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Market Commentary 02 December 2019
Benchmarks to get a cautious start on Monday

 

Snapping their two-day record-setting streak, Indian equity benchmarks ended Friday's trade on a pessimistic note with losses of more than half a percent, as investors were cautious ahead of the release of the Gross Domestic Product (GDP) data for the September quarter slated for later in the day. Markets traded in negative note since the beginning, amid discouraging cues from global peers. Sentiments remained dampened with CRISIL's report that for states, balancing the fiscal math while continuing to spend on infrastructure capital expenditure (capex) will be challenging. Selling got intensified in the afternoon session, as sentiments on the street weakened further with a private report that India's economy probably expanded at its weakest pace in more than six years in the quarter to September, as consumer demand and private investment weakened further and a global slowdown hit exports. Traders also took a note of chief Economic Adviser K V Subramanian's statement that the cut in corporate tax rate was required to boost investments as the virtual cycle that spurs growth in the economy has not been functioning as expected for the last few quarters. Finally, the BSE Sensex lost 336.36 points or 0.82% to 40,793.81, while the CNX Nifty was down by 95.10 points or 0.78% to 12,056.05.

 

The US markets closed lower with losses of around half percent on Friday, ending a four-day winning streak, as traders cashed in on recent gains amid concerns rising tensions between the US and China over the situation in Hong Kong could impact ongoing trade talks. After President Donald Trump signed two bills in support of pro-democracy protesters in Hong Kong, a spokesman for China's Foreign Ministry threatened strong countermeasures. Foreign Ministry spokesman Geng Shuang accused the US of interfering in China's internal affairs and violating international law and the basic norms governing international relations. Geng said China will take strong counter-measures in response to the US behavior that interferes in China's internal affairs and undermines China's interests. He added no one shall underestimate China's determination in safeguarding national sovereignty, security and development interests. Besides, trading activity remained relatively light, with many traders still away from their desks following the Thanksgiving Day holiday on Thursday. A lack of major US economic data is also kept some traders on the sidelines along with the early close for the markets, which came at 1 pm ET.

 

Crude oil futures ended deeply in red with loss of over five percent on Friday as the much-anticipated approval of a production-cut extension at next week's Organization of Oil Exporting Countries (OPEC) meeting grew more doubtful following speculative reports. Saudi Arabia probably will indicate it is no longer willing to compensate for excessive production by other members of the OPEC. Further, Russian Energy Minister Alexander Novak said he would prefer if OPEC and its non-OPEC allies made a decision closer to April on whether to extend their now three-year-old production coordination pact. Besides, the sell-off in oil prices also came amid concerns rising tensions between the US and China over the situation in Hong Kong could impact ongoing trade talks. Benchmark crude oil futures for January dropped $2.94 or 5.1 percent to settle at $55.17 a barrel on the New York Mercantile Exchange. January Brent fell $1.44 or 2.3 percent to settle at $62.43 a barrel on London's Intercontinental Exchange.

 

Extending weakness for the second day, Indian rupee ended lower against dollar on Friday, as good demand for the greenback from importers. Traders remain concerned with a private report that India's economy probably expanded at its weakest pace in more than six years in the quarter to September, as consumer demand and private investment weakened further and a global slowdown hit exports. Some caution also prevailed in the markets ahead of the release of the Gross Domestic Product (GDP) data for the September quarter slated for later in the day. Heavy losses in the domestic equity market along with dollar's strength against major global currencies overseas also weighed on the domestic unit. On the global front, euro hovered around its lowest levels for this month on Friday as the dollar held its poise on hopes that the United States and China would be able defuse their damaging tariff war with a preliminary trade deal. Finally, the rupee ended at 71.74, 12 paise weaker from its previous close of 71.62 on Thursday.

 

The FIIs as per Friday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5966.66 crore against gross selling of Rs 4338.97 crore, while in the debt segment, the gross purchase was of Rs 731.42 crore with gross sales of Rs 2596.20 crore. Besides, in the hybrid segment, the gross buying was of Rs 55.91 crore against gross selling of Rs 57.73 crore.

 

The US markets ended in red on Friday as trade tensions resurfaced after China warned it would retaliate against President Donald Trump's decision to ratify a bill backing protesters in Hong Kong. Asian markets are trading mostly higher on Monday as data releases showed Chinese factory activity springing a positive surprise in November. Indian markets ended lower on Friday as heavyweight auto, banking and IT stocks paced the declines amid concerns about India's economy. Today, the markets are likely to make a cautious start ahead of Manufacturing PMI data to be out later in the day. Investors will also be eyeing Services PMI data and outcome of the Reserve Bank of India's (RBI) policy meeting to be release later in the week. As per a private report said RBI may cut interest rates for the sixth straight time to support growth. There will be some cautiousness with the government data showing that the Gross Domestic Product (GDP) growth for the second quarter (July-September) of the financial year 2019-20 dropped to 4.5%, the weakest pace in more than six years, due to weak consumer demand, slowing factory activities and negative impacts of the prolonged monsoon. Also, output of eight core infrastructure industries contracted by 5.8% in October, indicating the severity of economic slowdown. Though, some respite may come later in the day with Finance minister Nirmala Sitharaman's statement that several significant steps in structural reforms have been taken in the past few months and responses/interventions addressing the needs of the economy will continue, indicating more relief measures could be on the anvil if so needed. Some support may also come with report that festive season demand helped the government collect Rs 1.03 lakh crore in goods and services tax (GST) in the month of November, up 6% over the same month last year. During the month of November, the GST collection on domestic transactions witnessed a growth of 12%, highest during the year.  Traders may take note of Union Minister Dharmendra Pradhan's statement that the current economic slowdown is temporary and a result of the ongoing global trade war between the US and China. There will be some buzz in the infra stocks with the finance minister's statement that the Union government will unveil a series of infrastructure projects this month as part of a plan to invest Rs 100 trillion ($1.39 trillion) in the sector over the next five years, in a push to improve the country's economy. There will be some reaction in telecom stocks as telecom operators Bharti Airtel and Vodafone Idea decided to raise their tariff plans from December. The auto sector stocks will also be in action, reacting to their monthly sales numbers.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,056.05

11,999.83

12,129.83

BSE Sensex

40,793.81

40,590.92

41,069.96

 

                                                             Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

4,283.32

68.30

65.90

72.35

Bharti Infratel

523.05

276.30

248.27

294.07

ZEEL

350.62

293.05

276.87

316.62

Adani Ports

301.11

382.05

373.58

387.73

SBI

230.82

341.85

338.68

346.93

 

  • ITC's biscuit brands -- Sunfeast has launched Sunfeast Veda Marie Light, a unique offering enriched with the goodness of 5 natural ingredients namely, Tulsi, Ginger, Cardamom, Ashwagandha and Mulethi. 
  • NTPC has added capacity to 250 MW unit of Barauni Thermal Power Station on successful completion of Trial Operation. 
  • ZEE5, a video on demand website run by Zee Entertainment Enterprises, has launched Zee5 Super Family, a brand-new innovation.  
  • ONGC has issued $300 million notes at a coupon of 3.375% per annum payable semi-annually in arrears on November 27, 2019 under the $2,000,000,000 Medium Term Note Programme.
News Analysis