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NSE Intra-day chart (29 May 2018)
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Market Commentary 30 May 2018
Markets likely to make negative start amid feeble global cues

 

Tuesday turned out to be a dismal day of trade for Indian equity benchmarks where frontline gauges ended the session below their crucial 10,650 (Nifty) and 35,000 (Sensex) levels, as traders opted to book profit after three days of continuous rally. Markets started the session on cautious note but gained traction with traders taking support from Economic Affairs Secretary Subhash Chandra Garg's statement that the Indian economy is expected to grow between 7.3-7.5 percent in the March quarter. The government will release GDP data on Thursday. He said the country was expected to grow at 6.7 percent in the 2017/18 financial year that ended in March. Adding to the optimism, the India Meteorological Department (IMD) said that the southwest monsoon hit Kerala today, three days before its scheduled arrival. The onset of monsoon over the southern state marks the commencement of the four-month long rainy season in the country. The IMD has made a forecast of normal rainfall this season. Some support also came with External Affairs Minister Sushma Swaraj's statement that her ministry's economic diplomacy attracted $209.83 billion for India's flagship development programmes. She also said that the External Affairs Ministry also created two new divisions for this - Department of Economic Diplomacy and Department of States - and merged both of them. However, selling which emerged in second half of the trade dragged markets below their respective crucial levels. Sentiments weakened with a private report stating that the June policy review meeting is likely to be a close call, while the tone of the policy statement is expected to remain hawkish. The markets participants paid no heed towards report that the Finance Ministry has clarified applicability of the Goods and Services Tax (GST) on farmers. It has said that support services like renting or leasing of land by farmers for agriculture, forestry, fishing or animal husbandry are exempt from the ambit of new indirect tax. Finally, the BSE Sensex declined 216.24 points or 0.61% to 34,949.24, while the CNX Nifty was down by 55.35 points or 0.52% to 10,633.30.

 

The US markets ended sharply lower on Tuesday with the Dow industrials down nearly 400 points as traders reacted to fresh political drama in Italy after a three-day weekend. Italy's president has appointed a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and passing the next budget after weeks of uncertainty. Geopolitical uncertainty also kept some traders on the sidelines following President Donald Trump's decision to call off the historic summit with North Korean leader Kim Jong Un. In a post on Twitter, Trump seemed pleased with the North Korean response to the cancellation of the planned meeting. The tweet from Trump came after the North's state-run Korean Central News Agency carried a statement by Vice Foreign Minister Kim Kye-gwan. In the statement, Kim indicated North Korea remains willing to hold talks with the U.S. and expressed a willingness to give Trump the time and opportunity to reconsider his decision. Meanwhile, sentiments also remained dampened on the back of latest batch of U.S. economic data, including a report from the Commerce Department showing a bigger than expected decrease in durable goods orders in the month of April. The Commerce Department said durable goods orders slumped by 1.7 percent in April after spiking by an upwardly revised 2.7 percent in March. The street had expected orders to drop by 1.4 percent. The Dow Jones Industrial Average tumbled 391.64 points or 1.58 percent to 24361.45 and the S&P 500 declined by 31.47 points or 1.16% to 2,689.86 and the Nasdaq was down by 37.26 points or 0.50 percent to 7396.59.

 

Crude oil futures extended their losses for sixth straight day to end near 6-week low on Tuesday, with concerns about a potential rise in oil supply. Investors also remained concern ahead of an OPEC meeting that could see major producers lift output caps that have been in place since January 2017. Besides, Saudi Arabia and Russia, two of the world's top three producers, have recently signaled that OPEC and its allies could decide at a June 22 gathering in Vienna to begin exiting their supply cutting agreement. Traders were also awaiting the latest data from the Energy Information Administration on US petroleum supplies, which will be released a day later than usual because of Monday's holiday. Benchmark crude oil futures for July delivery dropped $1.15 or 1.7 percent to settle at $66.73 a barrel on the New York Mercantile Exchange. July Brent crude fell 9 cents or 0.1 percent to settle at $75.39 a barrel on London's Intercontinental Exchange.

 

Reversing a straight three-session uptrend, Indian rupee ended significantly weaker against the Greenback on Tuesday, following fresh demand for the US currency from banks and importers to meet the month end dollar demand. Sentiments weakened with a private report stating that the June policy review meeting is likely to be a close call, while the tone of the policy statement is expected to remain hawkish. Investors paid no heed towards the India Meteorological Department (IMD) stating that the southwest monsoon hit Kerala today, three days before its scheduled arrival. The onset of monsoon over the southern state marks the commencement of the four-month long rainy season in the country. The IMD has made a forecast of normal rainfall this season. Besides, selling in second half of the trade in the domestic equity markets, added some extra pressure on the rupee. On the global front, pound fell to a six-month low against a rallying dollar today, while it held its own against a euro dragged down by concerns about a deepening political crisis in Italy. Finally, the rupee ended at 67.88, 46 paise weaker from its previous close of 67.42 on Monday.

 

The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4812.28 crore against gross selling of Rs 4432.80 crore, while in the debt segment, the gross purchase was of Rs 651.96 crore with gross sales of Rs 622.70 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.05 crore against gross selling of Rs 0.16 crore.

 

The US markets moved sharply lower during trading on Tuesday. The sell-off on Wall Street came as traders used concerns about political uncertainty in Italy as an excuse to sell stocks. All the Asian markets are trading in red on Wednesday as a sell-off in U.S. and European markets weighed on sentiment during the Asian trading session. The political crisis in Italy took center stage, with investors concerned over its implications for the rest of the euro zone. Indian equity benchmarks fell notably on Tuesday as weak cues from Asia and Europe prompted traders to book some profits after three days of gains. Today, the markets are likely to make a negative start amid feeble global cues as Italy's political turmoil roiled global markets. Traders will also remain concern on report that Hardening domestic fuel prices are likely to weigh on the Reserve Bank's rate setting panel, MPC, at its 3-day meet from June 4. The monetary policy review will take into account the retail inflation which rose to a 4-month high of 3.18 per cent in April mainly on account of increasing prices of petrol and diesel. Traders will get some support later in the day with Ficci's report that India's GDP growth is expected at 7.1 per cent for the January-March quarter of the last fiscal and 6.6 per cent for the entire 2017-18. The Central Statistics Office (CSO) is scheduled to release GDP numbers for the fourth quarter as well as the 2017-18 fiscal on May 31. Some solace will also came with exporters body FIEO's statement that India's exports are expected to record a growth of about 15-20 per cent and touch $350 billion in the current fiscal on account of a host of factors including rise in commodity prices. There will be buzz in banking stocks after audits undertaken by the Reserve Bank of India revealed that bad loans at the country's five biggest state-run banks are about Rs 47,000 crore more than what the lenders had assessed.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,633.30

10,593.85

10,695.00

BSE Sensex

34,949.24

34,836.23

35,148.19

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Vedanta 

329.37

253.25

242.43

259.53

SBI

161.08

264.30

261.08

269.23

ICICI Bank

129.70

289.90

285.88

296.33

ONGC

110.15

175.55

173.40

177.55

Indian Oil 

109.05

172.45

169.87

174.52

 

  • L&T has reported rise of 4.72% in its consolidated net profit at Rs 3,167.47 crore for Q4FY18 as compared to Rs 3,024.61 crore for Q4FY17. 
  • ITC is in the process of acquiring the Nimyle brand of floor cleaner from Arpita Agro, in order to boost revenue from its non-cigarette FMCG segment.  
  • Coal India has reported a fall of 52.36% in its consolidated net profit at Rs 1,295.22 crore for Q4FY18 as compared to Rs 2,718.75 crore for Q4FY17. 
  • Vedanta has received an order from the Government of Tamil Nadu directing the TNPCB to seal the company's Copper Smelter Plant 1 at Thoothukkudi District, Tamil Nadu and to close the said plant permanently.
News Analysis