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NSE Intra-day chart (29 May 2019)
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Market Commentary 30 May 2019
Markets to make a cautious start of F&O series expiry session

 

Indian equity benchmarks halted three days rally on Wednesday, with Sensex and Nifty losing more than half a percent each. After a weak start, key indices remained lackluster during the whole day, affected with the Department for Promotion of Industry and Internal Trade's (DPIIT) latest data report showing that foreign direct investment (FDI) in India declined for the first time in the last six years in 2018-19, falling by 1% to $44.37 billion as compared to $44.85 billion recorded in 2017-18. Traders were seen taking a note of a private report that the Reserve Bank of India is expected to cut key policy rates by 25 bps in the upcoming monetary policy meeting amid subdued domestic industrial activity and slowdown in trade on the global front. Markets saw further fall in the late hours of trade, amid weak cues from global markets. Profit booking in recent gainers, also weighed on trading sentiments. The street paid no heed towards a report stating that India has moved up one place to rank as the world's 43rd most competitive economy on the back of its robust economic growth, a large labour force and its huge market size. Markets participants also overlooked another report indicating that India can attract FDI to a ratio of 1.5 percent to 2 percent of its GDP by further improving on ease of doing business and building infrastructure. It also said that the country is in favourable position to attract foreign firms planning to relocate their manufacturing bases due to trade tension between the US and China. Finally, the BSE Sensex slipped 247.68 points or 0.62% to 39,502.05, while the CNX Nifty was down by 67.65 points or 0.57% to 11,861.10.

 

Extending their previous session's losses, the US markets ended lower with cut of over half percent on Wednesday amid fresh concerns over US-China trade negotiations. Reports suggested that China is considering restricting the export of rare earth minerals, which are crucial for the US technology industry. The latest developments on the trade front have added fuel to investor fears that the dispute between the US and China could escalate into a full-fledged trade war. Trade war worries have increased the appeal of safe havens such as US treasuries, resulting in a sharp decline in bond yields. The slump in bond yields has in turn added to concerns that the US could be headed for a recession or at least a notable slowdown in the pace of economic growth. Treasuries saw further upside on the day, driving the yield on the benchmark ten-year note down to its lowest level since September of 2017. However, overall trading activity was somewhat subdued as a lack of major US economic data kept some traders on the sidelines. Traders may have been looking ahead to the release of reports on first quarter GDP, pending home sales and personal income and spending in the coming days. Dow Jones Industrial Average dropped 221.36 points or 0.87 percent to 25126.41, Nasdaq declined 60.04 points or 0.79 percent to 7547.31and S&P 500 was down by 19.37 points or 0.69 percent to 2783.02.

 

Crude oil futures settled lower on Wednesday as prolonged trade talks between the US and China have caused a broad risk-off across financial markets, including equities and certainly crude oil, where downward revisions to global economic growth this year are likely to lower global oil demand growth as well. However, persistent tension in the Middle East with the Trump administration's John Bolton making fresh statement toward Iran raises supply concerns that are generally supportive to prices. Weekly data on US petroleum supplies are delayed this week due to Monday's holiday. The Energy Information Administration's report is due Thursday. Benchmark crude oil futures for July dropped 33 cents or 0.6 percent to settle at $58.81 a barrel on the New York Mercantile Exchange. July Brent crude declined 66 cents or 0.9 percent to settle at $69.45 a barrel on London's Intercontinental Exchange.

 

Indian rupee continued to slip for the second consecutive session against the US dollar on Wednesday on increased demand for the greenback from importers and banks. Traders remain concerned about the Department for Promotion of Industry and Internal Trade's (DPIIT) latest data showing that foreign direct investment (FDI) in India declined for the first time in the last six years in 2018-19, falling by 1 per cent to $44.37 billion as compared to $44.85 billion in 2017-18. Besides, strength in dollar against some major rival currencies and heavy selling in domestic equities also kept pressure on the Indian rupee. On the global front, Japanese yen firmed to a two-week high versus the dollar on Wednesday as concerns of a further escalation in the trade conflict between the United States and China prompted investors to rush to perceived safe-haven assets. Finally, the rupee ended at 69.83, 14 paise weaker from its previous close of 69.69 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 23453.44 crore against gross selling of Rs 18782.65 crore, while in the debt segment, the gross purchase was of Rs 2413.37 crore with gross sales of Rs 1441.40 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.26 crore against gross selling of Rs 3.15 crore.

 

The US markets declined on Wednesday as worries about slowing economic growth spurred coupled with trade tensions between the China-US. Asian markets are trading mostly lower on Thursday as rhetoric from Beijing and Washington over trade matters kept alive investor concerns about the tariff war's impact on global economic growth. Indian markets snapped three-day gaining streak on Wednesday and ended lower with losses of over half a percent on account fresh foreign fund outflow and rising worries over political disarray in Europe. Today, the start of the F&O series expiry session is likely to be cautious tailing the weakness in global markets amid concerns that the US and China dispute could escalate into a full-fledged trade war. On the domestic front, investors will keep an eye on new government formation and ministry allocation as Narendra Modi is set to take oath as the prime minister of India for the second term. Traders will also be looking ahead for the Q4 GDP data to be released on May 31, while there are expectations that numbers are likely to be weak. Market participants may take note a private report that the Reserve Bank of India (RBI) may leave repo rate unchanged next week due to uncertainty over oil prices, monsoon, weak transmission of monetary policy and on expected pick-up in inflation. It added that the central bank will also evaluate the implications of policies of the new government for growth and inflation. Meanwhile, the Department for Promotion of Industry and Internal Trade (DPIIT) has proposed to formulate a national retail policy to support growth of domestic trade. A national retail policy will be formulated to support development of the sector that would benefit 65 million small traders. There will be some buzz in the Non-banking financial companies (NBFCs) stocks with report that the RBI has extended minimum holding period requirement for NBFCs to raise funds via loan securitisation to help the sector overcome liquidity shortage. NBFCs have been permitted to securitise loans of over five-year maturity after holding them for six months on their books. Earlier, they were supposed to hold it for at least a year. There will be some reaction in aviation industry related stocks with global airlines' grouping the International Air Transport Association's (IATA) statement that India's domestic air traffic registered first negative growth rate in more than five years in April, mainly due to the demise of Jet Airways. After a sustained period of very strong growth, Revenue Passenger Kilometres (RPKs) in the domestic India market are 0.5% lower than their year-ago level. There will be earnings reaction based on the performance of the companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,861.10

11,821.30

11,916.40

BSE Sensex

39,502.05

39,359.06

39,706.49

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

490.01

151.70

149.57

154.92

SBI

283.70

348.65

344.20

356.05

Sun Pharma

280.86

423.80

408.97

433.22

ICICI Bank

221.32

423.30

420.12

428.47

Tata motors

152.22

176.35

174.47

179.12

 

  • NTPC is eyeing to produce 310 billion units of power and 10.4 million tonne of coal, and spend Rs 20,000 crore on capital expenditure in FY20. 
  • SBI has held customer meet in Delhi on May 28, 2019, to understand the issues and grievances of its account holders. 
  • Tech Mahindra and Strands have entered into strategic partnership to provide an integrated suite of secure and customized digital banking solution to financial institutions globally. 
  • TCS has signed a new strategic partnership with Scandinavia's leading airline, SAS, the flag-carrier of Sweden, Norway and Denmark.
News Analysis