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NSE Intra-day chart (23 September 2019)
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Market Commentary 24 September 2019
Benchmarks to extend two-day gaining momentum on Tuesday

                                          

Indian bourses gave a power-packed performance for second straight day on Monday, on the back of Friday's corporate tax cut by the government. The markets made a gap up opening, aided with Finance Minister Nirmala Sitharaman's statement that India has become a highly competitive investment destination post corporate tax reduction as the rates are now lower than that in China and most Southeast Asian countries. Adding more comfort among traders, Reserve Bank of India (RBI) relaxed the priority-sector lending (PSL) rules for exporters, scrapping the turnover limit for an exporter to be eligible for such loans and increasing the sanction limit per borrower. Despite weak global cues, bulls held their tight grip on the streets for the whole day, taking support with Union Minster Piyush Goyal's statement that the target of making India $5 trillion economy is achievable and that all the stakeholders need to work together to meet this objective. Market participants also remained optimistic after the Retirement fund body, Employment Provident Fund Organisation (EPFO) in its latest Provisional Estimate of Net Payroll data report showed that India created 11,61,918 new jobs in the month of July 2019 as against revised figure of 10,75,314 in June 2019. As per the report, the maximum jobs were created in the age bracket of 18-21. Finally, the BSE Sensex gained 1075.41 points or 2.83% to 39,090.03, while the CNX Nifty was up by 326.00 points or 2.89% to 11,600.20.

 

The US markets ended mostly in red on Monday after investors weighed downbeat data on eurozone manufacturing activity with reports that Chinese officials played down the significance of last week's cancellation of visits to US farm states. The flash eurozone manufacturing purchasing managers index (PMI) fell to an 83-month low of 45.6 in September, down from 47 in August. A figure of less than 50 indicates activity declined. In particular, Germany's manufacturing PMI gauge fell to 41.4 in September, its worst reading in a decade. The biggest economy in the eurozone has been vulnerable to the deterioration of global conditions, drawing concerns that the export powerhouse will record its second consecutive quarter of negative growth from the June to September period, which would qualify as a technical recession. Besides, the lackluster performance on markets also came as a lack of major US economic kept some traders on the sidelines. Reports on consumer confidence, new home sales, durable goods orders and personal income and spending are likely to attract attention in the coming days.

 

Crude oil futures ended higher on Monday on account of growing tensions in the Middle East following recent attacks on Saudi oil facilities. Late last week, the US said that it would deploy more troops to Saudi Arabia following the September 14 attacks on oil facilities. Also, President Donald Trump said that he had ordered the US Treasury to substantially increase sanctions on Iran. However, Saudi Arabia has reportedly restored much of the output lost to attacks over a week ago that damaged its oil facilities. Benchmark crude oil futures for October gained 55 cents or 1 percent to settle at $58.64 a barrel on the New York Mercantile Exchange. November Brent rose 49 cents or 0.8 percent to settle at $64.77 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended unchanged compared to its previous close on Monday, as rising crude oil prices and concerns regarding US-China trade war kept investors edgy. The domestic currency was also weighed down by dollar's strengthen against some other currencies. However, traders took some support with Finance Minister Nirmala Sitharaman's statement that India has become a highly competitive investment destination post corporate tax reduction as the rates are now lower than that in China and most Southeast Asian countries. On the global front, euro fell on Monday after German flash purchasing managers' index survey data for September was weaker than expected, raising more fears about the health of the economy. Finally, the rupee ended unchanged from its previous close of 70.94 on Monday.

 

The FIIs as per Monday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 17191.73 crore against gross selling of Rs 16599.09 crore, while in the debt segment, the gross purchase was of Rs 1310.82 crore with gross sales of Rs 825.29 crore. Besides, in the hybrid segment, the gross buying was of Rs 102.04 crore against gross selling of Rs 104.82 crore.

 

The US markets end mostly lower on Monday as weak economic data out of Europe stoked worries over the state of the global economy. Asian markets are trading mostly in green on Tuesday as investors' sentiment was buoyed after US Treasury Secretary Steven Mnuchin said US-China trade talks will resume next week. Indian markets continued their strong bullish momentum for second straight session on Monday, with Sensex (39,000) and Nifty (11,600) regaining their crucial levels, led by government's decision to cut corporate tax rate and the GST Council reduced taxes on a number of items and services to boost consumption. Today, the markets are likely to extend two-day gaining momentum for yet another session following the government's booster in the form of corporate tax rate cut, a reform which is likely to benefit several firms, amid positive Asian cues. Traders will be getting some encouragement with NITI Aayog vice chairman Rajiv Kumar's statement that India has become a more attractive investment destination following the reduction in corporate tax rates but relocation of units from competitors such as China will depend on other factors as well, such as the ability of states to make their environment more business-friendly. He added that this measure will help restore growth momentum in the second half of the economy. He expects the second half of FY20 (October 2019-March 2020) to clock higher than 7.5% GDP growth. Traders may take note of Moody's Investors Service's statement that the Reserve Bank of India (RBI) Housing Finance Committee's recent recommendations on Indian residential mortgage-backed securities (RMBS) have the potential to alleviate key credit challenges associated with the sector. Meanwhile, the Agriculture Ministry's data showed that the country's foodgrain production is estimated slightly lower at 140.57 million tonnes in the kharif season of 2019-20 crop year on likely fall in rice and pulses output. Auto stocks will be in focus as allaying fears of the automobile industry, Union Road Transport Minister Nitin Gadkari said there is no need to ban petrol and diesel vehicles as electric mobility has picked up momentum on its own and all buses would be electric in two years. Besides, ICRA said the automotive industry is likely to be one of the key beneficiaries of corporate tax revision. It said the reduction of corporate tax rates to globally competitive levels will incentivise OEMs (original equipment manufacturers) and their vendors to increase localisation, which augurs well for the industry. There will be some buzz in the steel stocks with Union Petroleum and Steel Minister Dharmendra Pradhan's statement that India will become a net exporter of steel in the next three years.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,600.20

11,482.75

11,706.25

BSE Sensex

39,090.03

38,695.67

39,462.75

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

2,211.69

55.45

53.07

57.67

ICICI Bank

574.90

446.30

433.17

454.72

SBI

541.78

313.75

304.10

319.70

ITC

520.40

254.85

249.67

260.27

Tata Motors

510.32

127.90

123.47

135.37

 

  • SBI is planning to launch a co-lending business model with 4-5 medium to large-sized NBFCs. 
  • TCS has launched its real-time payments solution in multiple markets, as part of TCS BaNCS for payments, to help customers in their digital transformation journey. 
  • Bharti Airtel has entered into a partnership with Bharti AXA Life Insurance to offer pre-paid plan with insurance protection cover for its customers.  
  • ICICI Bank is planning to expand its retail network by adding 450 new branches in FY20.
News Analysis