Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (23 February 2018)
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Market Commentary 26 February 2018
Markets likely to make positive start on firm global cues

 

Friday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls made come back on Dalal Street, with Sensex recapturing its crucial 34,100 mark, while Nifty end just shy of 10,500 mark. The markets' mood remained up-beat throughout the day and benchmarks fervently gained from strength to strength, as investors continued hunt for fundamentally strong stocks. Key gauges made a gap-up opening as traders took some encouragement with Niti Aayog Vice Chairman Rajiv Kumar's statement that India will emerge as a model for the rest of the world once it completes economic, political and social transitions. He highlighted India's development process, outlined country's experiences since Independence and laid out a future vision for achieving a New India by 2022. Some support also came with private report stating that exports of India-made retail and lifestyle products clocked a 16% growth in 2017, over the same period last year. It further noted that in terms of growth, India has surpassed China which traditionally led from the region, and now stands at number 3. Buying got accelerated in second half of the trade with market participants getting some support with CRISIL's report stating that asset quality of microfinance institutions (MFIs), including small finance banks, has come out of the impact of demonetisation and stabilised since June 2017. The report added that asset quality has improved, as evidenced by reducing portfolio delinquencies and cumulative collection efficiencies have risen to over 99 percent for disbursements since April 2017. Traders ignored private report that America's bilateral trade deficit with four major countries, including India, narrowed in the first three quarters of 2017 as compared to the previous year. According to the report, India's growth has slowed due to the effects of its structural economic reforms. Finally, the BSE Sensex surged 322.65 points or 0.95% to 34,142.15, while the CNX Nifty was up by 108.35 points or 1.04% to 10,491.05.

 

US markets ended the Friday's session on optimistic note and the major averages ended the session at their best levels of the day. A continued drop by treasury yields contributed to the rally on Wall Street, with the ten-year yield pulling back further off the four-year closing high set on Wednesday. The continued rebound by treasuries came as the Federal Reserve issued its monetary policy report to Congress, with the central bank hinting that it still plans three interest rates hikes in 2018. Trading activity is somewhat remain subdued, however, as a lack of major U.S. economic data is keeping some traders on the sidelines. A slew of economic data is scheduled to be released next week, including reports on new home sales, durable goods orders, consumer confidence, personal income and spending, and manufacturing activity. Congressional testimony by new Federal Reserve Chairman Jerome Powell is also likely to attract next Wednesday amid lingering concerns about the outlook for interest rates. The Dow Jones Industrial Average surged 347.51 points or 1.39 percent to 25,309.99, S&P 500 gained 43.34 points or 1.60 percent to 2,747.30 and Nasdaq was up by 127.30 points or 1.77 percent to 7,337.39.

 

Crude oil prices continued to rise on Friday despite further signs of robust U.S. oil production. The higher crude prices got support with data showing producers added one additional rig this week, leaving crude to notch its second consecutive weekly gain as it continues to claw back ground lost in a selloff earlier this month. The U.S. energy companies added one oil rig this week, bringing the total count up to 799, the highest level since April 2015. It was the fifth straight weekly rise in the rig count. Meanwhile, the Energy Information Administration said crude-oil stocks fell by 1.616 million barrels in the week ended February 16. Benchmark crude oil futures for April delivery surged 78 cents or 1.2 percent at $63.55 a barrel on the New York Mercantile Exchange. Brent crude gained 92 cents or 1.4 percent to settle at $67.31 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably stronger against dollar on Friday on increased selling of the American currency by exporters and banks. Traders took encouragement with Niti Aayog Vice Chairman Rajiv Kumar's statement that India will emerge as a model for the rest of the world once it completes economic, political and social transitions. Investors even overlooked report that America's bilateral trade deficit with four major countries, including India, narrowed in the first three quarters of 2017 as compared to the previous year. According to the report, India's growth has slowed due to the effects of its structural economic reforms. Besides, abundant capital inflows into domestic equities gave the uptrend some momentum. However, dollar's strength against major global currencies overseas restricted the local unit's further up move. On the global front, euro slipped on Friday as investors trim positions before a big week for global currency markets from a European politics perspective. Finally, the rupee ended at 64.73, 30 paise stronger from its previous close of 65.03 on Thursday.

 

The FIIs as per Friday's data were net sellers in equity and debt segments both, in equity segment, the gross buying was of Rs 7931.24 crore against gross sell of Rs 10194.46 crore, while in the debt segment, the gross purchase was of Rs 1125.79 crore with gross sales of Rs 1711.00 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.10 crore against no selling.

 

The US markets rallied on Friday as interest rates slipped further from a four-year high, pushing the major indexes higher for the week. Asian markets were trading mostly in green in early deals after U.S. stock indexes notched gains of more than a percent in the last session. Japanese Nikkei edged higher as major exporters gained on a weaker yen. Indian equity markets ended higher by around a percent after U.S. government debt yields fell from multiyear highs, helping ease investor worries over inflation and interest rates. Today, the start of holiday-shortened week is likely to be on optimistic note following firm global cues. Back on domestic turf, the investors will remain watchful for Q4 GDP estimate and manufacturing PMI data to be announced later in the week. Traders will be getting some support with Union Minister Parshottam Rupala's statement that the Centre was making concerted efforts to double the income of farmers by 2022 and asked scientists, and others concerned to tackle the challenges being faced by the agriculture sector. He opined that scientists, environmental and agricultural experts must have a global outlook and local approach to combat the challenges in agricultural and environmental sectors. There will be buzz in infrastructure related stocks after railway and coal minister Piyush Goyal said that the government is thinking of 360 degree solutions in terms of setting things in order for infrastructure sector. He added that the government has moved the needle from century old railway to connect with the most modern technology but also look into future. Mining will remain in focus after the government opened up the coal sector to private players. Stocks related to IT space will also be buzzing after the Trump administration made the H-1B visa-approval process even harder for Indian techies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,491.05

10,425.43

10,527.88

BSE Sensex

34,142.15

33,926.90

34,262.50

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Sun Pharma

308.45

569.65

552.02

581.27

Tata Steel

218.66

677.75

649.03

696.43

SBI

154.82

276.05

273.30

278.00

Yes Bank

114.00

323.45

317.93

327.48

Vedanta 

112.71

337.90

329.78

343.38

 

  • L&T's construction arm -- L&T Construction -- has bagged orders worth Rs 1,266 crore across various business segments.
  •  HCL Technologies will invest about Rs 160 crore as part of its CSR activity in the field of education, health and power.
  •  Bharti Airtel has added 15.02 lakh users in January 2018.
  •  Mahindra & Mahindra has signed an agreement for investing in Resfeber Labs on February 23, 2018.
News Analysis