Weak macro-economic data of
wholesale inflation & exports snapped 3-day rally of Indian markets on
Monday, with Sensex & Nifty ending in red terrain. Markets made a firm
start, aided with Chief Economic Advisor Krishnamurthy Subramanian's statement
that the government is focusing on increasing consumption to boost economic
growth. Highlighting steps taken by government to improve Indian economy, he
said that the measures include corporate tax cuts to improve risk-return of
companies. But soon, indices turned volatile, as India's exports contracted for
the fourth month in a row in November, dipping 0.34% to $25.98 billion.
Sluggish trade continued in the equity markets throughout the day, as India's
Wholesale price index (WPI) inflation rose to 0.58% in the month of November
2019 as against 0.16% for the previous month and 4.47% during the corresponding
month of the previous year. The rise in inflation is due to pick up in
vegetable prices including onions. Market participants paid no heed towards
Reserve Bank's Governor Shaktikanta Das' statement that the central bank had
acted ahead of time by starting to slash rates in February this year, and hoped
the decision to pause the cuts earlier this month will prove to be a right call
over time. Finally, the BSE Sensex fell 70.99 points or 0.17% to 40,938.72,
while the CNX Nifty was down by 32.75 points or 0.27% to 12,053.95.
The US markets ended higher on
Monday after the US and China finally reached an agreement on a phase one trade
deal last week. The agreement, announced by US and Chinese officials last
Friday, includes suspending planned tariffs on Chinese goods as well as scaling
back existing tariffs in exchange for Chinese structural reforms and purchases
of US goods. The trade deal eliminates a lot of the uncertainty hanging over
the markets. Moreover, the agreement does not completely end the US-China trade
war, as some tariffs will remain in place as negotiators begin phase two talks.
All three main benchmarks set new intraday records on Monday. On the economic
data front, a report released by the National Association of Home Builders
unexpectedly showed a substantial improvement in US homebuilder confidence in
the month of December. The report said the NAHB/Wells Fargo Housing Market
Index spiked to 76 in December from an upwardly revised 71 in November. Street
had expected the index to come in unchanged compared to the 70 originally
reported for the previous month. With the unexpected jump, the housing market
index reached its highest level since hitting 77 in June of 1999. Besides, New
York manufacturing activity has grown at a slightly faster rate in the month of
December, according to a report released by the Federal Reserve Bank of New York.
The New York Fed said its general business conditions index inched up to 3.5 in
December from 2.9 in November, with a positive reading indicating growth in
regional manufacturing activity. Street had expected the index to rise to 4.0.
Crude oil futures ended higher on
Monday, extending the notable upward move seen over previous sessions, lifted
by a so-called phase-one US-China trade deal that has de-escalated tensions
between the world's two-largest economies. US Trade Representative Robert
Lighthizer said that the phase one China deal was totally done. He said the deal
goes beyond agriculture to address intellectual property issues, has strong
enforcement provisions and addresses financial services and currency issues. A
number of contentious issues remain to be resolved in further phase two talks,
which have yet to be scheduled. The first leg of the trade deal is expected to
be signed in January. Benchmark crude oil futures for January rose 14 cents or
0.2 percent to settle at $60.21 a barrel on the New York Mercantile Exchange.
February Brent surged 12 cents or 0.2 percent to settle at $65.34 a barrel on
London's Intercontinental Exchange.
Indian
rupee ended weaker against the American currency on Monday, due to fresh dollar
demand from banks and importers. Sentiments remained down-beat as India's
Wholesale price index (WPI) inflation rose to 0.58% in the month of November
2019 as against 0.16% for the previous month and 4.47% during the corresponding
month of the previous year. Some concern also came in as India's exports
contracted for the fourth month in a row in November, dipping 0.34% to $25.98
billion. Besides, lackluster trade in local equity markets weighed on the
rupee. On the global front, pound pared earlier advances following
disappointing economic data, as the gloomy economic picture countered the
optimism in the market following the decisive Conservative victory in last
week's election. Finally, the rupee ended at 71.00, 17 paise weaker from its
previous close of 70.83 on Friday.
The
FIIs as per Monday'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
4686.55 crore against gross selling of Rs 4569.06 crore, while in the debt
segment, the gross purchase was of Rs 644.71 crore with gross sales of Rs
2156.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.40
crore against gross selling of Rs 4.13 crore.
The US markets ended higher on
Monday as investors' confidence was boosted by upbeat data from China while
cooling trade tensions between the world's two biggest economies removed one of
the hurdles for global economic growth. Asian markets are trading in green on
Tuesday following overnight gains on Wall Street. Indian equity benchmarks
ended lackluster trading day with marginal cut on Monday amid weak wholesale
inflation data. Today, the markets are likely to get a positive start tracking
positive global cues. Traders will be getting some encouragement with Reserve
Bank of India (RBI) Governor Shaktikanta Das' statement that the central bank
saw economic growth slowdown in February, prompting it to cut rates ahead of
the curve and wondered why markets were surprised with the decision to pause
rate reduction. Noting that there is a need for an informed and objective
discussion on the country's economy, Das said the RBI would do whatever is
necessary to address growth slowdown, spikes in inflation as well to ensure
good health of banks and non-bank lenders. Some support may come with report
that after a delay of over two months, the Centre has released Rs. 35,298 crore
as GST compensation to the states for the August-September period. Market
participants may take note of report that with economic growth slowing to a
six-year low, IMF said that the government should undertake structural reforms
such as bank clean-up and labour reforms to address the slowdown in domestic demand.
However, there may be some cautiousness as global ratings agency Moody's
Investors Service lowered India's gross domestic product growth projection for
the fiscal year 2019-20 to 4.9 percent from 5.8 percent, saying that weak
household consumption will curb economic growth and weigh on the credit
quality. There will be some buzz in the reality stocks as rating agency ICRA
maintained a negative outlook for housing because of subdued demand, slow
sales, over-supply and liquidity crunch. MSME stocks will be in focus as Union
Minister Nitin Gadkari approved changes in the Interest Subvention Scheme
guidelines for micro, small and medium enterprises (MSMEs), and said the
modifications are expected to boost their productivity through access to credit
at reduced cost.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
12,053.95
|
12,021.95
|
12,110.30
|
BSE Sensex
|
40,938.72
|
40,842.76
|
41,109.86
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
1,722.74
|
46.80
|
45.83
|
47.88
|
SBI
|
350.28
|
331.85
|
329.35
|
335.80
|
Tata Motors
|
262.50
|
174.95
|
172.60
|
178.05
|
ICICI Bank
|
130.71
|
539.25
|
536.83
|
541.53
|
ITC
|
120.14
|
236.90
|
234.37
|
241.42
|
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