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NSE Intra-day chart (09 December 2019)
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Market Commentary 10 December 2019
Markets to open marginally in green on Tuesday

                                                                                              

Indian equity benchmarks ended the volatile day with marginal gains on Monday. After a cautious start, key indices traded volatile, as IHS Markit in its latest report stated that India's real GDP growth in 2019-20 fiscal is expected to be slightly below 5% as the impact of stimulus measures will take time to filter through to the economy. Adding more worries among market participants, Former Reserve Bank of India's (RBI) governor Raghuram Rajan said that India is in the midst of a growth recession with signs of deep malaise in the Indian economy that is being run through extreme centralisation of power in Prime Minister's Office and powerless ministers. Despite volatility, markets managed to keep their heads above their neutral lines for the most part of the session, aided by Finance Minister Nirmala Sitharaman's statement that the government is working on more measures to revive the sagging economy. Traders got some relief, after Chief Economic Adviser KV Subramanian said that private investment is key to economic growth and the recent cut in corporate tax rate was done to boost investments. Further, the street took a note of the RBI's data report stating that India Inc's foreign borrowings grew over two-fold to $3.41 billion in October over the corresponding month a year ago. Finally, the BSE Sensex gained 42.28 points or 0.10% to 40,487.43, while the CNX Nifty was up by 16 points or 0.13% to 11,937.50.

 

The US markets snapped 3-day winning streak and ended lower on Monday. Lingering uncertainty about US-China trade talks weighed on markets, as new 15 percent tariffs on $165 billion worth of Chinese imports are currently still set to take effect this coming Sunday. The new round of tariffs could throw a wrench into negotiations over a phase on trade deal, which is reportedly being held up in part by a dispute over how much to roll back existing tariffs. Rising tensions between the US and North Korea also led to some caution among traders after North Korea conducted a very important test at a long-range missile launch site. President Donald Trump warned North Korean leader Kim Jong Un risks losing everything if he acts in a hostile way, leading a North Korean official to describe the president as a heedless and erratic old man. However, overall trading activity remained somewhat subdued, with traders looking ahead to the Federal Reserve's monetary policy announcement on Wednesday. The Fed is widely expected to leave interest rates unchanged, although traders are still likely to pay close attention to the accompanying statement for clues about the outlook for rates. A lack of major US economic data also kept some traders on the sidelines ahead of the release of reports on retail sales and consumer and producer prices in the coming days.

 

Crude oil futures ended marginally lower on Monday on concerns over the outlook for energy demand after data showed another drop in Chinese exports and on uncertainty about the US and China signing a phase one deal before the commencement of the next round of tariff hikes. Besides, traders remained on sidelines ahead of the Federal Reserve's monetary policy statement, due on Wednesday. Traders were also looking ahead to the first policy meeting of new ECB President Christine Lagarde. Benchmark crude oil futures for January declined 18 cents or 0.3 percent to settle at $59.02 a barrel on the New York Mercantile Exchange. January Brent dropped 14 cents or 0.2 percent to settle at $64.25 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended stronger against dollar for the fourth straight day on Monday, on increased selling of the US currency by exporters and banks. Investors got support with Former Union minister Suresh Prabhu's statement that startups are going to play a vital role in making India a $5 trillion economy. He also said so, when we talk about $5 trillion economy, it will be largely from the startups. It is inevitably bound to happen all over the world, thankfully our prime minister realised it and had that vision to understand the changing economic scenario of the Indian economy. Dollar losing sheen against some other currencies overseas also supported the forex sentiment. However, gains remain capped as anxiety remained among the traders with IHS Markit in its latest report stating that India's real GDP growth in 2019-20 fiscal is expected to be slightly below 5% as the impact of stimulus measures will take time to filter through to the economy. On the global front, British pound hit 31-month highs against the euro on Monday and hit seven-month highs against the US dollar amid growing confidence about a Conservative Party victory in Thursday's U.K. elections, which would end political paralysis on Brexit. Finally, the rupee ended at 71.04, 15 paise stronger from its previous close of 71.20 on Friday.

 

The FIIs as per Monday'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 4515.34 crore against gross selling of Rs 4589.30 crore, while in the debt segment, the gross purchase was of Rs 1372.85 crore with gross sales of Rs 900.22 crore. Besides, in the hybrid segment, the gross buying was of Rs 17.41 crore against gross selling of Rs 11.59 crore.

 

The US markets ended in red on Monday as investors kept a close eye on trade negotiations ahead of Sunday's tariff deadline and policy updates from global central banks. Asian markets are trading mostly lower on Tuesday as investors refrained from making major bets before December 15, when the next round of US tariffs on Chinese imports is due to take effect. Indian markets ended a range-bound session marginally higher on Monday supported by buying in blue-chip stocks such as HDFC, Reliance Industries, Maruti Suzuki India, and Axis Bank. Today, the markets are likely to make flat-to-positive start. Some encouragement will come as Chief Economic Advisor KV Subramanian stated that the current slowdown in the Indian economy is more cyclical than structural in nature and the government has a well-thought-out agenda for reforms. He noted that the country's potential growth remains unaltered and things will improve soon. Some support will also come with the Indian envoy to the US' statement that India took only five years to move from a $2 trillion to $3 trillion economy, and he exuded confidence that the country would touch the $5 trillion mark in the coming years. Traders may take note of Commerce and Railways Minister Piyush Goyal's statement that after clarity over angel tax, simpler regulations and more funds could be in offing for startups. However, there may be some cautiousness with report that the Central GST collection fell short of the budged estimate by nearly 40 per cent during the April-November period of 2019-20. Traders may react to a private report indicating that India is expected to witness a marginal 7 per cent rise in job creation in the October-March period of this financial year, as subdued economic conditions have dampened employment outlook. There will be some buzz in the telecom stocks with CRISIL Ratings' report that a tariff uptick of upto 50% in the telcom sector may double the industry's operating revenue by next fiscal. The rating firm concluded that revised tariffs will improve the average revenue per user (ARPU)- a key industry metric and every Rs one increase in ARPU will add to Rs 1000 crore to industry's EBIDTA. Banking stocks will be in focus with Minister of State for Finance Anurag Singh Thakur's statement that public sector banks (PSBs) returned to profitability in 2019-20, posting an aggregate profit of Rs 3,221 crore in the first half ending September. There will be some reaction in insurance stocks with a report that life insurance companies saw a 37.2 percent Y-o-Y growth in their eight-month (April to November) period new premiums at Rs 1.69 lakh crore compared to a year ago.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,937.50

11,889.72

11,983.62

BSE Sensex

40,487.43

40,334.12

40,643.19

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

3,148.40

56.25

53.72

58.82

SBI

524.35

316.70

311.75

324.65

Maruti Suzuki India

14.80

6,994.75

6,928.73

7,084.38

Reliance Industries

57.80

1,572.60

1,553.60

1,584.50

HDFC

33.62

2,311.40

2,275.82

2,331.22

 

  • Maruti Suzuki India has increased its production by 4.33 percent in November. 
  • Bharti Airtel's promoter -- Bharti Telecom has sought government nod for the infusion of Rs 4,900 crore investment from Singapore-based Singtel and other foreign entities.  
  • Tata Motors' wholly owned subsidiary -- JLR has reported 3.4% fall in total sales at 46,542 units in November as compared with year-ago period.  
  • JSW Steel's crude steel production declined 7 percent to 12.90 lakh tonne during November 2019.
News Analysis