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NSE Intra-day chart (26 December 2018)
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Market Commentary 27 December 2018
Markets to make optimistic start tracking firm global cues

 

Late hour recovery helped the Indian equity benchmarks to close the Wednesday's trading session in green, with Sensex and Nifty gaining more than 150 and 50 points, respectively. After a sluggish start, key indices remained weak for the most part of the session, impacted with former chief economic advisor Kaushik Basu's statement that distress in some sectors of the economy has slowed India's GDP growth, the consequences of which could be far reaching. Basu said distress has been very much visible in the agriculture sector as the condition of farmers is bad. Domestic sentiments also got hit with a private report stating that as India near 2019 general elections, populist steps by the government may exert pressure on India's fiscal scenario. It expected the general government debt at 70.1% of the GDP in FY19. Weakness in broader markets along with heavy sell-off in IT, Realty and Healthcare stocks also, kept the markets down. Sun Pharma Industries and Yes Bank also contributed to the losses during the trading session. However, key indices recovered all of their losses in late noon deals to enter into positive territory, on account of last hour buying. The street got encouragement, after investments in the Indian capital market through participatory notes climbed to Rs 79,247 crore in November after hitting a nine-and-a-half year low at the end of preceding month. Some comfort also came with Finance Minister and GST Council Chairman Arun Jaitley raising hopes of further pruning the peak rate (28%) and merging the 12% and 18% slabs. Traders also took some support with a private report that the government is considering several measures to support farmers in distress as pressure mounts for a nationwide loan waiver scheme ahead of the general election. Some relief also came with the commerce ministry Suresh Prabhu's statement that India is preparing a specific strategy for exports to each geography as part of plans to make 2019 a year when outward shipments would start driving the country's overall economic growth. Finally, the BSE Sensex surged by 179.79 points or 0.51% to 35,649.94, while the CNX Nifty was up by 66.35 points or 0.62% to 10,729.85.

 

The US markets ended higher on Wednesday, with the Dow logging its first-ever 1,000-point, single-day point increases ever, as traders picked up stocks at reduced levels on the heels of recent weakness. On a percentage basis, all three major indexes saw the strongest one-day gains since March 23, 2009. It also marked the best ever day-after-Christmas performance for the gauges. Further support also came in as the White House denied a CNN report that Treasury Secretary Steven Mnuchin's job was in serious jeopardy after a failed attempt to calm markets. White House economic adviser Kevin Hassett said that he was confident that President Donald Trump was happy with Mnuchin. Hassett also said Federal Reserve Chairman Jerome Powell's job was 100% safe. However, a lack of major US economic data kept traders on the sidelines, although reports on new home sales, consumer confidence, and pending home sales may attract attention in the coming days. Meanwhile, the partial government continues, with Trump stating the government will not reopen until Democrats agree to fund his controversial border wall. Besides, Equities closed early in an abbreviated session Monday and were closed Tuesday for Christmas Day. Dow Jones Industrial Average surged 1086.25 points or 4.98 percent to 22878.45, Nasdaq gained 361.44 points or 5.84 percent to 6554.35 and S&P 500 was up by 116.60 points or 4.96 percent to 2467.70.

 

Crude oil futures ended higher on Wednesday, with gain of over 8 percent, after closing the pre-Christmas session at their lowest since July 2017, as Russian Energy Minister Alexander Novak said that oil prices will become more stable in the first half of 2019. Meanwhile, efforts by Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, to limit output beginning early next year by 322,000 barrels a day - more than a previously announced cut of 250,000 barrels a day for six months starting in January.  The US Energy Information Administration will release its weekly oil inventory report Friday, rather than Wednesday, due to the Christmas holiday. Benchmark crude oil futures for February surged $4.69 or 8.6 percent to settle $46.22 a barrel on the New York Mercantile Exchange. February Brent crude rose $4 or 7.9 percent to settle at $54.47 a barrel on London's Intercontinental Exchange.

 

Indian rupee, after making a good start, gave away most of its gains but managed to end marginally higher against dollar on Wednesday, due to sustained selling of the US currency by exporters and banks. Local currency got some support with the commerce ministry Suresh Prabhu's statement that India is preparing a specific strategy for exports to each geography as part of plans to make 2019 a year when outward shipments would start driving the country's overall economic growth. However, gains remained capped as anxiety remained among the traders with former chief economic advisor Kaushik Basu's statement that distress in some sectors of the economy has slowed India's GDP growth, the consequences of which could be far reaching. Basu said distress has been very much visible in the agriculture sector as the condition of farmers is bad. On the global front, dollar was down against a large portion of its companions on Wednesday, constrained by a mixed drink of negative elements including uplifted worries over a halfway U.S. government shutdown and pressure between the White House and the Federal Reserve. Finally, the rupee ended at 70.06, 8 paise stronger from its previous close of 70.14 on Monday.

 

The FIIs as per Wednesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 1767.69 crore against gross selling of Rs 2640.68 crore, while in the debt segment, the gross purchase was of Rs 1140.52 crore with gross sales of Rs 582.30 crore. Besides, in the hybrid segment the gross selling was of Rs 0.64 crore against no buying.

 

The US markets ended significantly higher on Wednesday with traders picking up stocks at reduced levels on the heels of recent weakness. Asian markets were trading in green on Thursday following an overnight surge on Wall Street as markets, battered by a recent drum roll of deepening political and economic gloom, cheered upbeat US data and the Trump administration's effort to shore up investor confidence. Indian markets wiped out all of their initial losses and ended in green territory on Wednesday, supported by gains in shares of private bank and auto companies. Today, the start of the F&O series expiry session is likely to be in green tracking firm global cues. Traders will be getting some encouragement with a private report stating that with global crude oil prices slumping to below $50 a barrel just months after crossing $86, the Prime Minister Narendra Modi-led government is now confident that the current account deficit (CAD) for 2018-19 (FY19) can be contained at about 2 per cent of gross domestic product (GDP). Earlier, the government had estimated the CAD would be 2.8 per cent of GDP. There will be some support with a Reserve Bank of India study showing that private sector non-finance firms reported a 41 per cent growth in net profits during the July-September quarter, despite higher expenditure as other income contributed to growth. The central bank attributed this to the strong growth in manufacturing sector profits, which received support from other income. Traders may take note of a report that tightening norms for e-commerce firms having foreign investment, the government Wednesday barred online marketplaces like Flipkart and Amazon from selling products of companies where they hold stakes and banned exclusive marketing arrangements that could influence product price. The revised policy on foreign direct investment in online retail, issued by the commerce and industry ministry, also said that these firms have to offer equal services or facilities to all its vendors without discrimination. There will be some buzz in the airline industry stocks with report that Aviation watchdog DGCA has proposed duty time limits and rest hours for air traffic services personnel, wherein an individual can be on duty for up to 12 hours in a day. This is the first time that the regulator has mooted duty time limits for Air Traffic Services (ATS) personnel and it also comes at a time when air traffic has been growing exponentially.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,729.85

10,593.77

10,806.72

BSE Sensex

35,649.94

35,203.42

35,903.86

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

474.21

179.45

174.92

183.32

IOC

185.64

134.65

133.57

136.47

SBI

126.84

294.15

289.20

297.05

Tata Motors

120.44

170.90

168.27

172.87

Vedanta

94.50

196.40

193.75

198.35

 

  • Vedanta will set up a new steel plant in Jharkhand with a capacity of 4.5 MT per annum at an investment of $3-4 billion. 
  • Maruti Suzuki India will proactively and voluntarily undertake a recall campaign for certain Super Carry vehicles. 
  • M&M is all set to launch XUV300, a compact SUV, in early February 2019.  
  • ITC has entered the ready-to-drink milk-based beverages market with the launch of Sunfeast Wonderz Milk.
News Analysis