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NSE Intra-day chart (18 October 2019)
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Market Commentary 22 October 2019
Markets to get slightly negative start on Tuesday

 

Indian equity benchmarks took winning spree to 6th day on Friday, with both the larger peers, Sensex and Nifty, closing higher by around 0.65% each. Key indices made a negative start of the day but soon turned positive, taking support with Union Finance Minister Nirmala Sitharaman's statement that investors can find no better place in the world than India that has a democracy loving and capitalist respecting environment. She added that the government was continuously working to bring reforms. Domestic sentiments remained enthusiastic with a private report stating that India has emerged as third largest ecosystems for more successful start-ups right behind China and US but ahead of Britain and Israel. Bourses hold their strong gains throughout the day to settle higher, despite weak cues from global markets. Market participants got comfort, with a private report stating that corporate tax rate cut is clearly a positive for India which would move the country up the ladder in terms of attractiveness for foreign direct investment. Separately, recognizing the role of innovation as a key driver of growth and prosperity for India, NITI Aayog with Institute for Competitiveness as the knowledge partner has released the India Innovation Index (III) 2019. Karnataka, Tamil Nadu, Maharashtra, Telangana and Haryana have been ranked as top five most innovative major states in NITI Aayog's first Innovation Index. Finally, the BSE Sensex gained 246.32 points or 0.63% to 39,298.38, while the CNX Nifty was up by 75.50 points or 0.65% to 11,661.85.

 

The US markets ended higher on Monday on renewed optimism about the completion of phase one of a US-China trade deal following comments from President Donald Trump and Chinese Vice Premier Liu He.  Liu He said Washington and Beijing have laid the groundwork for success in the first phase of its attempt to carve out a resolution to its trade disagreement. China and the US have made substantial progress in many aspects, and laid an important foundation for a phase one agreement. President Donald Trump pronounced his optimism on the likelihood of a deal, saying it was coming along great. He also claimed issues in phase two of the deal would be a lot easier to work out than those in phase one. The strong corporate results reported last week also made traders hopeful as earnings season gets into full swing in the coming days. McDonald's, Procter & Gamble, UPS, Caterpillar, eBay, Ford, Microsoft, Tesla, Twitter, Amazon, and Intel are just a few of the companies due to report their results this week. Besides, UK British Prime Minister Boris Johnson was forced to ask the European Union for a three-month extension to the October 31 deadline to exit from the trade bloc, representing the latest setback for the British leader and the country's years long attempt to forge an orderly separation. The Germany's economic affairs minister said he thought the EU would approve the extension request. Johnson is seeking another vote on his Brexit proposal in Parliament, but UK House of Commons Speaker John Bercow rejected his bid, saying a new vote would be repetitive and disorderly.

 

Crude oil futures ended lower on Monday as worries about global economic slowdown and possible drop in near term energy demand weighed on the commodity. Meanwhile, Kuwait and Saudi Arabia were having discussions to restart production in oil fields that they manage jointly, which could deliver some 500,000 barrels a day in crude, pressuring prices. The fields Khafji and Wafra have been shut for the past four years. Besides, Russia said that it failed to comply to its commitments in September to curb production, citing increases in natural-gas condensate production ahead of winter. The current output pact between the Organization of the Petroleum Exporting Countries and its allies to cut 1.2 million barrels a day runs through March 2020. Benchmark crude oil futures for November fell 47 cents or 0.9 percent to settle at $53.31 a barrel on the New York Mercantile Exchange. December Brent dropped 46 cents or 0.8 percent to settle at $58.96 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended tad higher against dollar on Friday, owing to dollar sale by exporters and banks. Traders took some support with Union Finance Minister Nirmala Sitharaman's statement that investors can find no better place in the world than India that has a democracy loving and capitalist respecting environment. Moreover, dollar's weakness against some currencies overseas supported the rupee. However, gains were limited as some anxiety came with International Monetary Fund's (IMF) statement that though India has worked on the fundamentals of its economy, there are problems, including the long-term drivers of growth that need to be addressed. On the global front, euro edged higher against the dollar on Friday, amid hopes that a Brexit deal between Britain and the European Union could prevent an economic recession in the euro zone. Finally, the rupee ended at 71.14, 2 paise stronger from its previous close of 71.16 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 5758.41 crore against gross selling of Rs 4484.03 crore, while in the debt segment, the gross purchase was of Rs 2335.92 crore with gross sales of Rs 2052.20 crore. Besides, in the hybrid segment, the gross buying was of Rs 19.77 crore against gross selling of Rs 25.23 crore.

 

The US markets settled higher on Monday, boosted by optimism around US-China trade talks as well as the corporate earnings season. Asian markets are trading mostly in green on Tuesday amid cheery chatter about the chance of a Sino-US trade deal. Indian markets, before going for long weekend, posted strong gains of over 0.60% each on Friday and extended their gains to sixth straight session as Finance Minister Nirmala Sitharaman indicated further stimulus in FY20. Markets remain closed on Monday on account of assembly elections in Maharashtra and Haryana. Today, the start is likely to be marginally in red. There will be some cautiousness with Finance Minister Nirmala Sitharaman's statement that the ongoing trade wars and protectionism have generated uncertainties and will ultimately impact the flow of capital, goods and services. Meanwhile, regulator SEBI has put in place stricter norms for auditors, including prompt disclosures about reasons for their resignation and requirement to approach chairman of audit committee directly in case of any concerns with the management of the firm concerned. However, some respite may come later in the day following positive leads from Asian peers. Traders may take some encouragement as the International Monetary Fund supported India's recent decision to reduce corporate income tax, saying it has a positive impact on investment. Some support may also come with reprot that the commerce ministry is considering rationalising and simplifying certain export promotion schemes such as EPCG in the next foreign trade policy, which provides guideline and incentives for increasing shipments. Besides, a report showed that emerging investment instruments -- REITs and InvITs -- seem to be finally catching on with investors as mutual funds have invested nearly Rs 9,000 crore in such units in the first nine months of the year. Non-banking finance companies (NBFCs) stocks will be in focus with rating agency ICRA's report that NBFCs have stepped up securitisation of their loan portfolios in the last one year, raising as much as Rs 2.36 lakh crore since the IL&FS crisis in September 2018. There will be some reaction in sugar stocks with report that with the next sugarcane crushing season slated to begin after Diwali, the sugar exports have largely remained muted on global sugar glut and low prices in the international market. 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

11,661.85

11,581.77

11,713.32

BSE Sensex

39,298.38

39,054.30

39,451.76

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

4,416.46

51.40

47.37

54.07

Tata Motors

648.84

136.85

134.37

140.57

ZEEL

520.11

250.20

238.92

262.12

SBI

332.04

269.65

264.78

272.93

ONGC

175.97

143.50

140.77

145.37

 

  • M&M has inaugurated its 100th new standalone dealership for small commercial vehicles, within a span of just 6 months. 
  • Coal India's supply of coal to the power sector has declined by 7 percent to 218.4 MT in the April-September period of 2019-20. 
  • L&T has agreed to purchase the entire stake held by Old Lane in L&T Infrastructure Development Projects, a subsidiary company. 
  • Infosys is helping enterprises accelerate their digital transformation using Oracle Cloud technologies.
News Analysis