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NSE Intra-day chart (16 November 2018)
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Market Commentary 19 November 2018
Benchmarks to make a positive start amid supportive global cues

 

Key Indian equity indices ended the last trading day of week with decent gains, tracking firm global cues. The markets made a positive opening, as India's exports rose by 17.86% to $26.98 billion in October 2018 as compared to $22.89 Billion in October 2017. Exports bounced back in October to high double-digit figures after the mild contraction in September as engineering goods, pharmaceutical and chemical shipments picked up the pace. During the April-October period of the current financial year, exports grew by 13.27% to $191 billion. Optimism also spread on the street, with Fitch indicating that India's strong growth outlook continues to stand out among peers and upgraded its real GDP growth forecast at 7.8% for the current financial year ending March 2019 (2018-19) from 7.3% forecasted earlier in April this year. Market sentiments also got boosted with a private report stating that with bilateral trade between India and the South American country Peru touching an all-time high of $1.60 billion, the next round of talks for the free trade agreement (FTA) between the two countries is scheduled to take place next month. In the second half of the session, rally continued on the street, supported by Commerce and Industry Minister Suresh Prabhu's statement that huge opportunities exist for startups in agri sector to promote the growth of the segment. He also said that innovation in agri sector was important for reducing wastage, increase production, and cutting fertiliser use to enhance soil fertility. Investors took note of Secretary of the Department of Industrial Policy and Promotion (DIPP) Ramesh Abhishek's statement that the government will soon unveil a new industrial policy which may include a dedicated chapter on the importance of design. The street paid no heed towards a report showing that the trade deficit for the month of October 2018 widened to $17.13 billion v/s $13.98 billion in September on account of import growth again picked up. The deficit widened despite a decline of 42.9% in gold imports to $1.68 billion. Imports during the month also rose by 17.62% to $44.11 billion, leading to widening of trade deficit. Finally, the BSE Sensex gained 196.62 points or 0.56% to 35,457.16, while the CNX Nifty was up by 65.50 points or 0.62% to 10,682.20.

 

 The US markets ended choppy session mostly in green on Friday, with Dow Jones gaining around half a percent, as comments from President Donald Trump once again sparked hopes that a trade dispute with China could be resolved in the near term. Trump expressed guarded optimism over US-China trade ties, telling reporters that it may not be necessary to add new tariffs or raise existing ones on Chinese imports, and that he does not want to put China in a bad position. Trump and Chinese President Xi Jinping are scheduled to meet at the sidelines of the G-20 summit in Buenos Aires later this month. Bucking the trend, Nasdaq edged lower, as traders remained on sidelines amid lingering uncertainty about the global economic outlook and renewed anxiety about Brexit. Meanwhile, a report from the Fed showed a slight uptick in industrial production in the month of October. The Fed said industrial production inched up by 0.1 percent in October after rising by a downwardly revised 0.2 percent in September. Industrial output rose for the fifth consecutive month in October, with strength in the manufacturing sector outweighing softening activity in mining production. Gains in the industrial sector came despite monthly declines in the both the mining and utilities sectors. Street had expected industrial production to rise by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month. Dow Jones Industrial Average jumped 123.95 points or 0.49 percent to 25,413.22 and S&P 500 rose 6.07 points or 0.22 percent to 2,736.27, while Nasdaq was down by 11.16 points or 0.15 percent to 7,247.87.

 

Halting two-day winning streak, crude oil futures ended flat on Friday as traders remained cautious on worries about excess supply globally and weak demand outlook due to trade disputes. Though, oil prices edged higher earlier in the session amid speculation that the Organization of Petroleum Exporting Countries (OPEC) members will agree to a supply cut at their forthcoming meeting on December 06. According to reports OPEC's de facto leader, Saudi Arabia wants the cartel to cut output by about 1.4 million barrels per day, around 1.5% of global supply. Benchmark crude oil futures for December settled unchanged at $56.46 a barrel on the New York Mercantile Exchange. January Brent crude gained 14 cents or 0.2 percent to settle at $66.76 a barrel on London's Intercontinental Exchange.

 

Indian rupee trimmed most of its early gains but still managed to end higher against the American currency on Friday, on continued dollar selling by banks and exporters. Sentiments remained positive with Fitch indicating that India's strong growth outlook continues to stand out among peers and upgraded its real GDP growth forecast at 7.8% for the current financial year ending March 2019 (2018-19) from 7.3% forecasted earlier in April this year. The domestic unit also found support from strong gains in local equity markets along with dollar's weakness against some currencies overseas. However, gains were capped as anxiety remained among the traders with a report showing that the trade deficit for the month of October 2018 widened to $17.13 billion v/s $13.98 billion in September on account of import growth again picked up. The deficit widened despite a decline of 42.9% in gold imports to $1.68 billion. Imports during the month also rose by 17.62% to $44.11 billion, leading to widening of trade deficit. On the global front, British pound clawed back losses on Friday as Prime Minister Theresa May clung to her Brexit plan after the resignation of key ministers threw the divorce deal into doubt. Finally, the rupee ended at 71.93, 4 paise stronger from its previous close of 71.97 on Thursday.

 

The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 6094.36 crore against gross selling of Rs 4180.94 crore, while in the debt segment, the gross purchase was of Rs 1794.00 crore with gross sales of Rs 1420.34 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.30 crore against gross selling of Rs 0.69 crore.

 

The US markets closed mostly in green on Friday as President Donald Trump said China wants to make a deal on trade. He stated China has provided a large list of trade items the communist country is willing to compromise on but argued any trade deal has to be reciprocal. Asian markets were trading mostly higher on Monday after a buying spree on Wall Street kept up investor optimism into a new week. Indian equity markets on Friday continued their rising streak for the second day to end with gains of over half a percent. Sustained FII inflows and strengthening of rupee fuelled the uptrend. Today, the start of the new week is likely to be on positive side amid supportive global cues. Traders will be getting some encouragement with former Niti Aayog Vice Chairman Arvind Panagariya stating that the government has made a huge progress in implementing reforms including some difficult structural ones such as the Goods and Services Tax (GST) and Insolvency and Bankruptcy Code (IBC) that previous governments had difficulty in introducing.  He also said that the Centre should stick to the fiscal deficit target for 2018-19.  Meanwhile, the government expects to garner at least Rs 50 billion through share buyback offers of state-run companies, including Coal India, in the current financial year. Also, Prime Minister Narendra Modi will chair a meeting with top industrialists and policy makers today to brainstorm on measures required to realise his vision of India breaking into the top 50 in the World Bank's ease of doing business index. However, there may be some cautiousness as the government may push the Reserve Bank of India (RBI) to allow more active participation by government nominees to the central board in the decision-making process and keep them informed about key regulatory issues. The RBI board is scheduled to meet today amid an escalation in tension between the government and the regulator over liquidity, curbs on weak banks, capital requirements and the transfer of reserves among other things. A move may undermine investor confidence in the world's fastest-growing major economy. The Textiles and apparel sector's stocks will be in action on report that Textiles and apparel exports jumped by a staggering 33% in October on account of higher overseas demand. The country's textile and apparel exports stood at Rs 1,986 billion for October 2018 as against Rs 1,489 billion in the corresponding month last year. There will be some buzz in the Renewable Energy stocks as Indian Renewable Energy Development Agency (IREDA) said the government is planning incentives to promote renewable power and it has already issued tenders for setting up 26-GW clean energy capacities. IREDA Chairman K S Popli said India is planning to produce 50 GW (from clean energy sources) in the next few years.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,682.20

10,643.85

10,707.85

BSE Sensex

35,457.16

35,339.07

35,560.55

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

881.02

191.00

185.28

199.23

ICICI Bank

299.73

367.55

363.63

373.38

SBI

248.06

290.90

285.07

294.27

Bharti Airtel

225.73

332.75

310.90

345.70

ITC

126.36

276.55

275.10

278.15

 

  • Mahindra & Mahindra is planning to invest as much as Rs 1,000 crore in Karnataka in order to build a facility for the development and manufacturing of electric vehicles.
  • ITC is eyeing at portfolio expansion in its food division to achieve the stated vision of the company of achieving Rs 1 lakh crore turnover from FMCG by 2030.
  • Infosys has completed the formation of a joint venture with Temasek, the global investment company headquartered in Singapore.
  • ONGC is eyeing at production enhancement contracts and enhanced oil recovery techniques to boost oil and gas output from old and matured fields.
News Analysis