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NSE Intra-day chart (15 November 2017)
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Market Commentary 16 November 2017
Markets likely to make a flat-to-green start on positive regional cues


Extending losing streak for third straight day, Indian equity benchmarks ended the dismal day of trade with a cut of over half a percent on Wednesday. Sentiments remained downbeat since morning as markets after a negative start never looked confidant and extended their southward journey to end below their crucial 32,800 (Sensex) and 10,150 (Nifty) levels. Traders remained concerned with trade deficit widening to its highest in nearly three years in October, as export growth contracted for the first time after more than a year. The trade deficit widened to $14.02 billion last month from $8.98 billion in September. Merchandise exports for October fell 1.12 percent from a year earlier to $23.1 billion, dropping for the first time since August 2016. Market participants paid no heed on Central Board of Direct Taxes' statement that it was not only confident that the Income Tax (IT) department would achieve Rs 9.80 lakh crore target of direct tax revenue collections for the financial year 2017-18, but that it would surpass it. Traders failed to get any sense of relief with private report stating that the decision to lower goods and services tax (GST) rates on over 200 items could help pull down retail inflation by 20 basis points from the current levels driven by lower food and beverage prices. Investors also failed to get any solace with report that private equity (PE) investors announced transactions of $16.40 billion for January- October, a 55% jump over the year-ago period, driven by big-ticket deals. For October alone, the deal value read $1.6 billion. Besides, Finance Minister Arun Jaitley's statement that India is set to become an ‘extremely attractive' country to do business, with greater digitisation and formalisation of financial activities and businesses, failed to provide any respite to the equity markets. Finally, the BSE Sensex declined 181.43 points or 0.55% to 32,760.44, while the CNX Nifty was down by 68.55 points or 0.67% to 10,118.05.

 

The US markets closed lower on Wednesday, with both the Dow and the S&P 500 suffering their biggest one-day percentage drops since September as falling oil prices and worries over the progress of a US tax overhaul left investors increasingly averse to putting more money into assets seen as risky. The session marked the first time in 50 sessions that the S&P fell at least 0.5% in a single trading day, putting an end to its longest such streak since 1968. The concerns over the progress of tax-cut legislation in Washington were lingering. The Senate Finance Committee unveiled major changes to its tax legislation late Tuesday, including a repeal of the Obamacare individual mandate. Uncertainty over the issue grew after Republican Sen. Ron Johnson said he wouldn't vote for the plan, putting its odds of passing into further question. On the economy front, retail sales slowed in October after a sharp gain in the prior month. Sales rose 0.2% in October. Sales rose a revised 1.9% in September, up from the prior estimate of a 1.6% gain, boosted by post-hurricane spending. Excluding autos, sales rose 0.1% after a 1.2% gain in September. Sales excluding autos and gasoline climbed 0.3% after being up 0.6% in the prior month. Separately, the consumer price index rose 0.1% in October, held down by falling energy prices. The Dow Jones Industrial Average lost 138.19 points or 0.59 percent to 23,271.28, the Nasdaq dropped 31.664 points or 0.47 percent to 6,706.21, and the S&P 500 edged lower by 14.25 points or 0.55 percent to 2,564.62.

 

Crude oil futures continued their weakness and slid to their fresh two week low on Wednesday after government data showed a more modest build in U.S. oil stockpiles and as Russia is said to be less than convinced that OPEC should extend output curbs in a meeting this month. There were reports that the Russian government has yet to reach a consensus with the nation's oil companies on extending the deal. Meanwhile, the Energy Information Administration (EIA) said domestic inventories rose by about 1 million barrels. Crude exports rose by 260,000 barrels a day, while inventories at the key Cushing, Oklahoma, pipeline hub fell by 1.5 million barrels. Benchmark crude oil futures for December delivery ended lower by $0.37 or 0.7 percent at $ 55.33 a barrel on the New York Mercantile Exchange. Brent crude for January delivery was down by $ 0.34 to $61.87 a barrel on the ICE.

 

Indian rupee strengthened against US dollar on Wednesday, on increased selling of the American currency by exporters and banks. Sentiments remained up-beat with private report stating that the decision to lower goods and services tax (GST) rates on over 200 items could help pull down retail inflation by 20 basis points from the current levels driven by lower food and beverage prices. Investors overlooked data showing that trade deficit widened to its highest in nearly three years in October, as export growth contracted for the first time after more than a year. The trade deficit widened to $14.02 billion and merchandise exports for October fell 1.12%. The domestic unit also found support from dollar weakened overseas. On the global front, dollar slipped against basket of the other major currencies on Wednesday, as investors remained cautious ahead of the release of October consumer inflation data from the United States later in the day that could provide hints on the Federal Reserve`s monetary tightening policy. Finally, the rupee ended at 65.22, 20 paise stronger from its previous close of 65.42 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 8083.35 crore against gross selling of Rs 5402.41 crore, while in the debt segment, the gross purchase was of Rs 925.62 crore with gross sales of Rs 727.34 crore.

 

The US markets continuing their bearish trend ended sharply lower in the last session, the weakness was on the heels of the decline seen by stocks overseas amid concerns about the global economy. Uncertainty about Republican lawmakers' ability to come together and pass tax reform legislation also weighed. The Asian markets are showing some recovery and many of them have got a decent positive opening after a four-day drop. The Indian markets extended their decline in last session led by sharp fall in commodity prices and some disappointing earnings, also weighed down by widening trade deficit to an almost three-year high. Today, the start is likely to be slightly in green tailing the positive regional cues and hopes for further rationalization of Goods and Services Tax (GST), as Chief economic adviser (CEA) Arvind Subramanian has hinted at further rationalisation of the five-tier goods and services tax (GST) structure and said the GST Council's decision last week to prune substantially the list of items under the highest rate bracket won't affect the Centre's fiscal position much. Also, Finance Minister Arun Jaitley has said that with greater digitisation and formalisation of financial activities and businesses, India is set to become an "extremely attractive" country to do business. He, however, acknowledged short-term challenges for the country in implementing strategic initiatives such as demonetisation and the GST. There will be some buzz in the export oriented stocks, as the GSTN utility for exporters to claim refunds has been activated. With the new utility RFD-1A, a merchant exporter can claim refund of GST paid at the time of buying goods which he has exported in the relevant month. The auto stocks too will remain buzzing with Centre's announcement of the introduction of BS-VI grade automobile fuel in the national capital Delhi being advanced by two years to April 2018.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10118.05

10082.88

10164.33

BSE Sensex

32760.44

32647.71

32909.06

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

SBI

173.90

324.95

321.08

329.98

ITC

170.12

253.30

250.02

256.97

ICICI Bank

144.08

315.50

312.23

319.18

Yes Bank

130.49

300.95

295.77

305.97

Hindalco

98.87

251.85

246.93

258.23

  • HDFC has raised Rs 1,300 crore from World Bank-arm IFC through an issue of masala bonds.
  • M&M has unveiled updated version of its SUV Scorpio with price starting at Rs. 9.97 lakh.
  • TCS has expanded long-standing partnership with Rolls Royce in order to exploit future data innovation opportunities.
  • Tata Motors' subsidiary -- JLR has started locally assembly of its popular SUV, the F-Pace, from its Pune plant and priced it Rs 8.4 lakh lower than the CBU model.
News Analysis