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NSE Intra-day chart (07 January 2020)
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Market Commentary 08 January 2020
Markets to get a gap-down opening amid weakness in Asian peers

 

Indian equity bourses came back in green terrain in Tuesday's trading session, with Sensex and Nifty ending higher by around 0.50% each. The start of the day was fabulous, aided with Commerce and Industry Minister Piyush Goyal's statement that use of artificial intelligence (AI) in different forms can help achieve the target of making India a $5 trillion economy in the coming years. Adding more relief on the street, the Reserve Bank of India (RBI) has revised the Supervisory Action Framework (SAF) for urban cooperative banks (UCBs), with an aim to ensure expeditious resolution of financial stress being faced by some of them. But, indices pared some of gains in noon deals, amid a private report that India's government is likely to cut spending for the current fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of the biggest tax shortfalls in recent year. It added that Asia's third largest economy, which is growing at its slowest pace in over six years because of lack of private investment, could be hurt further if the government cuts spending. Some concerns also came with reports that markets view the rally in Brent oil prices, triggered by geopolitical tensions, as a threat to the improvement in India's FY20 current account deficit and forecasts for a balance of payment surplus. Finally, the BSE Sensex gained 192.84 points or 0.47% to 40,869.47, while the CNX Nifty was up by 59.90 points or 0.50% to 12,052.95.

 

The US markets ended lower on Tuesday amid uncertainty about the impact of rising tensions between the US and Iran following the US airstrike that killed top Iranian military commander Qasem Soleimani. Iran has vowed to take revenge against the US for the killing of Soleimani. However, losses remained capped on report that while traders generally seem optimistic that the war of words between Washington and Tehran will not escalate into a full-fledged military conflict, the uncertainty has kept buying interest in check. On the economic data front, a report released by the Commerce Department showed a pullback in new orders for US manufactured goods in the month of November. The Commerce Department said factory orders fell by 0.7 percent in November after inching up by a downwardly revised 0.2 percent in October. Street had expected orders to drop by 0.8 percent compared to the 0.3 percent increase originally reported for the previous month. Besides, with exports rising and imports falling, the Commerce Department released a report showing the US trade deficit narrowed significantly in the month of November. The report said the trade deficit narrowed to $43.1 billion in November from a revised $46.9 billion in October. The trade deficit shrank to its smallest since hitting $42.0 billion in October 2016. The narrower trade deficit came as the value of exports climbed by 0.7 percent to $208.6 billion in November after edging down by 0.1 percent to $207.3 billion in October. Meanwhile, the report said the value of imports slumped by 1.0 percent to $251.7 billion in November after tumbling by 1.7 percent to $258.7 billion in October.

 

Crude oil futures settled lower on Tuesday on hopes that the war of words between Washington and Teheran will not escalate into a full-fledged military conflict. Meanwhile, there were conflicting reports about American military repositioning troops in preparation for leaving Iraq. Besides, traders were awaiting the data on crude inventory. While the American Petroleum Institute will release its weekly oil report late Tuesday, the Energy Information Administration's inventory data is due Wednesday. Crude oil futures for February declined 57 cents or 0.9 percent to settle at $62.70 a barrel on the New York Mercantile Exchange. March Brent dropped 64 cents or 0.9 percent to settle at $68.27 a barrel on London's Intercontinental Exchange.

 

Reversing its three-session fall, the rupee bounced back to end higher against the US currency on Tuesday, on persistent selling of the American currency by exporters. Sentiments turned optimistic with Commerce and Industry Minister Piyush Goyal's statement that use of artificial intelligence (AI) in different forms can help achieve the target of making India a $5 trillion economy in the coming years. Besides, positive trend in equity market supported the rupee. However, local unit cut most of its early gains, as some concern came with private report that India's government is likely to cut spending for the current fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of the biggest tax shortfalls in recent year. It added that Asia's third largest economy, which is growing at its slowest pace in over six years because of lack of private investment, could be hurt further if the government cuts spending. On the global front, Japanese yen pulled back from recent highs on Tuesday as investors became less anxious about the chances of an all-out conflict between the United States and Iran. Finally, the rupee ended at 71.82, 11 paise stronger from its previous close of 71.93 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 3675.19 crore against gross selling of Rs 3694.18 crore, while in the debt segment, the gross purchase was of Rs 528.96 crore with gross sales of Rs 3946.55 crore. Besides in the hybrid segment, the gross buying was nil against gross selling of Rs 39.45 crore.

 

The US markets ended lower on Tuesday as investor caution persisted amid a dispute between the United States and Iran. All the Asian markets are trading in red on Wednesday following reports that rockets were fired at an Iraqi air base that hosts American troops. Indian markets ended higher on Tuesday with gains around half a percent each as no fresh aggressive moves from the US and Iran helped crude prices ease. Today, the benchmarks are likely to make gap-down opening tracking sell-off in Asian peers amid jump in oil prices. Traders will be concerned with the first advance estimates released by the Central Statistics Ministry showing that the government has estimated India's GDP growth during fiscal 2019-20 at 5% as compared to 6.8% in the year-ago period. The decline has been mainly on account of deceleration in manufacturing sector growth, which is expected to come down to 2% in 2019-20 from 6.2% in the year-ago fiscal. Also, there will be some cautiousness with a private report indicating that markets view the rally in Brent oil prices, triggered by geopolitical tensions, as a threat to the improvement in India's FY20 current account deficit and forecasts for a balance of payment surplus. However, some respite may come later in the day with Finance minister Nirmala Sitharaman's statement that the government is taking various steps to simplify the taxation system and eliminate harassment of honest taxpayers. Some support may also come with the government data on national income showing that the country's per-capita monthly income is estimated to have risen by 6.8% to Rs 11,254 during 2019-20. Meanwhile, as per a new amendment made to the norms by the Insolvency and Bankruptcy Board of India (IBBI), a secured creditor cannot sell assets of a company undergoing liquidation process to any person barred from submitting an insolvency resolution plan. Reality stocks will be in focus with a private report that despite a slowdown in the economic, housing sales witnessed a marginal rise 2019 across eight major cities to nearly 2.46 lakh units. There will be some reaction in metal stocks with ICRA's statement that prices of aluminium and copper are showing signs of recovery in the last three months as trade tensions in international markets have eased to an extent leading to an improvement in sentiment.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,052.95

11,988.15

12,134.95

BSE Sensex

40,869.47

40,654.51

41,157.28

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,110.95

45.05

43.87

46.32

SBI

509.67

318.40

313.53

325.13

Tata Motors

349.95

184.70

181.53

188.63

Vedanta

244.18

156.00

153.43

157.68

ICICI Bank

161.02

522.90

517.83

531.78

 

  • Bharti Airtel has inked a pact with Tamil superstar Rajinikanth's upcoming flick Darbar, offering a host of features to customers. 
  • Bajaj Auto has extended strategic partnership with Gulf Oil Lubricants India for three years. 
  • HDFC Bank has witnessed rise in advances by around 20% to Rs 9,340 billion as of December 31, 2019 as compared to Rs 7,810 billion as of December 31, 2018. 
  • Tech Mahindra has inaugurated its new delivery center in the Warangal city of Telangana.
News Analysis