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NSE Intra-day chart (29 August 2018)
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FII Activity(Rs. Cr)
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Market Commentary 30 August 2018
Markets to open in green terrain amid supportive global cues


 

Indian equity benchmarks ended the lackluster day of trade of trade with a cut of around half a percent on account of selling occurred in last leg of trade. Markets made a cautious start and traded in very tight range near neutral lines for most part of the day, as traders remained on sidelines  ahead of August F&O expiry on Thursday. Traders also remained cautious with a private report that the Indian economy is in for a rough ride, with rising oil prices set to continue weighing on its already-weakened currency, widen its deficit, and affect its growth outlook. However, markets somehow managed to restrict their losses, as market participants took some support with Care Ratings in its latest report bet on a higher GDP growth April-June quarter as compared to the last year. Meanwhile, the department of industrial policy and promotion (DIPP) has effectively ruled out foreign direct investment (FDI) in inventory-based ecommerce, allaying concerns raised by those opposed to such a move, even as it agreed with the need for a regulator to oversee the sector. But it was selling in final hour of trade which played spoil sports for the Indian markets and dragged frontline gauges below their crucial 11,700 (Nifty) and 38,800 (Sensex) levels. Sentiments turned pessimistic with the credit rating agency, India Ratings' latest report stating that the widening current account deficit (CAD), which is projected to cross 2.6% of GDP this year, coupled with the rupee plunge, is likely to increase borrowing costs for corporates and bring down the overall volume of fresh forex loans. Sentiments also remain dampened with Credit rating agency Moody's Investors Service report that there are risks of India breaching the 3.3% fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures. Anxiety persisted on street after the Reserve Bank of India in its annual report said that bad loans for the banking sector are likely to increase in 2018-19 from the current levels of around 11.5%. Finally, the BSE Sensex declined 173.70 points or 0.45% to 38,722.93, while the CNX Nifty was down by 46.60 points or 0.40% to 11,691.90.

 

The US markets closed higher on Wednesday with the S&P 500 and the Nasdaq settling at a record for a fourth session, while the Dow reached its best closing level in nearly seven months. The US economy's strength-despite some concern about slack in the housing market-and solid corporate results also laid the groundwork for continued market gains. Investors' sentiment was also boosted by the resumption of US-Canada trade talks. Canada rejoined the talks following President Donald Trump's announcement of a preliminary trade deal with Mexico on Monday. Canadian Foreign Affairs Minister Chrystia Freeland said difficult concessions by Mexico have set the stage for productive conversations in the coming days. On the economic front, the Commerce Department's report showed that economic activity in the US grew by slightly more than initially estimated in the second quarter. The report said real gross domestic product climbed by 4.2% in the second quarter compared to the previously reported 4.1% increase. The pace of growth had been expected to be downwardly revised to 4.0%. With the unexpected upward revision, the GDP growth in the second quarter reflects a significant acceleration from the 2.2% advance in the first quarter. Meanwhile, a separate report from the National Association of Realtors (NAR) showed an unexpected pullback in pending home sales in the month of July. NAR said its pending home sales index dropped by 0.7% to 106.2 in July after jumping by 1.0$ to an upwardly revised 107.0 in June. Dow Jones Industrial Average rose 60.55 points or 0.23 percent to 26124.57, the S&P 500 gained 16.52 points or 0.57 percent to 2914.04 and Nasdaq was up by 79.65 points or 0.99 percent to 8109.69.

 

Crude oil futures ended higher on Wednesday after a US government report showed that domestic crude supplies fell more than expected last week. The Energy Information Administration (EIA) reported that domestic crude supplies declined by 2.6 million barrels for the week ended August 24. S&P Global Platts had forecast a fall of 1 million barrels, while the American Petroleum Institute on Tuesday reported a modest rise of 38,000 barrels. Besides, Iran oil shipments are declining at a faster-than-expected pace ahead of US sanctions set to begin in November. Benchmark crude oil futures for October gained 98 cents or 1.4 percent to settle at $69.51 a barrel on the New York Mercantile Exchange. October Brent crude surged $1.19 or 1.6 percent at $77.14 a barrel on London's Intercontinental Exchange.

 

Indian rupee slumped to a fresh record low against the US dollar on Wednesday, following bouts of month-end dollar demand from banks and importers. Investors remained cautious with a private report that the Indian economy is in for a rough ride, with rising oil prices set to continue weighing on its already-weakened currency, widen its deficit, and affect its growth outlook. Sentiments also remained dampened with Credit rating agency Moody's Investors Service report that there are risks of India breaching the 3.3% fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures. The rupee's losses were also caused by late hour sell-off in domestic equity market. On the global front, dollar rose on Wednesday as relief about a US-Mexico trade deal gave way to concern among investors that the conflict over trade between the US and China was not about to end soon. Finally, the rupee ended at 70.57, 47 paise weaker from its previous close of 70.10 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4202.41 crore against gross selling of Rs 4251.27 crore, while in the debt segment, the gross purchase was of Rs 141.89 crore with gross sales of Rs 852.07 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.03 crore against gross selling of Rs 0.37 crore.

 

The US markets ended higher on Wednesday as investors grew more hopeful about trade talks between the US, Mexico and Canada. Asian markets were trading mostly in green on Thursday as Wall Street hit record highs in the hope that the current North American Free Trade Agreement (NAFTA) negotiations will lead to a further easing of global trade tensions. After registering record highs for two consecutive sessions, the Indian markets lost steam on Wednesday and late hour sell off drag the markets to intraday low level, as investors preferred to book profits. Today, the start of the F&O series expiry session is likely to be in green on positive global cues. Though, the expiry day is very much likely to bring in volatility later in the day. Traders will be getting some encouragement with the Reserve Bank of India's (RBI) latest annual report showing that it expects India's economic growth rate to accelerate to 7.4% in the current financial year (FY19) on pick up in industrial activity and good monsoon. Traders may take note of the government's statement that demonetisation of high-value currency notes in November 2016 achieved the objectives quite substantially even as the RBI  reported most of the demonetised currency was back with the banks. The Central Bank said that 99.3% of demonetised currency, or Rs 15.31 lakh crore of the Rs 15.41 lakh crore demonetised, has been returned. However, there may be some cautiousness with a report that foreign investors have pulled out $280 million from the Indian markets so far this year, while domestic institutional investors (DIIs) continue to invest more aggressively and have put in a staggering $10 billion. There will be some reaction in banking sector stocks with the RBI's report that bad loans for the banking sector are likely to increase in 2018-19 from the current levels of around 11.5%.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,691.90

11,662.77

11,737.12

BSE Sensex

38,722.93

38,605.12

38,915.20

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Vedanta

314.04

227.90

224.08

234.98

Yes Bank

305.45

366.00

359.15

375.70

SBI

243.21

309.65

306.27

312.52

ICICI Bank

188.68

340.65

336.75

343.60

Axis Bank

133.29

656.55

650.65

665.05

  • IOC will invest over Rs 286 crore to enhance its LPG bottling capacity, including setting up of two greenfield plants, in North East by 2020. 
  • Wipro has been awarded a multi-year business process services engagement and chosen as a finance transformation partner by Falck. 
  • Vedanta has bagged 41 out of 55 oil and gas exploration blocks offered in India's maiden open acreage auction. 
  • Tata Motors is planning to showcase five new public transport vehicles at the bus and coach exhibition, BusWorld India, in Bengaluru in the state of Karnataka.
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