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NSE Intra-day chart (17 January 2019)
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Market Commentary 18 January 2019
Benchmarks likely to make positive start on firm global cues

 

Key Indian equity benchmarks took U-turn to settle Thursday's trading session in green territory, with both Sensex and Nifty gaining around 0.15% each. After a firm start, the key indices remained positive for the most part of the day, as Reserve Bank of India (RBI) come out with a new policy for overseas borrowings, allowing all eligible entities to raise foreign funding under the automatic route and removing sectoral curbs. All eligible borrowers can now raise external commercial borrowings (ECB) up to $750m per fiscal under the automatic route. Traders got encouragement after a working group of the Commerce and Industry Ministry came out with a blueprint suggesting a host of long and short-term measures to increase the size of India's economy to $ 5 trillion by 2025. It also added that India's potential to achieve a $5 trillion GDP by 2024-25 is within the realm of possibility. Some support also came with a report that Consumer Sentiment Index rebounded in January on account of easing inflation, increasing liquidity and stabilising US-China trade war. India Primary Consumer Sentiment Index has risen over the previous month of November, signalling rising optimism going ahead. However, the markets turned volatile during the noon deals, after a US think tank claimed that H-1B workers are vulnerable to abuse and frequently placed in poor working conditions, seeking reforms like a substantial increase in wages to those holding the visa, popular among Indian IT professionals. Weak cues from global markets also hit the trading sentiments. But, the trade soon bounced back to end the session in green, amid reports that the government simplified process for seeking income tax exemption by startups on investments from angel funds and prescribed a 45-day deadline for a decision on such applications. Adding some optimism, a private report stated that India's growth to be the best in the Asian region in 2019. It is also positive on the market with a Nifty target of 12,170 for the year end which is a fourteen percent upside from current levels. Some comfort also came with ICRA's latest report expressing confidence that mid-sized construction players are likely to see significant growth opportunities, with improving credit profiles and strengthening order book aided by the government's push towards infrastructure development projects. Finally, the BSE Sensex gained 52.79 points or 0.15% to 36,374.08, while the CNX Nifty was up by 14.90 points or 0.14% to 10,905.20.

 

Magnifying their gains for third straight day, the US markets ended higher on Thursday on report that US is considering lifting some tariffs on Chinese products in an effort to elicit more concessions from China for a bilateral trade deal and to stabilize the financial markets. Some support also came with report from the Philadelphia Federal Reserve showing a significant acceleration in the pace of growth in regional manufacturing activity in the month of January. The Philly Fed said its index for current manufacturing activity in the region jumped to 17.0 in January from 9.1 in December, with a positive reading indicating growth. Street had expected the index to tick up to 10.0. The much bigger than expected increase by the headline index reflected a substantial acceleration in new orders growth, as the new orders index surged up to 21.3 in January from 13.3 in December. Besides, a separate report from the Labor Department unexpectedly showed a modest decrease in first-time claims for unemployment benefits in the week ended January 12. The report said initial jobless claims edged down to 213,000, a decrease of 3,000 from the previous week's unrevised level of 216,000. Street had expected jobless claims to inch up to 220,000. The less volatile four-week moving average also dipped to 220,750, a decrease of 1,000 from the previous week's unrevised average of 221,750. However, gains remain capped as investors were increasingly worried that a government shutdown, entering its 27th day, would deliver a more lasting impact to economic growth in the first quarter. Dow Jones Industrial Average surged 162.94 points or 0.67 percent to 24370.10, Nasdaq gained 49.77 points or 0.71 percent to 7084.46 and S&P 500 was up by 19.86 points or 0.76 to 2635.96.

 

Crude oil futures ended lower on Thursday, pressured by recent data showing a weekly climb in US crude production. Uncertainty over whether the US and China will resolve a protracted trade spat has weighed on investment sentiment and raised questions about the health of China, one of the world's biggest importers of crude. However, oil prices found some support with report that the Organization of the Petroleum Exporting Countries (OPEC) stating member oil production fell in December as the group appeared to get a jump on their pledge and that of close non-cartel producers to cut daily output beginning in January. OPEC member output fell by 751,000 barrels a day to 31.6 million barrels a day in December. Benchmark crude oil futures for February declined 24 cents or 0.5 percent to settle $52.07 a barrel on the New York Mercantile Exchange. March Brent crude lost 14 cents or 0.2 percent to settle at $61.18 a barrel on London's Intercontinental Exchange.

 

Snapping four days depreciating streak, Indian rupee ended higher against dollar on Thursday, on persistent selling of the American currency by exporters. Sentiments turned optimistic as a working group of the Commerce and Industry Ministry came out with a blueprint suggesting a host of long and short-term measures to increase the size of India's economy to $ 5 trillion by 2025. It also added that India's potential to achieve a $5 trillion GDP by 2024-25 is within the realm of possibility. Some support also came with a report that Consumer Sentiment Index rebounded in January on account of easing inflation, increasing liquidity and stabilizing US-China trade war. India Primary Consumer Sentiment Index has risen over the previous month of November, signaling rising optimism going ahead. On the global front, dollar took a breather on Thursday following its recent strong gains against key rivals, while sterling steadied after British Prime Minister Theresa May's government won a no-confidence vote in parliament. Finally, the rupee ended at 71.03, 21 paise stronger from its previous close of 71.24 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3928.07 crore against gross selling of Rs 3999.10 crore, while in the debt segment, the gross purchase was of Rs 810.20 crore with gross sales of Rs 1775.80 crore. Besides, in the hybrid segment, there was no buying and selling.

 

The US markets extended their gains for third straight session on Thursday on optimism the US would ratchet back tariffs on Chinese imports, a conflict that has rattled financial markets in recent months. Asian markets were trading higher on Friday, as hopes for a thaw in the US-China trade conflict fed investor appetites for risk assets. Indian markets ended Thursday's session flat, as gains in IT and financials stocks were offset by losses in healthcare and consumer stocks. Investors were also cautious ahead of Q3 results by Reliance Industries and Hindustan Unilever. Today, the markets are likely to make optimistic start mirroring firm cues from global markets. Traders will be getting encouragement with India Ratings and Research (Ind-Ra), a Fitch Group company, report stating that the country's economy is likely to grow a tad higher at 7.5 per cent in 2019-20 on account of steady improvement in major sectors -- industry and services. It further said Gross Domestic Product (GDP) growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors. Traders may also take note of report that ahead of the monetary policy review, India Inc has urged the Reserve Bank of India (RBI) to cut interest rate and reserve ratio to prop up growth. Industry chambers suggested various measures to ease tight liquidity situation and reduce high cost of credit in the light of consistently falling inflation. There will be some buzz in the rubber industry related stocks with Union minister for commerce and Industry and Civil Aviation Suresh Prabhu's statement that the government is developing a National Rubber Policy to address various issues concerning the sector. The policy by the commerce and industry ministry will address issues that will boost productivity. Prabhu said the rubber industry will continue to grow faster, create more employment opportunities, increase exports and add to the economic output of India. Also, there will be some reaction in agriculture related stocks with report that farmers could get annual income support of Rs 15,000 per hectare if the Niti Aayog's proposal for an upfront subsidy through direct benefit transfer is accepted. The Aayog has suggested that all subsidies for agriculture, including fertiliser, electricity, crop insurance, irrigation and interest subvention be replaced by income transfer. There will be some important earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,905.20

10,856.35

10,942.35

BSE Sensex

36,374.08

36,207.11

36,504.73

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

605.35

201.50

197.98

207.28

SBI

159.75

297.40

293.88

302.63

ICICI Bank

131.72

374.60

372.28

377.43

Indian Oil Corporation

116.44

137.65

135.87

138.87

ITC

106.01

293.95

290.87

296.32

 

  • SBI is planning to sell over Rs 15,000 crore worth bad loans belonging to Essar Steel to recover its dues from the debt-laden steel maker. 
  • L&T has signed a definitive agreement on January 16, 2019 to acquire Ruletronics (UK), Ruletronics Systems Inc. (US) and Ruletronics Systems. 
  • Tech Mahindra and Alfresco have extended their global partnership to offer new Machine Learning Solutions for the digital customer. 
  • HUL has reported a rise of 8.90% in its net profit at Rs 1,444 crore for Q3FY19 as compared to Rs 1,326 crore for Q3FY18.
News Analysis