Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (17 January 2020)
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Market Commentary 20 January 2020
Benchmarks to make slightly positive start on Monday

 

Indian equity bourses ended volatile session on flat note on Friday. The start of the day was on cautious note, as United Nations World Economic Situation and Prospects (WESP) 2020 report lowered its GDP growth estimate for India to 5.7 percent in the current fiscal (from 7.6 percent forecast in WESP 2019) and lowered its forecast for the next fiscal to 6.6 percent (from 7.4 percent earlier). But soon, indices staged sharp gains, aided with NITI Aayog member Ramesh Chand's statement that farm sector growth is likely to be higher at 3.1 per cent in the current fiscal compared with 2.9 per cent in 2018-19. Despite high volatility on the street, key benchmarks traded in green for the most part of the session, amid reports that the Reserve Bank of India (RBI) decided to conduct simultaneous purchase and sale of government securities (G-Secs) under Open Market Operations (OMO) for Rs 10,000 crore each on January 23, 2020, in wake of the current liquidity and market situation and an assessment of the evolving financial conditions. Some relief also came with a private report stating that India attracted tech investments worth $9.36 billion last year, a 95 per cent increase compared with the previous year. Finally, the BSE Sensex rose 12.81 points or 0.03% to 41,945.37, while the CNX Nifty was down by 3.15 points or 0.03% to 12,352.35.

 

The US markets ended in green on Friday helped by more data suggesting the economy and corporate profits are in good health. The continued strength on Wall Street was widely attributed to Chinese GDP data even though the latest report showed China's economy grew at the slowest pace since 1990. The report from China's National Bureau of Statistics said Chinese GDP grew by 6.1 percent in 2019 compared to the 6.6 percent growth seen in 2018. However, the GDP growth matched street estimates, which seems to have allowed global traders to breathe a sigh of relief that the impact of the US-China trade war was not worse than feared. More upbeat US economic data also generated buying interest, with a report from the Commerce Department showing a substantial increase in US housing starts in the month of December. The Commerce Department said housing starts skyrocketed by 16.9 percent to an annual rate of 1.608 million in December after jumping by 2.6 percent to a revised rate of 1.375 million in November. The surge came as a big surprise to street, who had expected housing starts to rise by 0.7 percent to a rate of 1.375 million from the 1.365 million originally reported for the previous month. With the much bigger than expected increase, housing starts soared to their highest level since hitting a rate of 1.649 million in December of 2006. Meanwhile, the Federal Reserve released a report before the start of trading showing a modest pullback in US industrial production in the month of December. The Fed said industrial production fell by 0.3 percent in December after climbing by a downwardly revised 0.8 percent in November.

 

Crude oil futures failed to hold early gains and ended marginally higher on Friday as traders continued to weigh the prospects for energy demand in the wake of the China-US trade deal and Senate approval of the US-Mexico-Canada trade pact this week. While data showing that Chinese economy recorded its slowest expansion in almost thirty years, growing just 6.1% in the year 2019, raised concerns about the outlook for energy demand, the signing of the trade deal and buoyant economic data from the US helped ease these concerns. Meanwhile, according to a report released by Baker Hughes, the number of active US oil rigs increased by 14 to 673 this week. Oil rig count had declined in the previous three weeks. Crude oil futures for February inched up 2 cents or 0.03 percent to settle at $58.54 a barrel on the New York Mercantile Exchange. March Brent rose 23 cents or 0.4 percent to settle at $64.85 a barrel on London's Intercontinental Exchange.

 

Extending losses for the second straight day, Indian rupee ended weaker against the US dollar on Friday, on persistent dollar demand from importers. Investors remained cautious as United Nations World Economic Situation and Prospects (WESP) 2020 report lowered its GDP growth estimate for India to 5.7 percent in the current fiscal (from 7.6 percent forecast in WESP 2019) and lowered its forecast for the next fiscal to 6.6 percent (from 7.4 percent earlier). Lackluster trade in local equity markets along with dollar's strength against major global currencies overseas also affected the rupee. However, losses remain capped as some optimism remained among the traders with Minister of State for Finance and Corporate Affairs, Anurag Singh Thakur's statement that the Centre is taking several measures to boost consumption in a bid to put the country's economy on the growth path. On the global front, dollar scaled an eight-month high against the yen on Friday after upbeat US retail sales and jobs data. Finally, the rupee ended at 71.08, 15 paise weaker from its previous close of 70.93 on Thursday.

 

The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 14535.95 crore against gross selling of Rs 4803.99 crore, while in the debt segment, the gross purchase was of Rs 1489.16 crore with gross sales of Rs 1275.68 crore. Besides, in the hybrid segment, the gross buying was of Rs 38.87 crore against gross selling of Rs 51.37 crore.

 

The US markets closed higher on Friday amid strong global economic data and a solid start to the earnings season. Asian markets are trading mostly in green on Monday, with the People's Bank of China (PBoC) keeping the loan prime rate (LPR) unchanged. Indian markets ended volatile session almost flat on Friday with gains in Reliance Industries offsetting losses in other heavyweights HDFC, ICICI Bank and TCS. Today, the markets are likely to get slightly positive start following gains in global markets. Some encouragement will come with Union Road Transport and Highways Minister Nitin Gadkari's statement that the goal of making India a $5 trillion economy by 2024 was difficult but not impossible. He added that it can be achieved by increasing domestic production and reducing dependence on imports. Some support will also come with report that the government is working vigorously on import substitution to promote micro, small and medium enterprises (MSMEs) and encourage local manufacturing. Traders may take note of report that the tax department raised GST collection target to Rs 1.15 lakh crore over the next two months and Rs 1.25 lakh crore for March month by checking fraudulent input tax credit claims. Besides, the Reserve Bank of India (RBI) data showed that the country's foreign exchange reserves rose by $58 million to reach a life-time high of $461.21 billion in the week to January 10. Though, there may be some cautiousness as CRISIL Research expects revenue growth of corporate India, excluding banking, financial services and insurance (BFSI) and oil companies, to decline 2-3 per cent on a year-on-year basis in the third quarter (Q3) of fiscal year 2019-20, mainly due to muted private consumption and a decline in revenues of industrial and construction-linked sectors. There will be some buzz in the auto stocks with the Society of Indian Automobile Manufacturers' (SIAM) data showing that Passenger vehicle (PV) exports from India increased by 5.89 percent in the first nine months of the current fiscal. PV exports stood at 5,40,384 units in the April-December period of the current fiscal as compared with 5,10,305 units in the same period of 2018-19. Insurance stocks will be in focus with a private report indicating that the non-life insurance sector reported a weak premium growth in December 2019 due to a slowdown in motor and fire business. There will be some reaction in sugar stocks with the Indian Sugar Mills Association's (ISMA) statement that Indian mills produced 10.9 million tonnes of sugar between October 1 and January 15, down 26% from a year earlier, due to lower production in the drought-hit western state of Maharashtra. There will be lots of earnings reaction based on the performance of the companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,352.35

12,320.68

12,384.73

BSE Sensex

41,945.37

41,842.46

42,056.10

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,256.36

39.25

37.65

40.20

Bharti Airtel

607.75

500.05

482.17

510.87

SBI

583.96

318.00

310.90

324.30

Bharti Infratel

282.83

218.25

209.47

227.82

ICICI Bank

183.13

532.05

529.10

536.50

 

  • Wipro's strategic investment arm -- Wipro Ventures is closing its $150 million Fund II. 
  • L&T has delivered the 51st K9 VAJRA-T Gun to Indian Army at L&T's Armoured System Complex facility in Gujarat.
  • Reliance Industries' telecom arm Reliance Jio Infocomm has added 56,08,668 customers in November 2019. 
  • HDFC has made an application to list Commercial Paper at BSE for Issue Size of Rs 3,650 crore.
News Analysis