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NSE Intra-day chart (24 January 2018)
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Market Commentary 25 January 2018
Markets to make a cautious start of the F&O expiry session

Indian equity benchmarks managed to end the extremely volatile day of trade with modest gains on Wednesday, with frontline gauges holding their crucial 11,050 (nifty) and 36,100 (Sensex) levels. Markets altered between green and red throughout the session and somehow managed to end with slender gains, as traders took some encouragement with former Niti Aayog vice chairman Arvind Panagariya's statement that India has the potential to achieve 10% growth rate, but it needs major reforms in areas in labour laws and land acquisition. He said Indian economy grew 7.5% in the first three years of the Narandra Modi government, but two major reforms - demonetisation and goods and services tax - brought the growth rate down a little. Some support also came with Prime Minister Narendra Modi showcasing India's growth story to world leaders and called out for tackling the three major challenges the world faces currently - climate change, terrorism and threat to globalisation. Meanwhile, expressing confidence about the economy's potential, Finance Minister Arun Jaitley hoped that it would become the third largest economy over the next 25 years. He said, We have moved from the seventh to the fifth largest economy. Unquestionably in the next 25 years India would perhaps be the largest economy. However, gains remained capped as traders remained mostly on sidelines ahead of January derivatives expiry on Thursday and ahead of the Union Budget next week. Traders also remained concerned with global rating agency, S&P ratings' latest report -- APAC Economic Snapshots, January 2018 -- which stated that overall economic risks in India remain low, but risks from higher oil prices have reappeared. International oil prices have been rising which has also led to increased prices of petrol and diesel and a majority of India's import bill stem from crude oil purchases. Finally, the BSE Sensex gained 21.66 points or 0.06% to 36,161.64, while the CNX Nifty was up by 2.30 points or 0.02% to 11,086.00.

 

The US markets closed mostly lower on Wednesday, as technology names came under pressure, but the Dow managed to buck the trend to close higher on the back of a few blue-chip financial shares. All three equity benchmarks had set fresh all-time intraday highs near the start of trade but couldn't maintain altitude. Federal Reserve Board nominee Marvin Goodfriend defended his past focus on inflation, saying that while earlier warnings about runaway prices were absolutely proved wrong, it was the Fed's credibility in controlling inflation that has allowed unemployment to fall so low. On the economy front, business activity in the US private sector declined less than expected in January, as a strong start to the year in manufacturing helped offset the slowdown in services. In a report, market research group IHS Markit said that its composite Purchasing Managers' Index (PMI), covering both the manufacturing and services sectors, fell to 53.8 in January, from the prior reading of 54.1. By sectors, the research group said that its flash services PMI unexpectedly dropped to 53.3 in January, from the prior month's reading of 53.7. The Nasdaq lost 45.23 points or 0.61 percent to 7,415.06, the S&P 500 edged lower by 1.59 points or 0.06 percent to 2,837.54, while the Dow Jones Industrial Average gained 41.31 points or 0.16 percent to 26,252.12.

 

Extending its northward journey, Crude oil futures settled at 3-year high, supported by a weak U.S. dollar. Treasury Secretary Steven Mnuchin, at the World Economic Forum in Davos, said a weaker greenback is good for us as it related to trade and opportunities. The buck dropped to its lowest in 3 years and could weaken further. Moreover, decline in U.S. oil inventories too supported upmove of the Crude oil prices. The U.S. commercial crude stockpiles fell by 1.1 million barrels in the week through January 19. That put total inventories at 411.6 million barrels, the lowest since February 2015. The report was further evidence that production limits by OPEC, Russia and several other oil-producing nations are achieving their goal of shrinking stockpiles in developed countries. Benchmark crude oil futures for February delivery gained by $1.14 or 1.80% at $65.61 a barrel on the New York Mercantile Exchange. Brent crude for March delivery was up by 59 cents or 0.8% to $70.55 a barrel on the ICE.

 

Maintaining its upbeat trend for the second-straight session, Indian rupee ended higher against US dollar on Wednesday, on the back of fresh selling of the US dollar by exporters. Investors took support with Niti Aayog's former vice chairman Arvind Panagariya's statement that India is headed to become the world's fifth largest economy and it has the potential to achieve 10% growth rate. Some support also came with Finance Minister Arun Jaitley expressing confidence about the Indian economy's potential, he said India will be one of the three largest economies in the world over the next 25 years. Moreover, weakness in the dollar against other currencies overseas too made the rupee stronger. Though, lackluster trade in the equity markets limited further appreciation of Indian currency. On the global front, dollar slid to three-year lows against a basket of major peers on Wednesday on worries about the protectionist agenda expected to be pursued by US President Donald Trump in a speech later this week. Finally, the rupee ended at 63.69, 9 paise stronger from its previous close of 63.78 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 8416.66 crore against gross selling of Rs 5935.20 crore, while in the debt segment, the gross purchase was of Rs 2721.13 crore with gross sales of Rs 1079.94 crore. Besides, in the hybrid segment, there was no buying against gross selling of Rs 11.17 crore.

 

The US markets ended mixed on Wednesday after report showing a bigger than expected pullback in existing home sales in the month of December. The bigger than expected decrease came after existing home sales jumped to highest rate in nearly eleven years in November. Asian markets have a mixed start following the mixed cues overnight from Wall Street. Japanese market edged lower, as a stronger yen weighed on shares of exporters. Indian shares extended recent gains to close at fresh record highs on Wednesday, although overall gains remained marginal ahead of the January derivatives expiry. Today, the start of the F&O series expiry session is likely to be cautious and lots of volatility can be seen with the progress of the trade and as the traders balance their positions to the new series. Traders may get some support with private report stating that waning effects from the GST impact will help push the Indian GDP growth to 7 per cent in FY19. It can be noted that the International Monetary Fund has come out with an estimate of 7.4 per cent growth two days ago. The traders may took some note with report that the government is at the advanced stage of finalising anti-profiteering guidelines for judging parameters whereby benefits of reduced GST rates are passed on to the end consumer. Meanwhile, the Department of Industrial Policy and Promotion (DIPP) on Wednesday notified easing of FDI rules for several sectors, including single-brand retail and construction. Public sector banks (PSBs) may get some support with the government announcing Rs 881.39 billion capital infusion in 20 PSBs during the current fiscal, with IDBI Bank getting the most -- Rs 106.1 billion. Finance Minister Arun Jaitley said his ministry had undertaken a detailed exercise on the amount of capital to be infused into the PSBs. There will be lots of important earnings announcements to keep the market buzzing for the day. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11086.00

11051.40

11115.35

BSE Sensex

36161.64

36042.70

36274.38

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

SBI

380.71

329.90

320.20

335.60

Bharti Airtel

264.51

459.50

447.43

479.28

ITC

173.05

281.45

277.67

283.62

ONGC

161.32

210.85

208.57

212.57

ICICI Bank

128.15

352.75

349.97

357.37

 

  • Bajaj Auto has launched the 2018 version of its Avenger range in Cruise 220 and Street 220 variants priced at Rs 93,466.
  • Bharti Airtel has received an approval for the acquisition of Tigo Rwanda, a subsidiary of Millicom from the Rwanda Utilities Regulatory Authority.
  • TCS has entered into partnership with Mesosphere to help customers utilize data services and cloud platforms more efficiently.
  • Maruti Suzuki India's popular entry level Alto emerged as top-selling car of India in December.
News Analysis