Tuesday's session turned out to
be a nasty one for the Indian equity benchmarks which tumbled like a ‘house of
cards' and went on to breach various key technical levels in the over a percent
freefall. Sentiments turned pessimistic after the Reserve Bank of India (RBI)
kept its key policy rates unchanged, opting to wait for the government's annual
budget statement at the end of February for further easing. Sentiments weakened
further with Moody's Investors Service's report that RBI's target to bring down
retail inflation at 5 per cent by March 2017 will face some risks from monsoon
uncertainty and execution of seventh Pay Panel recommendations, while
macro-economic factors will be critical for sustaining growth. Market
participants remained worried that the union budget might increase effective
corporate tax rate by doing away with a host of tax exemptions. Depreciation in
Indian rupee too weighed down sentiments. The rupee depreciated by 12 paise to
trade at 67.96 against the US dollar at the time of equity markets closing.
Investors failed to draw any solace from report that Core sector output
returning to positive territory in December 2015 by registering a 0.9 per cent
growth after shrinking (-) 1.3 per cent in November last year. On the global
front, Asian equity markets ended mostly in red, while European equities too fell
sharply in early trade as crude oil prices slipped again. Back home, after
getting positive start, Indian benchmark indices showed signs of consolidation
in early trade and entered into negative territory in noon session. But, the
sentiments got spooked in late afternoon trades following the sell-off in
European markets. Thereafter, the frontline indices lost the plot and kept
tumbling down the hill without any stoppage. The sharp cut dragged key indices
to intraday lows of around 24,450 and 7,430 levels post which some short
covering helped the indices to settle off the day's lows. Finally, the BSE
Sensex declined by 285.83 points or 1.15% to 24539.00, while the CNX Nifty lost
100.40 points or 1.33% to 7,455.55.
The US markets closed sharply
lower on Tuesday, as investors' unloaded energy and financial stocks amid a
selloff in crude-oil futures, which settled below $30 a barrel. A fresh slump
in oil prices following a slide on Monday, weighed on energy companies' stocks.
On the economy front, sales of new vehicles dropped in the United States in
January from a year ago, partly because of the snowstorm that shut down
dealerships across the East Coast. Over all, the industry reported selling
about 1.15 million vehicles during the month, a decline of 0.3 percent from
January 2015. That was better than expected, particularly because January had
two fewer selling days than last year because of a quirk in the calendar. The
major auto manufacturers reported mixed results as demand continued to tilt
more toward sport utility vehicles and pickups and away from traditional
passenger cars. The Dow Jones Industrial Average lost 295.64 points or 1.80
percent to 16,153.54, the Nasdaq was down 103.42 points or 2.24 percent to
4,516.95 while the S&P 500 dropped by 36.35 points or 1.87 percent to
1,903.03.
Crude oil futures plunged on
Tuesday and tumbled below $30 a barrel, amid renewed speculation that global
oil inventories will continue to mount. Further, there were reports that Iran
could pencil in a line item on its annual budget, which would enable the
Persian Gulf state to ramp up its oil exports above the 2 million barrel
threshold in fiscal year 2016. Also, there were reports that Iran is planning
to export as much as 2.3 million barrels per day of crude this year, commencing
as early as next month. Benchmark crude oil futures for March delivery declined
by $1.68 or 2.30 percent to $29.97 a barrel after trading in a range of $29.82
and $31.52 a barrel on the New York Mercantile Exchange. In London, Brent crude
for April delivery closed at $32.76, down $1.47 or 4.31 percent on the ICE.
Indian rupee extending its
weakness for the second straight day depreciated against dollar on Tuesday after
the Central Bank in its monetary policy review opted to keep the policy repo
rate unchanged on inflation concerns even as it emphasized that it continues to
be accommodative. It has also left the cash reserve ratio of scheduled banks
unchanged at 4.0 per cent. The reverse repo rate under the LAF will remain
unchanged at 5.75 per cent, and the marginal standing facility (MSF) rate and
the Bank Rate at 7.75 per cent. Besides, demand for American currency from
importers and losses in equity market also kept the rupee environment
pessimistic. Investors failed to get relief with Core sector output returning
to positive territory in December 2015 by registering a 0.9 per cent growth
after shrinking (-)1.3 per cent in November last year. On the global front, yen
rose on Tuesday as a fall in oil prices and Asian stock markets sent investors
in search of traditional safe havens for capital. Finally, the rupee ended at
67.98, 14 paise weaker from its previous close of 67.84 on Monday.
The
FIIs as per Tuesday's data were net buyers in equity and in debt segments both.
In equity segment, the gross buying was of Rs 4281.44 crore against gross selling
of Rs 3876.76 crore, while in the debt segment, the gross purchase was of Rs 2255.26
crore with gross sales of Rs 640.15 crore.
The US markets suffered sharp
sell-off in the last session amid a notable decrease by the price of crude oil.
Though, the trading activity too remained light, as some traders were on the
sidelines lacking any major US economic news. The Asian markets have made a
weak start, as oil slumped below $30 a barrel eroding investor confidence in
global economic growth. The loss in the region is led by the Japanese market
which is down by over three percent as yen surged on demand for safer haven. The
Indian markets completely lost its momentum in the final hours and major
averages lost over a percent, tailing the weakness in other markets and
disappointed by RBI's status quo stance in its monetary policy. Today, the
start is likely to be weak and the markets will extend their somberness for yet
another day amid feeble global cues. While there will still be lingering
disillusionment of RBI's policy stance, the commodity stocks will be under
pressure taking cues from their global counterparts. However, there will be
some solace with the Reserve Bank keeping its growth projections for Indian
economy unchanged at 7.4 percent for the current fiscal, a tad higher than 7.3
percent forecast by the World Bank. Traders will also be eyeing the Services
PMI data, meanwhile IBM chairman & CEO Virginia Rometty has said that the
21st century will belong to India. She said India would be at the centre of the
fourth technology shift that she refers to as the cognitive era. The export
oriented stocks will be in action, as the Commerce Ministry has asked exporters
to come up with specific suggestions which could be taken up with various
ministries, including Finance, to improve ease of doing business and boost
waning exports. There will be lots of result announcements too, to keep the
markets buzzing.
Support
and Resistance: NSE Nifty and BSE Sensex
Index
|
Previous close
|
Support
|
Resistance
|
CNX Nifty
|
7455.55
|
7396.97
|
7545.22
|
BSE Sensex
|
24539.00
|
24356.77
|
24824.99
|
Nifty Top volumes
Stock
|
Volume
(in Lacs)
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
SBI
|
359.57
|
169.40
|
166.20
|
175.00
|
ICICI Bank
|
289.29
|
210.40
|
206.83
|
216.83
|
Vedanta
|
186.81
|
64.90
|
62.57
|
68.97
|
Axis Bank
|
121.31
|
390.90
|
384.85
|
400.70
|
Power Grid
|
102.75
|
146.25
|
144.05
|
149.40
|
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