Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (16 December 2019)
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Market Commentary 17 December 2019
Benchmarks to make optimistic start amid firm global cues

 

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

 

  • UPL has received the environment clearance from the government for its Rs 353.43 crore pesticide unit expansion project in Bharuch district of Gujarat. 
  • Titan Company has strengthened its offerings in the Fastrack portfolio with launch of Fastrack Perfumes. 
  • USFDA has conducted GMP inspection of Sun Pharmaceutical Industries' Halol facility in Gujarat from December 03 to 13, 2019. 
  • TCS has launched Quartz DevKit, an intuitive, low code development kit for enterprises to quickly build and deploy blockchain applications on any popular blockchain platform.
News Analysis