Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (07 October 2016)
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Market Commentary 10 October 2016
Markets to make a positive start ahead of IIP data

 

Friday's trading session was of consolidation as market participants decided to hold back on big bets ahead of the US jobs data, which is expected to bolster the case for a US Fed interest rate hike. The session largely remained a bit choppy as the aimless indices moved only sideways in a tight band amid lack of triggers. Weak trend in global markets and depreciation in rupee value against dollar, also weighed on the sentiments. However, investors got some confidence with NITI Aayog Vice-Chairman Arvind Panagariya's statement that India can become a $10 trillion economy in the next 15 years, from the existing $2 trillion, like China did in last one and a half decade. NITI Aayog is preparing a 15-year vision blueprint which will provide a roadmap for developing India into a big economic powerhouse with inclusive growth. Some support also came from IMF's statement that India's strong reform push in 2016 is welcome and should continue apace. Adoption of the goods and services tax is poised to boost India's medium-term growth. It added that as shown by India, progress on reforms could ignite business investment (including already strong FDI inflows), further boosting domestic demand. On the sectoral front, Auto and oil-gas stocks witnessed some recovery from lower levels, while cement and power stocks faced resistance at higher levels due to profit booking. Information technology (IT) companies edged lower for third straight trading sessions on concerns of weaker earnings growth for Q2FY17 as the sector continues to face headwinds from muted global macro, BREXIT and transition of existing business to new technologies. Telecom stocks were also seen in action post the spectrum auction. Going forward, the markets is likely to be volatile in near term as investors are having high hopes from July-September quarter earnings, while many are expecting to see some turnaround in selected sectors. Finally, the BSE Sensex declined by 45.07 points or 0.16% to 28061.14, while the CNX Nifty dropped 11.95 points or 0.14% to 8,697.60.

 

US stock markets ended the Friday's session in red terrain, as sentiments remained dampened on report from the Labor Department showing that U.S. employment increased by less than expected in the month of September. The report said non-farm payroll employment climbed by 156,000 jobs in September compared to economist estimates for an increase of about 176,000 jobs. While the job gains in August were upwardly revised to 167,000 from 151,000, the job growth in July was downwardly revised to 252,000 from 275,000. The Labor Department also said the unemployment rate edged up to 5.0 percent in September from 4.9 percent in August. The street had expected the unemployment rate to remain unchanged. Moreover, the report said average hourly employee earnings rose by 6 cents to $25.79. Compared to the same month a year ago, average hourly earnings were up by 2.6 percent. Meanwhile, Speaking at the Institute of International Finance's annual meeting in Washington, D.C., Federal Reserve Vice Chair Stanley Fischer said the jobs data was 'pretty close' to an ideal ‘Goldilocks' reading. Fischer said the rate of job growth is 'fully consistent' with a continued decline in unemployment and suggested the US is close to full employment. The Dow Jones Industrial Average lost 28.01 points or 0.15 percent to 18,240.39, Nasdaq dropped 14.45 points or 0.27 percent to 5,292.40, while S&P 500 was up 7.03 points or 0.33 percent to 2,153.74.

 

Crude oil futures suffered some profit taking on Friday, failing to sustain $50 a barrel after Baker Hughes said U.S. rig counts continued to rise. Also, the Iraqi Oil Minister Jabar al-Luaibi called on local and foreign companies operating in Iraq to continue increasing oil and natural gas output in 2017. Report from oil services firm Baker Hughes showed that drillers added three oil rigs in the week to Oct. 7, bringing the total count up to 428. Benchmark crude oil futures for November delivery was down $0.63 or 1.3 percent to $49.81 on the New York Mercantile Exchange. In London, Brent crude for December delivery ended at $51.86, lower by $0.62 or 1.2 percent on the ICE.

 

Indian rupee appreciated against US dollar on Friday due to increased selling of the American currency by banks and exporters. Some support also came from IMF's statement that India's strong reform push in 2016 is welcome and should continue apace. Adoption of the goods and services tax is poised to boost India's medium-term growth. It added that as shown by India, progress on reforms could ignite business investment (including already strong FDI inflows), further boosting domestic demand. However, dollar firmed up against some global currencies overseas ahead of a key US jobs report, weighed on the rupee. On the global front, British pound fell sharply on growing concerns over the terms of a break from the European Union following comments by the government earlier this week the formal move would come by March of next year. Finally, the rupee ended at 66.67, 2 paise stronger from its previous close of 66.69 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 3628.52 crore against gross selling of Rs 3267.97 crore, while in the debt segment, the gross purchase was of Rs 427.15 crore with gross sales of Rs 1375.25 crore. 

 

The US markets ended modestly in red in the last session as the US employment increased by less than expected in the month of September. The Asian markets have made a mixed start as crude extended losses, Japanese market too was trading in red even though Bank of Japan chief Haruhiko Kuroda reinforced his commitment to unprecedented stimulus. The Indian markets ended modestly in red in the last session, turning cautious ahead of the US employment report, today the start of the holiday truncated week is likely to be in green but cautious and traders will be eyeing the macro data scheduled to be announced through the week starting with factory output numbers later in the day. Traders will however, be getting some support with NITI Aayog Vice-Chairman Arvind Panagariya's statement that India can become a $ 10 trillion economy in the next 15 years, from the existing $2 trillion, like China did in last one and a half decade. Also, credit rating agency Crisil in its latest report has said that revenues of companies in key sectors such as automobiles, IT services, power, steel products, telecom services, pharmaceuticals and FMCG are expected to grow 7 per cent in the July-September 2016 quarter, compared with a marginal 2 per cent in the year ago period. Meanwhile, Finance Minister Arun Jaitley has said that India is at the world's centre stage more than ever before for "aspiring to do better in an adverse" environment, though he also cautioned that by its own yardstick, the country's current growth rate is not enough. However, there will be some cautiousness too, as the World Bank in a new report has said that India, the world's largest remittance recipient in 2015, may receive a remittance of $ 65.5 billion this year, a drop of 5 percent due to weak economic growth in remittances-source countries and cyclic low oil prices.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

8697.60

8666.37

8726.27

BSE Sensex

28061.14

27965.47

28156.24

 

Nifty Top volumes

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

Aurobindo Pharma

194.22

855.80

835.20

875.70

SBI

119.34

258.70

256.00

260.65

Tata Steel

116.1

406.55

395.30

412.70

ICICI Bank

95.52

250.60

247.90

253.60

Tata Motors

91.22

565.70

556.43

571.13

  • Bharti Airtel has acquired 173.8 Mhz spectrum across 1800/2100/2300 MHz bands for a total consideration of Rs 14,244 crore in the latest spectrum auction conducted by the Department of Telecom, Government of India.
  • Idea Cellular has successfully completed its Pan-India Mobile Broadband footprint and significantly boosted its capacity spectrum portfolio in the latest spectrum auction conducted by the Department of Telecom, Government of India.
  • HDFC is planning to raise Rs 1,500 crore by issuing debt securities on private placement basis.
  • Tata Steel has reported 12% rise in sales to 2.62 million tonne in the second quarter ended September 30, 2016 as compared to 2.33 mt sold in previous corresponding period.
  • SBI is likely to sell up to 5 percent stake in SBI Life Insurance, a joint venture between SBI and BNP Paribas Cardiff.
News Analysis