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NSE Intra-day chart (03 May 2019)
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Market Commentary 06 May 2019
Markets likely to make a negative start tacking weak Asian cues

 

Indian equity benchmarks ended the last trading day of week on negative note, on the back of mixed cues from other Asian markets. After a cautious start, the markets added gains to remain in green for the most part of day, aided by a report stating that India was the biggest recipient of funds from Asian Development Bank last year and would continue to get sovereign loans in excess of $3 billion in 2019 as well. The multilateral funding institution committed $3 billion in sovereign loans to India in 2018, the highest level of assistance since sovereign operations began in the country in 1986. Investors also got comfort with Union minister Nitin Gadkari's statement that development has always been the top agenda of the government and the Centre has given impetus to infrastructure projects in the last five years. But, in the last leg of the trade, markets erased all the gains to settle in red terrain, as the Finance Ministry's monthly report showed that India's economy slowed down slightly in the last fiscal due to declining growth in private consumption, slow increase in fixed investment and muted exports, though it is still fastest growing major economy. It further said there is slowdown of growth in agriculture and sustained growth in industry as well as some challenges. Adding anxiety on the streets, the Reserve Bank of India (RBI) study report said that inflation forecasts by the central bank have gone awry only at time of low food inflation. In most other periods, forecasts have remained almost close to actual, and in line with the trend in the forecast of other central banks. Finally, the BSE Sensex slipped 18.17 points or 0.05% to 38,963.26, while the CNX Nifty was down by 12.50 points or 0.11% to 11,712.25.

 

The US markets ended higher on Friday, with notable gains of more than one third of a percent each, after the Labor Department data showed much stronger than expected job growth in the month of April. The Labor Department said non-farm payroll employment surged up by 263,000 jobs in April following a downwardly revised increase of 189,000 jobs in March. Street had expected employment to climb by 185,000 jobs compared to the addition of 196,000 jobs originally reported for the previous month. The report also said the unemployment rate fell to 3.6 percent in April from 3.8 percent in March, while investors had expected the rate to remain unchanged. With the unexpected decrease, the unemployment rate slid to its lowest level since hitting 3.5 percent in December of 1969. The drop in the unemployment rate was largely due to a significant contraction in the labor force, however, with the labor force shrinking by 490,000 people. The Labor Department also said the average workweek for all employees on private non-farm payrolls decreased by 0.1 hour to 34.4 hours in April. Though, traders overlooked a separate report from the Institute for Supply Management unexpectedly showing a continued slowdown in the pace of service sector growth in the month of April. The ISM said its non-manufacturing index dropped to 55.5 in April after falling to 56.1 in March, with the index hitting its lowest level since a matching reading in August of 2017. Dow Jones Industrial Average jumped 197.16 points or 0.75 percent to 26504.95, Nasdaq surged 127.22 points or 1.58 percent to 8164.00 and S&P 500 was up by 28.12 points or 0.96 percent to 2945.64.

 

Crude oil futures settled higher on Friday on expectation of shortage in supply due to sanctions against Iran and Venezuela, and on hopes of good demand for crude on the back of upbeat US jobs data. The Labor Department data showed employment in the US jumped by much more than expected in the month of April, with the unemployment rate dropping to its lowest level in nearly fifty years. The Labor Department said non-farm payroll employment surged up by 263,000 jobs in April following a downwardly revised increase of 189,000 jobs in March. Though, gains remained limited as rising crude inventories in the US continued to weigh on crude oil prices. Benchmark crude oil futures for June gained 13 cents or 0.2 percent to settle at $61.94 a barrel on the New York Mercantile Exchange. July Brent crude rose by a dime or 0.1 percent to settle at $70.85 a barrel on London's Intercontinental Exchange.

 

Indian rupee continued its upward march for the fourth straight session on Friday, on persistent selling of the American currency by exporters. Sentiments got up-beat with a report that India was the biggest recipient of funds from Asian Development Bank last year and would continue to get sovereign loans in excess of $3 billion in 2019 as well. The multilateral funding institution committed $3 billion in sovereign loans to India in 2018, the highest level of assistance since sovereign operations began in the country in 1986. However gains remain limited as the Finance Ministry in its monthly economic report for March has said that the Indian economy slowed down slightly in the fiscal year 2018-19 (FY19), though it is still fastest growing major economy. On the global front, brief rally in the euro petered out on Friday with political uncertainty and the threat of economic decline in Europe pulling the currency down against the dollar. Finally, the rupee ended at 69.22, 15 paise stronger from its previous close of 69.37 on Thursday.

 

The FIIs as per Friday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5745.44 crore against gross selling of Rs 5200.41 crore, while in the debt segment, the gross purchase was of Rs 627.14 crore with gross sales of Rs 757.95 crore. Besides, in the hybrid segment, the gross buying was of Rs 34.30 crore against gross selling of Rs 42.76 crore.

 

The US markets rose on Friday after surprisingly the data showed strong payroll gains in April and the lowest unemployment rate since 1969. Asian markets declined in early trade on Monday as trade negotiations between China and the US deteriorated suddenly, reversing apparent progress made in recent months. Extending southward journey for third straight session, Indian markets gave up all of their gains and ended marginally lower on Friday following a sudden sell-off in the dying hours of the trade amid weakness in IT bluechips. Today, the start of new week is likely to be pessimistic tracking weakness in the Asian peers as the trade war reignites. Investors will be eyeing Services PMI data for the month of April to be out later in the day. Market participants will also be awaiting India's industrial production (IIP) data for the month of March, which is scheduled to be released later in the week. There will be some cautiousness with report that in a first in recent history of tax filings, income tax e-filings in FY2019 have dropped. Income tax e-filings in FY 2018-19 was 6.68 crore, down from 6.74 crore in the previous fiscal. This is surprising given that post demonetisation it was expected that the tax base would continue to increase. However, traders may take some support later the day with the Reserve Bank of India's (RBI) data showing the country's foreign exchange reserves soared by $4.368 billion to $418.515 billion in the week to April 26, helped by the second dollar-rupee swap auction. In the swap auction conducted on April 23, the RBI had received bids worth $18.65 billion against $5 billion on offer. It accepted just five bids worth $5 billion. There will be some buzz in the banking sector stocks with a private report that banks have taken a huge 57 percent haircut in the 94 large accounts worth Rs 1.75 lakh crore which were resolved in FY19, recovering just Rs 75,000 crore or only 43 percent of the admitted claims. There will be some reaction in TV broadcasting industry related stocks with report that Telecom Regulatory Authority of India (TRAI) has roped in state-owned Broadcast Engineering Consultants India (BECIL) for conducting audits to ensure that cable TV and DTH companies are complying with its new regulatory norms. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,712.25

11,684.10

11,755.65

BSE Sensex

38,963.26

38,864.70

39,117.29

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

589.54

175.90

171.13

179.23

Tata Motors

371.54

209.45

203.78

214.38

ICICI Bank

244.31

401.80

395.93

406.43

ONGC

127.20

170.25

168.67

171.87

SBIN

124.53

310.00

308.60

311.60

 

  • Hero MotoCorp has reported sales of 574,366 units of motorcycles and scooters in the month of April 2019.  
  • Coal India will supply 530 MT of coal to the power sector in 2019-20, 8.6 per cent rise over the previous year. 
  • Cipla and its subsidiary Cipla USA, Inc., are set for a phased launch of generic Cinacalcet Hydrochloride tablets in the USA.  
  • M&M has launched an updated version of its compact SUV TUV300 priced at Rs 8.38 lakh.
News Analysis