Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (03 December 2018)
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Market Commentary 04 December 2018
Markets to open slightly in red tailing weakness in Asian counterparts

 

Weak economic data pushed the markets to end flat on Monday's trading session. The start of the day was marvelous, aided by Niti Aayog Vice-Chairman Rajiv Kumar's statement that 70 lakh jobs were created in the financial year 2017-18 alone. He said that growth in sales of transport vehicles, huge disbursement of Mudra loans and EPFO data show that enough opportunities for employment. Domestic sentiments were also boosted after the Indian manufacturing sector accelerated further in the month of November, buoyed by healthier inflows of new orders. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - improved to 54 in November from 53.1 in October. Some support also came with Economic Affairs Secretary Subhash Chandra Garg's statement that foreign investors have put in Rs 10,925 crore in equity and debt instruments in November. FPIs investment at Rs 4,786 crore in equity and Rs 6,139 crore in debt, together at Rs 10,925 crore, is the highest during the financial year. Meanwhile, Newly-appointed Revenue Secretary Ajay Bhushan Pandey said his focus would be to improve the tax-GDP ratio and increase compliance by making the system more taxpayer friendly. However, in noon deals, the key indices turned volatile to end the session flat with marginal gains, impacted by reports that India's economic growth slowed down 7.1% in July-September quarter (Q2) of current fiscal year (FY19) after touching over a two-year high of 8.2% in April-June quarter (Q1), as consumption demand moderated and farm sector displayed signs of weakness. Traders were also cautious, as Goods and Services Tax (GST) collection dropped to Rs 97,637 crore in November 2018 as compared to Rs 1 lakh crore collected previous month. Of the Rs 97,637 crore collected, central GST (CGST) collection was Rs 16,812 crore, state GST (SGST) was Rs 23,070 crore, integrated GST (IGST) was Rs 49,726 crore (including Rs 24,133 crore collected on imports) and cess was Rs 8,031 crore (including Rs 842 crore collected on imports). Adding more worries, India's core sector output also grew at a slower pace of 4.8% in October 2018, as compared to 5% in October 2017, due to contraction in the production of crude oil, natural gas and fertilizer. Sentiments also got hit, with the Controller General of Accounts' latest data report indicating that India's fiscal deficit, the gap between expenditure and revenue, in the first seven months of current financial year (FY19) came in at Rs 6.24 lakh crore or 103.9% of the FY19 Budget target, on the back of lower revenue collections. Finally, the BSE Sensex rose 46.70 points or 0.13% to 36,241.00, while the CNX Nifty was up by 7.00 points or 0.06% to 10,883.75.

 

The US markets ended higher with gains of over one percent on Monday after the US and China over the weekend called a temporary truce to their trade war, triggering relief buying of perceived riskier assets such as equities. The two sides agreed to launch negotiations to reduce trade tensions and discuss forced technology transfer, intellectual-property protection, non-tariff barriers, and cyber and agriculture issues, among other concerns. Trump and Xi agreed to a 90-day truce in the escalating trade war between the world's two largest economies as they work to reach a long-term trade deal. Trump also agreed not to raise the tariffs on $200 billion worth of Chinese goods to 25% from 10% on January 01 as planned. However, if the two countries are not able to reach an agreement by the end of the time period, the 10% tariffs on Chinese goods will be raised to 25%. On the economic front, according to a report released by the Institute for Supply Management (ISM), manufacturing activity in the US unexpectedly grew at a faster rate in the month of November. The ISM said its purchasing managers index climbed to 59.3 in November after falling to 57.7 in October, with a reading above 50 indicating growth in manufacturing activity. Street had expected the index to edge down to 57.5. The unexpected rebound by the headline index was partly due to strong demand, as the new orders index jumped to 62.1 in November from 57.4 in October. Meanwhile, the Commerce Department released a report showing an unexpected dip in US construction spending in the month of October. The Department said construction spending edged down by 0.1% to an annual rate of $1.309 trillion in October after slipping by 0.1% to a downwardly revised rate of $1.311 trillion in September. Dow Jones Industrial Average jumped 287.97 points or 1.13 percent to 25826.43, S&P 500 surged 30.20 points or 1.09 percent to 2790.37and Nasdaq was up by 110.98 points or 1.51 percent to 7441.51.

 

Crude oil futures closed higher on Monday as optimism ahead of the Organization of the Petroleum Exporting Countries (OPEC) meeting grew after Russian President Vladimir Putin said he and Saudi Crown Prince Mohammed Bin Salman agreed to extend output cuts on the sidelines of the weekend G-20 summit. Another support for crude also came after Alberta Premier Rachel Notley, who said she has ordered oil companies in the Canadian province to cut production by nearly 9% next year. Canada is the fourth-largest oil producer in the world. Benchmark crude oil futures for January surged $2.02 or 4 percent to settle $ 52.95 a barrel on the New York Mercantile Exchange. February Brent crude rose $2.23 or 3.8 percent to settle at $ 61.69 a barrel on London's Intercontinental Exchange.

 

Snapping its four-day winning streak, Indian rupee ended considerably weaker against dollar on Monday, amid a spike in crude oil prices. Sentiments turned pessimistic with reports that India's economic growth slowed down 7.1% in July-September quarter (Q2) of current fiscal year (FY19) after touching over a two-year high of 8.2% in April-June quarter (Q1), as consumption demand moderated and farm sector displayed signs of weakness. Some anxiety was also among the local traders with the Controller General of Accounts' latest data report indicating that India's fiscal deficit, the gap between expenditure and revenue, in the first seven months of current financial year (FY19) came in at Rs 6.24 lakh crore or 103.9% of the FY19 Budget target, on the back of lower revenue collections. On the global front, dollar weakened across the board on Monday as investor demand for riskier assets rose following the US-China truce. Finally, the rupee ended at 70.46, 88 paise weaker from its previous close of 69.58 on Friday.

 

The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 12233.36 crore against gross selling of Rs 12391.59 crore, while in the debt segment, the gross purchase was of Rs 1712.88 crore with gross sales of Rs 1565.63 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.48 crore against gross selling of Rs 0.93 crore.

 

The US markets ended sharply higher on Monday after President Trump and President Xi Jinping agreed to a temporary truce in the trade war between the United States and China. Asian markets were trading mostly in red on Tuesday as a relief rally sparked by a truce in the US-China trade war gave way to doubts on whether the two countries are able to resolve their differences before a 90-day deadline. Paring most of the early gains, Indian equity markets ended Monday's session flat with positive bias on firm global cues, though upside remained capped as investors turned cautious over disappointing macro-economic data and a rise in global crude oil prices. Today, the start of the session is likely to be mildly soft following weakness in its other Asian counterparts amid uncertainty about the future of US-China trade relations. There will be some cautiousness with Crisil cutting India's growth forecast for current fiscal to 7.4% on the back of weakening GDP growth and lower global trade forecasts. India's growth in the July-September quarter slipped to 7.1% from 8.2% in the April-June quarter. It added that India's export, which saw a revival in early part of 2018, could likely see a slower growth. Traders will also be concerned about ICRA's statement that India's current account deficit is likely to rise to 3% of GDP in the July-September quarter of current fiscal, from 2.4% in the preceding quarter, driven mainly by high crude oil prices. Traders will also be reacting to a private report that the recent move by the US government to change the method of H-1B visa allotment is a mixed bag for India. It added that while the move is expected to have a negative impact on the Indian technology services industry. Meanwhile, the finance ministry said Rs 91,149 crore has been issued so far to exporters as Goods and Services Tax (GST) refunds, which are 93.77% of total claims with the tax authorities. It also said Rs 6,053 crore worth GST refund is still pending with the government and that is being expeditiously processed.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,883.75

10,839.00

10,934.85

BSE Sensex

36,241.00

36,078.40

36,424.88

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,047.21

178.00

169.03

183.23

Sun Pharmaceutical

614.92

455.40

444.03

463.88

ICICI Bank

234.27

355.50

352.10

358.90

Vedanta

162.35

202.95

200.85

205.20

SBI

157.72

286.80

284.07

288.72

 

  • Hero MotoCorp has reported sales of 610,252 units of two-wheelers for the month of November 2018. 
  • Sun Pharmaceutical including its subsidiaries has received final approval from US FDA for its ANDA for generic version of Ganirelix Acetate Injection, 250 mcg/0.5 mL. 
  • Larsen & Toubro's construction arm -- L&T Construction has won orders worth Rs 1,127 crore across two business segments. 
  • Coal India has reported provisional coal production of 52.09 MT in November 2018, as against 51.26 MT reported during corresponding month of previous year.
News Analysis