Indian equity indices staged
rebound from the Union Budget day carnage, with Sensex and Nifty ending higher
by around 140 and 50 points, respectively. After a cautious opening, indices
remained volatile, as rating agency CRISIL in its report expressed concerns
over the budget attaining its targets on growth, given the rural boost and thus
consumption and revenue realisations, and said that planned budgetary measures
are not expected to provide a short-term boost. Anxiety remained among traders,
on the back of Moody's statement that India's nominal growth projection and
fiscal deficit target for 2020-21 will be challenging to achieve. Despite high
volatility, bourses managed to keep their heads above water for the most part of
the day, after Indian manufacturing industry saw a solid rise in activities at
the start of 2020. As per the survey report, the Nikkei India Manufacturing
Purchasing Managers' Index - a composite single-figure indicator of
manufacturing performance - surged to 55.3 in January from 52.7 in December,
its highest level in just under eight years. Some support also came with
Commerce & Industry Minister Piyush Goyal's statement that a set of
measures announced in the Union Budget for 2020-21 will help boost investment
and the country's gross domestic product growth. Finally, the BSE Sensex gained
136.78 points or 0.34% to 39,872.31, while the CNX Nifty was up by 46.05 points
or 0.39% to 11,707.90.
The US markets ended higher on
Monday as traders picked up stocks at reduced levels on the heels of the steep
drop seen in the previous session. Adding to the positive sentiment, US
manufacturing activity unexpectedly expanded for the first time in several
months in January, according to a report released by the Institute for Supply
Management (ISM). The ISM said its purchasing managers index surged up to 50.9
in January after slipping to a revised 47.8 in December, with a reading above
50 indicating growth in manufacturing activity. Street had expected the index
to show a more modest increase to a reading of 48.5, which would have still
indicated a contraction. With the much bigger than expected increase, the index
returned to expansion territory for the first time since July 2019. The jump by
the headline index came as the production index soared to 54.3 in January from
44.8 in December and the new orders spiked to 52.0 from 47.6. However, after
reporting a bigger than expected increase in US construction spending in the
previous month, the Commerce Department released a report showing construction
spending unexpectedly edged lower in the month of December. The Commerce
Department said construction spending dipped by 0.2 percent to an annual rate
of $1.328 trillion in December after climbing by 0.7 percent to a revised rate
of $1.330 trillion in November. The modest pullback came as a surprise to
participants, who had expected construction spending to increase by 0.5
percent. With the unexpected decrease, construction spending pulled back off
the more than one-year high reached in the previous month. Spending on private
construction edged down by 0.1 percent to a rate of $991.2 billion, as a 1.4
percent jump in spending on residential construction was more than offset by
1.8 percent slump in spending on non-residential construction.
Crude oil futures ended deeply in
red on Monday, with prices logging their lowest settlement in more than a year
and marking their entry into a bear market, amid continued concerns about the
outlook for energy demand, especially from China, amid the rapid spread of
coronavirus and worries about its impact on the global economy. According to
private report, oil demand in China has dropped by about three million barrels
a day, or 20% of total consumption amid the virus outbreak. Several airlines
have cancelled flights to China and supply chains across the world's
second-largest economy have also been disrupted, prompting its biggest refiner
Sinopec to cut output. Crude oil futures for March fell $1.45 or 2.8 percent to
settle at $50.11 a barrel on the New York Mercantile Exchange. April Brent
dropped $2.17 or 3.8 percent to settle at $54.45 a barrel on London's
Intercontinental Exchange.
Indian
rupee depreciated marginally against dollar on Monday due to fresh demand for
the American currency from banks and importers. Traders remain concerned with
Moody's statement that India's nominal growth projection and fiscal deficit
target for 2020-21 will be challenging to achieve. It added that the 10%
nominal growth expectation that's in the 2021 budget is going to be challenging
to achieve and as a result that would present some fiscal challenges as well.
Moreover, dollar's strength against major global currencies overseas affected
the rupee. However, losses remain capped as some optimism came with SBI
Research's report that the revised 3.8 percent fiscal deficit for FY20 looks
ambitious as it is based on projected 18% rise in tax collections against a
paltry 5.1% higher realisaition so far, and around Rs 65,000 crore mop-up
through disinvestment in the last two months of the current fiscal. On the
global front, pound fell against the dollar on Monday after Boris Johnson laid
out a hard-line approach to Brexit negotiations with Brussels, prompting
renewed fears that Britain will leave the EU without a trade deal in 11 months.
Finally, the last traded price of rupee was 71.35, 3 paise weaker from its
previous close of 71.32 on Friday.
The
FIIs as per Monday's data were net sellers in both equity and debt segments. In
equity segment, the gross buying was of Rs 8006.13 crore against gross selling
of Rs 12381.69 crore, while in the debt segment, the gross purchase was of Rs
1442.97 crore with gross sales of Rs 1552.57 crore. Besides, in the hybrid
segment, the gross buying was of Rs 45.43 crore against gross selling of Rs
45.89 crore.
The US markets ended higher on
Monday as gains in Amazon and Nike as well as a surprise rebound in US factory
activity helped markets attempt a recovery from steep weekly losses. The Asian
markets are trading in green on Tuesday following overnight gains on Wall
Street. Indian markets ended volatile session in green territory on Monday
after a private survey showed that activity in India's beleaguered
manufacturing sector hit a near eight-year high in January. Today, the start of
session is likely to be in green tracking positive leads from global markets
coupled with sharp fall in crude oil prices overnight. Investors are looking
forward to the Reserve Bank of India's (RBI) February bi-monthly policy
outcome. The central bank's MPC will begin its three-day meeting today, and
will announce its decision on February 6. There are expectations that the
central bank to maintain a status quo. Traders will be getting encouragement as
the government said the economy is not in recession and India recorded the
highest average growth among the G-20 nations during 2014-19. Minister of State
for Finance Anurag Thakur said that according to the IMF estimates, India
continues to be among the fastest-growing economies in the world and its GDP is
estimated to grow at 5.8% in 2020-21 and is further projected to surpass China
with a growth rate of 6.5% in 2021-22. Also, terming the Union Budget
pragmatic, Niti Aayog CEO Amitabh Kant said the government is determined to
take India on a high growth path. He further said if the government will be
able to achieve disinvestment target of 2020-21 then the Budget will be very
successful. Though, some cautiousness may come with Fitch Ratings' statement
that India is expected to clock a GDP growth of 5.6% in the next financial
year, lower than the projection made by the government's Economic Survey, as
Budget 2020 has not materially altered its view on the country's growth
outlook. Banking stocks will be in focus as RBI's data showed that banks credit
and deposits grew 7.21% and 9.51% to Rs 100.05 lakh crore and Rs 131.26 lakh
crore, respectively, in the fortnight ended January 17. There will be some buzz
in the infrastructure stocks with Finance Minister Nirmala Sitharaman's
statement that the money raised through disinvestment will be used to develop
infrastructure, which will have multiplier effect on the economy and not
bridging revenue deficit. Metal stocks will be in focus as Ind-Ra revised its
outlook on the steel sector to stable-to-negative for the remainder of the
ongoing fiscal due to sluggish steel demand growth expectations. There will be
some reaction in sugar stocks with the Indian Sugar Mills Association's (ISMA)
statement that Indian mills produced 14.1 MT of sugar between October 1 and
January 31, down nearly 24% from a year earlier. Also, there will be lots of
earnings reaction based on the performance of the companies.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,707.90
|
11,631.65
|
11,767.00
|
BSE Sensex
|
39,872.31
|
39,618.62
|
40,070.45
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
1,480.30
|
36.00
|
35.00
|
37.70
|
ITC
|
797.64
|
207.60
|
202.77
|
214.67
|
Tata Motors
|
666.16
|
163.85
|
159.50
|
168.25
|
SBI
|
560.60
|
298.10
|
293.35
|
304.85
|
IOC
|
250.72
|
108.05
|
106.27
|
111.12
|
HCL Technologies has declared establishment of its global delivery center in Colombo, signing an agreement with the Board of Investment of Sri Lanka.
Coal India has reported rise in its production by 10.3% to 63.11 million tonnes in January 2020.
Hero MotoCorp has reported sales of 5,01,622 units of motorcycles and scooters in the month of January 2020.
Tata Motors has reported domestic sales of 45,242 units for January 2020, as compared to 54,915 units for January 2019, posting a decline of 18%.