Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (16 September 2016)
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Market Commentary 19 September 2016
Markets to make a positive but cautious start

 

The week's last session turned out to be a volatile one as the Indian frontline equity indices went through a rollercoaster ride, through they managed to settle with gains of around half a percent. Sentiments remained jubilant in the first half of trade amid firm cues from Asia and overnight gains on Wall Street, but investors started booking profits after weak opening in European counterparts. Sentiments got some support with report that Prime Minister Narendra Modi targeting to roll out the ambitious GST on April 1 next year, has directed that all steps required in this direction should be completed before that date. He has also said that GST Council would need to have intensive meetings to be able to make timely recommendations relating to its mandate. Adding the confidence among market participants, Finance Minister Arun Jaitley expressed hope that the Reserve Bank will keep in mind the decline in retail inflation, while deciding on interest rates at its policy review meeting on October 4, 2016. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 345 crore on September 15, 2016. However, investors remained nervous with the exports declining for the second consecutive month in August by 0.3 percent to $ 21.51 billion due to dip in shipments of products like petroleum and leather. The imports too contracted by 14 percent to $29.91 billion, leaving a trade deficit of $7.67 billion in the month under review. Meanwhile, sugar stocks gained traction as sugar prices touched three-year highs due to strong demand from bulk consumers for the festive season amid millers selling at higher levels. Sugar prices also rose as data from the Brazilian cane industry group showed that production dropped more-than-expected during the second half of August. Finally, the BSE Sensex ended up by 186.14 points or 0.66% to 28599.03, while the CNX Nifty gained 37.30 points or 0.43% to 8,779.85.

 

The US markets closed lower on Friday, as weak oil prices pressured energy shares, while anxiety ahead of next week's central-bank meetings weighed on sentiment. The Federal Open Market Committee (FOMC) and the Bank of Japan are both scheduled to wrap up their policy meetings on Wednesday. The BOJ is seen as easing policy slightly, while the Fed is widely expected to keep rates on hold. The market is pricing in a 12% probability of a rate increase when the Fed's policy group convene, according to CME Group data.  On the economy front, the government data suggested that inflation may be nearing a level that could encourage the Federal Reserve to raise interest rates. The Consumer Price Index rose 0.2% in August, driven by higher rents and a surge in health-care costs. Medical care rose 1%, the fastest rate since 1984. Separately, the Federal Reserve stated that household net worth rose to $89.06 trillion in the second quarter, a rise of $1.07 trillion, or 1.2%. The gains were almost equally split between the $452 billion rise in equities and the $474 billion advance in the value of real estate. The Dow Jones Industrial Average lost 88.68 points or 0.49 percent to 18,123.80, Nasdaq dropped 5.12 points or 0.10 percent to 5,244.57, while S&P 500 was down 8.10 points or 0.38 percent to 2,139.16. 

 

Crude oil futures turned sharply lower on Friday, hitting their lowest levels in more than a month on ongoing supply concerns. Further evidence that U.S. supplies are on the rise contributed to lower oil prices. Oil Services firm Baker Hughes said US companies added two oil rigs in the week to Sept. 16, bringing the total rig count up to 416, the most since February. Crude prices were also under pressure with data showing that Iran's August crude oil exports jumped 15% from July to a five-year high of more than 2 million barrels per day, re-approaching Tehran's pre-sanctions shipment levels. Benchmark crude oil futures for October delivery dropped $0.88 or 2 percent to close at $43.03 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for November delivery declined by $0.81 or 1.65 percent to $45.80 a barrel on the ICE.

 

Indian rupee appreciated against US dollar due to selling of American currency by banks and exporters. Investors got some confidence after Finance Minister Arun Jaitley expressed hope that the Reserve Bank will keep in mind the decline in retail inflation, while deciding on interest rates at its policy review meeting on October 4, 2016. Foreign fund inflows, dollar's weakness against other currencies and a firm domestic equity market also helped the home currency. On the global front, dollar eased against the yen as lacklustre US economic data further dampened already low expectations of a Federal Reserve interest rate hike next week. Finally the rupee ended at 66.98, stronger by 4 paise from its previous close of 67.02 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 3410.81 crore against gross selling of Rs 3064.77 crore, while in the debt segment, the gross purchase was of Rs 717.46 crore with gross sales of Rs 1401.27 crore.

 

The US markets once again showed a lackluster trade and ended lower in last session, traders remained cautious ahead of the US Fed meeting and booked profit. The Asian markets have made a positive start with some of the indices showing strong trade, up by over half a percent in early deals, as oil rebounded, increasing risk appetite ahead of policy meetings this week by the Federal Reserve and the Bank of Japan. The Indian markets despite losing some strength posted good gains in the last session on hopes that US Fed may delay the rate hike in view of some weak economic reports. Today, the start of the new week is likely to be cautious but in green on positive regional cues. Traders will be getting some support with DIPP Secretary Ramesh Abhishek's statement that implementation of the goods and services tax (GST) is bound to be a "game changer" for India's manufacturing sector and will enhance ease of doing business in the country. Meanwhile, the Confederation of Indian Industry (CII) has said that the factory inspection system needs a complete overhaul to bring India among the top 50 countries in terms of ‘ease of doing business' in the next two years. CII in its white paper said that the excessive number of inspections in India weighs down on the competitive advantage and the 'ease of doing business' of Indian businesses. The pharma sector will be buzzing with government slashing prices of 10 more drugs while bringing eight new medicines, including paracetamol, under price control for the first time in its bid to cap cost of over 800 plus formulations to make them affordable. The steel stocks too will be in action, as the Union Steel Minister Chaudhary Birendra Singh has claimed that the country will be ranked after Japan and America in steel production in December this year as a result of the Prime Minister's various initiatives like Skill India, Startup India and Make in India. Apart from the secondary market there will be buzz from the primary market too, where the Rs 6,000 crore IPO of ICICI Prudential Life Insurance will kick off. The first IPO by any insurance company values the private life insurer at Rs 48,000 crore.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

8779.85

8737.68

8834.83

BSE Sensex

28599.03

28469.53

28753.58

 

Nifty Top volumes

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

ICICI Bank

299.60

267.35

263.90

273.20

Axis Bank

193.1

602.20

592.17

612.32

State Bank of India

180.13

254.30

251.13

259.73

ITC

140.38

260.35

256.43

263.23

BHEL

136.26

146.65

143.73

151.43

  • Tata Motors has launched its new Signa range of Medium & Heavy Commercial Vehicles, which will be shortly be available across Haryana, Himachal Pradesh and Punjab.
  • Wipro and Reltio have entered into a partnership to develop faster and cost effective Master Data Management solutions.
  • Dr. Reddy's Laboratories has expanded strategic collaboration with Amgen, one of the world's leading independent biotechnology companies, to market and distribute three of Amgen's medicines in India in the therapy areas of oncology and osteoporosis.
  • ICICI Bank's subsidiary- ICICI Prudential Life Insurance Company has raised capital of Rs 1,635 crore from anchor investors ahead of its Initial Public Offer.
  • Axis Bank, has signed a Share Purchase Agreement with IFCI for acquisition of 73,28,334 equity shares in Assets Care and Reconstruction Enterprise.
News Analysis