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NSE Intra-day chart (18 September 2019)
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Market Commentary 19 September 2019
Markets to make a cautious start amid mixed global cues

                                          

In a highly volatile session, Indian equity benchmarks managed to keep their heads above water in Wednesday's trading session, with Sensex and Nifty closing higher by over 0.20% each. Key indices made a fabulous start of the day, amid reports that the finance ministry is working on one more booster dose to give a leg-up to the economy that has hit over six-year low of 5 per cent. However, soon volatility persisted over the markets, after global credit rating agency Moody's in its latest report said that reduction in the risk weight on consumer credit by the Reserve Bank of India is credit negative as it may lead to increased exposure by lenders to this loan segment. But, equity benchmarks managed to trade in green territory for the most part of the trading session to end higher, taking comfort with Principal Economic Adviser Sanjeev Sanyal's statement that there is far more space on the monetary side than the fiscal front for lifting sagging economic growth. Some support also came with Minister of Commerce and Industry and Railways Piyush Goyal's statement that government is planning to launch a National Logistics Policy to reduce trade costs. He added that all transport sectors of railways, civil aviation, roads and shipping would work towards bringing logistics costs below 10%. Finally, the BSE Sensex gained 82.79 points or 0.23% to 36,563.88, while the CNX Nifty was up by 23.05 points or 0.21% to 10,840.65.

 

The US markets ended volatile session mostly in green on Wednesday after the Federal Reserve revealed its widely expected decision to cut rates by another 25 basis points, lowering the target range for the federal funds rate to 1.75 to 2 percent. The latest rate cut was once again attributed to the implications of global developments for the economic outlook as well as muted inflation pressures. The accompanying statement was largely unchanged from July, with the Fed reiterating that the labor market remains strong and that economic activity has been rising at a moderate rate. The Fed did acknowledge in its latest statement that exports have weakened along with business fixed investment, although the central bank noted household spending has been rising at a strong pace. The central bank reiterated that it will act as appropriate to sustain the economic expansion, with a strong labor market and inflation near its symmetric 2 percent objective. Fed Chairman Jerome Powell said that the central bank is prepared for a more extensive sequence of rate cuts in the face of an economic downturn but noted that is not currently expected. The Fed announcement largely overshadowed a Commerce Department report showing a substantial rebound in new residential construction in the month of August. US homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market. As per the report, housing starts jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units last month, the highest level since June 2007.

 

Extending losses for second straight session, crude oil futures ended lower on Wednesday following data showing an increase in US crude stockpiles last week and a sooner than expected recovery in Saudi Arabia's output levels. The Energy Information Administration's data showed that crude inventories in the US rose by 1.06 million barrels in the week ended September 13, compared with expectations for a drawdown of 2.5 million barrels. Gasoline inventories were up by 780,000 barrels last week, against forecasts for a drop of 540,000 barrels. Meanwhile, distillate stockpiles increased by 440,000 barrels, compared with forecasts for a rise of 535,000 barrels. Moreover, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman said that average oil production in September and October would be 9.89 million barrels per day and that the world's top oil exporter would ensure full oil supply commitments to its customers this month. Benchmark crude oil futures for October declined $1.23 or 2.1 percent to settle at $58.11 a barrel on the New York Mercantile Exchange. November Brent slipped 95 cents or 1.5 percent to settle at $63.60 a barrel on London's Intercontinental Exchange.

 

Snapping two days falling streak, Indian rupee staged a smart recovery against dollar on Wednesday, as positive trend in equity market and easing crude prices strengthened investor sentiments. Traders also took encouragement with a report that the finance ministry is working on one more booster dose to give a leg-up to the economy that has hit over six-year low of 5 per cent. As per the report, the blue print for the stimulus is ready that would be announced by Finance Minister Nirmala Sitharaman in the next few days. On the global front, dollar held near a seven-week high against the Japanese yen on Wednesday before the outcome of a Federal Reserve meeting where officials are widely expected to cut interest rates by a quarter of a percentage point. Finally, the rupee ended at 71.24, 54 paise stronger from its previous close of 71.78 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4406.99 crore against gross selling of Rs 5087.60 crore, while in the debt segment, the gross purchase was of Rs 712.22 crore with gross sales of Rs 1107.58 crore. Besides, in the hybrid segment, the gross buying was of Rs 26.06 crore against gross selling of Rs 25.89 crore.

 

The US markets closed mostly higher Wednesday after the Federal Reserve cut its benchmark interest rate for a second time this year, citing slowing global economic growth and uncertainty over US trade conflicts. Asian markets are trading mixed as investors looking for the Bank of Japan (BoJ) to announce its interest rate decision and monetary policy statement later today. The BoJ is widely expected to maintain a pledge to guide short-term interest rates at -0.1%. Indian markets snapped two-day losing streak and ended volatile session in green territory on Wednesday with notable gains amid easing crude oil prices. Today, the markets are likely to make a cautious start amid mixed cues from global markets. Traders will be concerned with report that as against a steep 17.5 percent higher tax collection budgeted for the full year, the government could mop-up only 4.7 percent more so far this year, with the direct tax kitty growing to Rs 5.50 lakh crore as of September 17, up from Rs 5.25 lakh crore a year-ago. The lower mop-up reflects the deepening slump in demand and overall growth. Some cautiousness may also come as ahead of the crucial GST Council meeting on September 20, a committee of officials has rejected demands for a cut in tax rate on items ranging from biscuits to car owing to tight revenue position as any reduction will dent Centre and State collections. Traders may take note of the India Meteorological Department's (IMD) report that monsoon rains in India in the week to September 18 were above average for a third straight week, with floods hitting many districts in the central parts of the country and damaging crops such as soybean and pulses. Though, some support may come later in the day with Niti Aayog CEO Amitabh Kant's statement that the government is doing everything possible to turn around the Indian economy and bring it back to a high trajectory growth path. Some suprot may also come with Commerce and Industry Minister Piyush Goyal's statement that huge export potential exists in chemical and allied sector and it should make a combined effort to set higher goals and aspire for extraordinary results. There will be some buzz in the steel stocks with ratings agency ICRA's statement that India's steel consumption growth is likely to decelerate to six per cent in the current financial year, due to the economic slowdown. However, the profitability of steelmakers may recover somewhat in the third quarter of 2019-20, with a sharp fall in prices of coking coal, key steel-making ingredient, in August 2019. Housing finance companies stocks will be in focus as after mandating banks to link their new retail loans to an external benchmark, the Reserve Bank is now looking at structuring the interest rate regime for housing finance companies and shadow bankers, which together control over a fifth of the credit market, for better transmission.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,840.65

10,801.95

10,882.25

BSE Sensex

36,563.88

36,448.87

36,695.94

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,869.37

64.10

61.72

66.47

Tata Motors

530.49

121.75

119.53

124.93

SBI

254.79

280.40

275.55

284.10

BPCL

241.28

382.10

371.18

390.88

ITC

199.56

239.25

234.77

243.02

 

  • M&M has incorporated Mahindra Bangladesh as its wholly owned subsidiary. 
  • Reliance Industries' telecom arm Jio has added 85,39,325 customers in July 2019. 
  • Tata Motors has launched Tata Motors AutoMobility Collaboration Network 2.0. 
  • Bajaj Finance has received approval to raise up to Rs 8,500 crore through QIP by issuing equity shares.
News Analysis