friday and is on track to post its best weekly performance in more than 1-1/2 years as a spike in US Treasury yields prompted some investors to unwind some short bets against the dollar, especially against some emerging market currencies. Finally, the rupee ended at 66.65, 10 paise stronger from its previous close of 66.75 on Thursday.

 

The FIIs as per Friday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 7368.22 crore against gross selling of Rs 7710.16 crore, while in the debt segment, the gross purchase was of Rs 852.05 crore with gross sales of Rs 3116.31 crore. Besides, in the hybrid segment, there was no buying and selling.

 

The US markets ended mostly in green on Tuesday after the Institute for Supply Management released a report showing growth in manufacturing activity slowed by more than anticipated in the month of April. Asian stocks are trading lower in early deals on Wednesday, after most overseas benchmarks saw little change the previous day. Indian stock markets edged higher on Monday as tensions in the Korean Peninsula faded after a spectacularly successful inter-Korean summit. Today, the markets are likely to make flat- to-negative start as investors looked ahead to a slew of U.S. data releases this week for hints on the interest rate outlook. Traders will react negatively on report that the eight core industries' output growth slowed to three-month low of 4.1 per cent in March, largely due to some base effect and contraction in crude oil production. The latest print was lower than the revised 5.4 per cent growth in February and 6.1 per cent in January. Also, the December 2017 print for core eight industries has been revised downwards to 3.8 per cent from 4.2 per cent projected earlier. However, markets may get some support later in the day on report that the government mopped up over Rs 1 trillion in GST collection in April, indicating stabilisation of the new indirect tax regime which was rolled out on July 1 last year. While Goods and Services Tax (GST) collection in entire 2017-18 stood Rs 7.41 trillion, in March the figure was Rs 892.6 billion. Traders will also get some support with Union Minister Suresh Prabu's statement that India, driven by a new industrial policy to be rolled out soon, will be the next engine of growth for the world. There will be some important earnings announcements too, to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,739.35

10,709.63

10,764.03

BSE Sensex

35,160.36

35,038.47

35,247.77

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

284.00

362.00

352.47

369.37

Axis Bank 

183.57

517.30

508.43

531.13

SBI

172.63

246.40

244.03

249.23

ICICI Bank

97.38

284.20

280.67

289.37

Reliance Industries

88.72

963.30

951.33

983.93

 

  • Wipro has expanded Wipro Science Education Fellowship Program to three additional universities in the United States. 
  • Sun Pharma CHC, a division of Sun Pharmaceutical Industries has entered into the anti-fungal powder OTC category with ABZORB. 
  • Kotak Mahindra Bank has reported rise of 27.41% in its net profit at Rs 1,789.24 crore for Q4FY18 as compared to Rs 1,404.34 crore for Q4FY17.  
  • HDFC has reported a rise of 28.64% in its net profit after taxes for Q4FY18 as compared to Rs 3,079.33 crore for Q4FY17.
News Analysis