Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (02 September 2016)
Top Gainers
Company NameClose% Change
Top Losers
Company NameClose% Change
World Indices
IndicesLast Trade% Change
Indices
IndicesLast Trade% Change
FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
Equity
Debt
Equity
Debt
Equity
Debt
 
Market Commentary 06 September 2016
Positive start on cards tailing sanguine global cues

 

After slipping into the negative territory on Thursday, Indian markets made a strong comeback on Friday, with the benchmark indices hitting fresh 52-week highs and raising weekly gains to over two and half percent.  Sentiments remained optimistic right from the start of trade as Odisha became the 16th state to ratify the constitutional amendment bill passed by Parliament to introduce the goods and services tax (GST), helping cross the important threshold of more than half the number of states needed for the proposed law to be sent for presidential assent. Also, investors got some peace of mind from chief economic advisor Arvind Subramanian's statement that India has the potential to sustain 8 to 10 percent GDP growth rate during the next two to three years, despite April-June GDP growth coming in below expectations at 7.1 percent. Allaying fears that the roll out of the GST will not fuel inflationary pressure, Subramanian said the key objective of the tax reform was to shield the poorest sections from inflation.  Some support also came with International Monetary Fund's (IMF's) report praising the country by saying that India has recently taken important steps towards a national goods and services tax which, when fully implemented, promises to boost tax buoyancy and growth, including by enhancing the efficiency of the internal goods and services market. However, the sanguinity in local markets was under check by IMD's report saying that the country's cumulative rainfall during this year's monsoon so far (till 31 August 2016) was 3% below the long period average (LPA). Meanwhile, Sugar stocks came under pressure after the government imposed stock limits on sugar mills during the festival season till October-end. However, many infrastructure companies continued their uptrend for the third straight sessions after the Cabinet approved an array of measures to help quickly resolve disputes, pump in liquidity and deal with stressed assets. Good buying was also observed in selected auto stocks amid robust auto sales in August. On the global front, Asian market ended mixed on Friday, while European markets held steady in early trade. Back home, the local benchmarks got off to a positive opening, in tandem with the cautiously optimistic sentiments prevailing in Asian markets. Investors around the region remained cautious ahead of US non-farm payrolls report which could give clues on whether the Federal Reserve will raise interest rates as soon as this month. Finally, the BSE Sensex surged 108.63 points or 0.38% to 28532.11, while the CNX Nifty gained 35 points or 0.40% to 8,809.65. Indian markets remained closed on Monday on account of a public holiday.

 

The US markets closed higher on Friday, after the closely watched August jobs report came in weaker than Wall Street's consensus estimate, suggesting that the Federal Reserve may hold off on hiking interest rates when policy makers meet later this month. Wall Street assigned a 1-out-of-4 chance of a hike in September and a 46% chance of a rate increase in December, according to a gauge of federal-funds futures by the CME Group. On the economy front, the US trade deficit slid almost 12% in July to $39.5 billion as a surge in soybean shipments pushed exports to a 10-month high. The smaller deficit in the first month of the third quarter is a good sign for GDP. US exports rose 1.9% to $186.3 billion to mark the biggest advance in two and a half years. Soybean exports tripled to $5.2 billion, largely accounting for the increase. US imports, on the other hand, fell 0.8% in July to a seasonally adjusted $225.8 billion. The US added 151,000 jobs in August, slowing sharply from earlier in the summer and probably pushing an expected increase in US interest rates toward the end of the year. The unemployment rate was unchanged at 4.9%. The Dow Jones Industrial Average added 72.66 points or 0.39 percent to 18,491.96, Nasdaq was up 22.69 points or 0.43 percent to 5,249.90, while S&P 500 gained 9.12 points or 0.42% to 2,179.98. US markets remained closed on Monday on account of 'Labor Day' holiday.

 

Crude oil futures made a strong bounce back on Friday, following a report showing weaker US jobs growth in August that weakened a case of rate hike and suppressed the dollar, pushing up commodities. Oil also rose on favorable comments by Russia to OPEC's hopes of implementing an output freeze with other oil producers. Russian President Vladimir Putin said that an agreement between oil exporters to freeze output would be the right decision to support the market. However, Oil Services firm Baker Hughes said the number of active rigs continued to rise this week. Benchmark crude oil futures for October delivery surged by $1.30 or 3 percent to close at $44.46 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for November delivery were up by $1.38 or 3 percent to $46.83 a barrel on the ICE.

 

Indian rupee ended strong and hit a two-week high against the US dollar on Friday on fresh selling of American currency by banks and exporters amid strong gains in domestic equity market. Local currency got some support with International Monetary Fund's (IMF's) report praising the country by saying that India has recently taken important steps towards a national goods and services tax which, when fully implemented, promises to boost tax buoyancy and growth, including by enhancing the efficiency of the internal goods and services market. Also, investors got some confidence with chief economic advisor Arvind Subramanian's statement that India has the potential to sustain 8 to 10 percent GDP growth rate during the next two to three years, despite April-June GDP growth coming in below expectations at 7.1 percent. On the global front, the dollar rose against yen on Friday with investors focused on U.S. job data later in the day to glean clues on whether the Federal Reserve will raise interest rates, maybe even as soon as this month. Finally the rupee ended at 66.82, stronger by 14 paise from its previous close of 66.96 on Thursday.

 

The FIIs as per Friday'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 3355.76 crore against gross selling of Rs 3737.70 crore, while in the debt segment, the gross purchase was of Rs 2211.22 crore with gross sales of Rs 1422.97 crore.

 

The US markets remained closed in last session unable to give any cues to the other markets. The Asian markets have however made a strong start and some of the indices in the region are trading near one-year high and the dollar maintained losses from the last session as prospects for a US interest-rate increase this month remained subdued. The Indian markets before going for a long weekend posted good gains on hopes of good economic growth. Today, the start is likely to be in green and the markets will be extending the gains on jubilant regional cues. Traders will be getting some support with report that growth in India's services industry accelerated to its fastest pace in more than 3-1/2 years in August, driven by a surge in domestic and foreign demand. The Nikkei/Markit Services Purchasing Managers' Index jumped to 54.7 in August, its highest since January 2013, from 51.9 in July. Also there are reports that Prime Minister's Office (PMO) will soon clear projects worth Rs 20 lakh crore, stating that the Project Monitoring Group (PMG) has already cleared 276 projects worth 10 lakh crore which were stalled due to various reasons including roads, environment, coal and power among others. However, there will be some cautiousness too, with former RBI governor Raghuran Rajan's warning that Low interest rates globally could distort markets and it would be difficult to abandon. There will be some buzz in the steel stocks on report that the government is unlikely to further extend the minimum import price (MIP) on certain steel products beyond October 4 as these items could be covered under anti-dumping duty.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

8809.65

8777.20

8833.10

BSE Sensex

28532.11

28445.97

28599.92

 

Nifty Top volumes

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

Idea Cellular

504.49

84.45

81.65

86.20

Bharti Airtel

153.31

318.90

309.95

324.40

State Bank of India

113.8

254.60

252.43

255.98

Tata Motors

100.97

549.85

547.33

554.13

ITC

91.54

262.90

260.87

264.32

  • Bharat Heavy Electricals has successfully commissioned the fourth and last unit of 4 x 40 MW Teesta Low Dam Hydro Electric Project Stage-IV in West Bengal.
  • Larsen & Toubro's construction arm -- L&T Constructions has bagged orders worth Rs 1458 crore across various business segments.
  • HDFC is planning to raise up to Rs 1,000 crore through issuance of rupee denominated bonds to overseas investors.
  • Coal India, the world's largest coal miner by output, has reported provisional production of 32.43 million tonnes in August 2016, as against a target of 40.89 million tones.
  • Tata Motors' passenger and commercial vehicle sales in August 2016 were at 43,061 vehicles, a growth of 6%, over 40,679 vehicles sold in August 2015.
News Analysis