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NSE Intra-day chart (22 February 2018)
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FII Activity(Rs. Cr)
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Market Commentary 23 February 2018
Markets to make positive start of the new F&O series

 

Indian equity markets truly depicted the choppiness of F&O expiry session and settled with marginal cut on Thursday. Markets started the session on pessimistic note as sentiments remained downbeat on report that the country's investment climate during April-December period of this fiscal looks subdued with declining figures in announcements of new projects and the number of projects under execution. The value of investment in new projects during April-December was Rs 4.43 trillion, less than half of Rs 9.21 trillion in the comparable period of last fiscal. Traders also remained concerned on report that minutes from the Reserve Bank of India's meeting this month showed monetary policy committee members expressing concerns about accelerating inflation, although that was also tempered by uncertainty about the strength of an economic recovery. Some concerns also came with US Department of Agriculture (USDA) Chief's statement that the recently announced rise in minimum support price of agri commodities by the government is not the best way to increase farmers' income. Sentiments also remained dampened on a private report stating that goods and services tax (GST) mop up has dropped yet again for the month of January. GST collection stands at around Rs 82,000 crore so far. That is a sharp decline from the December revenue figure of over Rs 86,000 crore. However, recovery in last leg of trade helped markets to pare most of their early losses to end with meager cut as traders took some solace with a report that India's Gross Domestic Product (GDP) growth in the third quarter of the current fiscal is likely to be in the range of 6.5-7 per cent and may expand further in following three months. The country's GDP grew by 6.3 per cent in July-September quarter of the fiscal, up from 5.7 per cent in the first quarter. Meanwhile, foreign direct investment (FDI) in the country grew by a meagre 0.27 per cent to $35.94 billion during the first 9 months of the current fiscal. The FDI inflows were $35.84 billion during the April-December period of last fiscal, 2016-17. Finally, the BSE Sensex slipped 25.36 points or 0.07% to 33,819.50, while the CNX Nifty was down by 14.75 points or 0.14% to 10,382.70.

 

The US markets closed mostly higher on Thursday, following upbeat data on the labor market which may have momentarily offset investor jitters over climbing inflation and rising bond yields. But stocks ended the session well off their intraday highs as financial and health-care shares slid into negative territory in the afternoon. Even though investors are betting on an improving economy, they are demonstrating a heightened sensitivity to the prospect of accelerated inflation, rising interest rates, and higher bond yields ever since a recent reading on wages showed its fastest growth in years. On the economy front, US jobless claims fell by 7,000 to 222,000 in the seven days ended February 17, marking the second lowest level since the end of the 2007-2009 recession. The more stable monthly average of claims declined by 2,250 and stood at 226,000. The number of people already collecting unemployment benefits, known as continuing claims, dropped by 73,000 to 1.88 million. After falling for years, initial jobless claims are now down to levels last seen in the early 1970s. Most firms continue to hire and the unemployment rate is at a 17-year low. The Dow Jones Industrial Average added 164.7 points or 0.66 percent to 24,962.48, S&P 500 gained 2.63 points or 0.10 percent to 2,703.96, while Nasdaq was down by 8.142 points or 0.11 percent to 7,210.09.

 

Resuming northward journey after a day of halt, Crude oil futures rallied on Thursday, supported by data showing a surprise draw in U.S. crude inventories and also by a drop in the dollar. U.S. crude inventories USOILC=ECI unexpectedly fell 1.6 million barrels last week as net imports dropped to a record low and exports surged, while inventories declined further at the key storage hub in Cushing, Oklahoma. Crude inventories had been forecast to rise 1.8 million barrels, as stocks seasonally increase when refineries cut intake to conduct maintenance. Benchmark crude oil futures for March delivery surged $1.09 or 1.8 percent at $62.77 a barrel on the New York Mercantile Exchange. April Brent crude gained 97 cents or 1.5 percent to settle at $66.39a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably weaker against the US dollar on Thursday, on the back of consistent demand for the greenback from state-run banks and importers. Sentiments remained down-beat on report that the country's investment climate during April-December period of this fiscal looks subdued with declining figures in announcements of new projects and the number of projects under execution. The value of investment in new projects during April-December was Rs 4.43 trillion, less than half of Rs 9.21 trillion in the comparable period of last fiscal. The rupee sentiment was also hit with a report indicating that minutes from the Reserve Bank of India's meeting this month showed monetary policy committee members expressing concerns about accelerating inflation, although that was also tempered by uncertainty about the strength of an economic recovery. Besides, the dollar rose against major world currencies after US Federal Reserve minutes hinted at hiking interest rates faster than expectations, also impacted the rupee sentiment. Finally, the rupee ended at 65.03, 26 paise weaker from its previous close of 64.77 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity and debt segments both, in equity segment, the gross buying was of Rs 5874.14 crore against gross sell of Rs 7094.89 crore, while in the debt segment, the gross purchase was of Rs 806.39 crore with gross sales of Rs 1699.10 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.14 crore against gross selling of Rs 1.13 crore.

 

The US markets ended mostly in green on Thursday, with traders took some support with Labor Department unexpectedly showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended February 17th. Asian markets were trading mostly in green as comments from a US Federal Reserve official eased worries that the central bank might raise rates more aggressively this year. Indian equity markets closed marginally lower on Thursday as the minutes of the RBI's latest policy meeting showed increased concern among members on inflationary risks. Today, the start is likely to be on positive side following firm regional cues. Traders may get some encouragement with Niti Aayog Vice Chairman Rajiv Kumar's statement that India will emerge as a model for the rest of the world once it completes economic, political and social transitions. He highlighted India's development process, outlined country's experiences since Independence and laid out a future vision for achieving a New India by 2022. Some support will also come with CRISIL's report stating that asset quality of microfinance institutions (MFI), including small finance banks, has come out of the impact of demonetisation and stabilised since June 2017. The report added that asset quality has improved, as evidenced by reducing portfolio delinquencies and cumulative collection efficiencies have risen to over 99 percent for disbursements since April 2017. However, there will be some concern with private report stating that the growth in India has slowed due to the effects of its structural economic reforms. India's demonetisation of large-denomination notes in November 2016 invalidated 86 per cent of the cash in circulation in an economy where more than 90 per cent of transactions were cash-based. There will be buzz in banking related stocks with Fitch rating stating that the RBI's new norms for overhauling the mechanism to deal with bad loans is aimed at speeding up the NPA resolution, but would undermine the banking sector earnings in the near-term.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,382.70

10,349.72

10,406.62

BSE Sensex

33,819.50

33,717.70

33,895.02

 

Nifty Top volumes


Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

SBI

255.84

272.60

270.17

274.32

ICICI Bank 

255.31

318.35

315.10

320.45

ITC 

191.19

267.10

265.37

268.92

Vedanta 

172.54

328.65

323.58

332.13

Yes Bank

147.87

316.10

310.53

319.28

 

  • Mahindra and Mahindra has acquired minority stake, 22.9 percent, in Carnot Technologies.
  • Sun Pharmaceutical Industries' US arm - Sun Pharmaceutical Industries Inc is recalling over 17.5 thousand bottles of antihistamine Azelastine HCI nasal solution from the US market. 
  • Wipro has decided to invest Rs 220 crore for setting up personal care products plant in Telangana.
  • Bajaj Auto has launched the new Avenger Street 180 cruiser in India.
News Analysis