Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (28 December 2017)
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Market Commentary 29 December 2017
Markets likely to get a cautious start of the final trading day of 2017


Indian equity markets truly depicted the choppiness of F&O expiry session and ended the session slightly in red on Thursday. However, both Sensex & Nifty were up by over 2% during the December F&O series. Key gauges traded lackluster throughout the session and volatility which emerged in dying hour of trade mainly dragged the bourses lower on lingering concerns over government borrowing exceeding target. Cautiousness persisted in the markets throughout the session with the government decision to make additional borrowing of Rs 50,000 crore this fiscal through dated securities, a move that may put burden on the fiscal deficit target of 3.2 percent of GDP. At the same time, the government lowered its borrowing through short-term treasury bills by Rs 61,203 crore. This has made the task of exactly calculating the fiscal deficit a bit tedious exercise. However, losses remained capped, as traders took some solace with report that the capital markets regulator, Securities and Exchange Board of India (SEBI) is likely to ease entry norms for FPIs willing to invest in the Indian markets. It may ease some rules, including expanding the eligible jurisdictions for registration by including countries with diplomatic tie-ups with India. Market participants also get some comfort with EEPC India new chairman, Ravi P Sehgal's statement that the year 2018 is expected to be a good year for exports on back of global trade boom. The chairman added that as the IMF has outlined, that the global trade has grown at a faster clip than the overall world output growth, as the US, Euro zone, Japan and China are witnessing a resurgence in economic activity. Investors also get some relief with credit rating agency, ICRA's latest report stating that the retail credit growth for non-banking financial companies is likely to be moderate at 16-18 percent in the current fiscal, helped by some asset classes, such as SME credit. Finally, the BSE Sensex declined 63.78 points or 0.19% to 33,848.03, while the CNX Nifty was down by 12.85 points or 0.12% to 10,477.90.

 

The US markets closed higher on Thursday, with the Dow Jones Industrial Average logging its 71st record close in 2017, buoyed mostly by gains in bank shares and a slight pick-up in energy and materials, as crude-oil prices perked up in seasonally light trading volume. Trading has been muted as investors have little incentive to make decisive bets on assets perceived as risky in the penultimate session of trade ahead of the New Year's holiday on Monday. However, Thursday's late burst suggests that investors aren't ready to dump stocks going into next year. On the economy front, the Purchasing Managers Index for Chicago showed a rise of 67.6 in December from 63.9 in the previous month, compared with expectations for 62. Initial US jobless claims, a tool to measure layoffs, were unchanged at 245,000 in the seven days ended December 23. The more stable monthly average of claims rose slightly - they were up 1,750 to 237,750. The number of people already collecting unemployment benefits, known as continuing claims, edged up by 7,000 to 1.94 million. Separately, the US goods trade deficit widened by 2.3% in November to $69.7 billion. Exports rose a seasonally adjusted 3% during the month, while imports were up 2.7%. The Dow Jones Industrial Average added 63.21 points or 0.26 percent to 24,837.51 and the Nasdaq gained 10.824 points or 0.16 percent to 6,950.16, and the S&P 500 edged higher by 4.92 points or 0.18 percent to 2,687.54.

 

Crude oil futures moved higher once again on Thursday, touching fresh 2-year highs after another drop in U.S. oil inventories. Prices were also supported by strong data from top importer China amid thin trading activity ahead of the New Year weekend. However, heading into 2018, traders said market conditions were relatively tight because of supply cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and Russia. Meanwhile, the Energy Information Administration (EIA) said in its weekly report that crude oil inventories fell by 4.609 million barrels in the week ended December 22. It also said that gasoline inventories increased by 0.591 million barrels, while distillate stockpiles rose by 1.090 million barrels. Benchmark crude oil futures for January delivery ended higher by $0.20 at $59.84 a barrel on the New York Mercantile Exchange. Brent crude for March delivery was down by 0.18 percent to $65.91 a barrel on the ICE.

 

Snapping two day falling streak, Indian rupee bounced back against the Greenback on Thursday, on the back of fresh dollar selling by exporters and some banks. Traders took some support with report that the capital markets regulator, Securities and Exchange Board of India (SEBI) is likely to ease entry norms for FPIs willing to invest in the Indian markets. It may ease some rules, including expanding the eligible jurisdictions for registration by including countries with diplomatic tie-ups with India. Besides, the dollar losing muscle against other currencies overseas, largely supported the rupee's recovery. However, gains were limited as some concern came with the government decision to make additional borrowing of Rs 50,000 crore this fiscal through dated securities, a move that may put burden on the fiscal deficit target of 3.2 percent of GDP. On the global front, dollar slipped to a four-week low against a basket of currencies on Thursday, kept under pressure by a recent dip in US 10-year bond yields. Finally, the rupee ended at 64.08, 7 paise stronger from its previous close of 64.15 on Wednesday.

 

The FIIs as per Thursday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 2951.59 crore against gross selling of Rs 2513.07 crore, while in the debt segment, the gross purchase was of Rs 675.94 crore with gross sales of Rs 630.95 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.79 crore against gross selling of Rs 1.43 crore.

 

The US markets despite a choppy trading ended in green in the last session, with the Dow reaching a new record closing high, however many traders remained away from their desks ahead of the New Year's weekend, leading to another light trading day. The Asian markets have made a mixed start on the final trading day of 2017 Japanese equity benchmarks opened higher even though the yen held gains. The Indian markets extended their decline for the second day and ended marginally lower in the last session amid volatility of the F&O series expiry. Today, the start of the new series and the final day of the calendar year is likely to be cautious on sluggish regional cues. Traders will be a bit concerned with a study report of the industry body Assocham, which has said that a slowdown in the economy coupled with high stress level in the banking sector is expected to restrict credit growth at around 8 per cent during the current fiscal despite government's thrust on loan expansion. Also, a report from rating agency ICRA has said that rising commodity prices, especially that of crude oil that has hit a three-year peak last week, will double current account deficit (CAD) to $39 billion or 1.5 per cent of GDP this fiscal year. There will be some buzz in the India Inc and the banking stocks as the RBI has turned down requests from banks to extend the deadline for restructuring the debt of companies on a second list. This will mean bankruptcy proceedings likely kicking off at the National Company Law Tribunal (NCLT) by December 31. Telecom stocks especially Anil Ambani's debt-laden Reliance Communications will be in focus, as the company has signed an agreement to sell its wireless assets to Reliance Jio Infocomm, the telecoms arm of elder brother Mukesh Ambani's Reliance Industries.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10477.90

10447.38

10521.48

BSE Sensex

33848.03

33725.49

33997.11

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

Hindalco

229.38

275.25

268.57

280.37

ICICI Bank

226.90

315.30

310.80

319.50

SBI

203.53

308.40

305.20

314.05

ITC

158.90

261.85

260.58

263.58

NTPC

149.96

176.15

174.90

178.05

  • Maruti Suzuki India has entered into an agreement with the Government of NCT of Delhi to set up state-of-the-art Automated Driving Test Centres across 12 locations in the city.
  • Tata Steel is ramping up production at its Khondbond iron ore mine in Odisha in order to fuel expansion of the Kalinganagar plant.
  • SBI has received its board's approval to raise Rs 8,000 crore through various sources, including masala bonds, to meet Basel III capital norms.
  • L&T's construction arm -- L&T Construction -- has bagged orders worth Rs 1,600 crore under the Power Transmission & Distribution Business.
News Analysis