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NSE Intra-day chart (04 November 2019)
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Market Commentary 05 November 2019
Benchmarks to get a cautious start; Services PMI eyed

 

Indian equity markets settled higher on Monday, with the Sensex and the Nifty gaining over 130 and 50 points, respectively. The start of the day was optimistic, aided with Prime Minister Narendra Modi's statement that the country is among the top 10 destinations for foreign direct investment (FDI) in the world and had received $286 billion of FDI in the last five years. Adding some comfort, the Reserve Bank of India's (RBI) data report showed that India's forex reserves increased by $1.832 billion to a new lifetime high of $442.583 billion in the week ended October 25, helped by a jump in core currency assets and value of gold. Volatility hit over street during noon deals which brought the markets off day's high points, amid Centre for Monitoring Indian Economy's report highlighting that India's unemployment rate rose to 8.5% in October 2019, the highest level since August 2016. Separately, Goods and Services Tax collection declined by 5.29 per cent to Rs 95,380 crore in the month of October 2019, as against Rs 1,00,710 crore in the same month a year ago. But, indices remained in green for whole day to end higher, amid reports that India is likely to make a strong pitch for exports of its Pharma, IT and agricultural products among others at China's second International Import Expo to be opened at Shanghai on November 5. Finally, the BSE Sensex gained 136.93 points or 0.34% to 40,301.96, while the CNX Nifty was up by 50.70 points or 0.43% to 11,941.30.

 

The US markets ended higher on Monday, extending the strong upward move seen in the previous session, as traders remain hopeful about a US-China trade agreement, with Commerce Secretary Wilbur Ross expressing optimism phase one of a trade deal could be signed this month. Ross said we are in good shape, we are making good progress, and there is no natural reason why it couldn't be. Ross called the phase one agreement particularly complicated and acknowledged it is always possible the signing of the deal could slip a little bit. Ross also said licenses for US firms to sell components to China's Huawei Technologies would be coming very shortly. All three equity benchmarks hit all-time intraday highs. The last time the three major indexes ended at record highs on the same day was July 15. Besides, a third-quarter earnings season that has been better than feared buoyed sentiment on markets. Of the 356 companies in the S&P 500 that have reported third-quarter earnings so far, 75.8% have reported earnings per share that exceeded street estimates, above the average 65% beat rate since 1994, putting the index on pace for an overall decline in earnings of 0.8%, up from a predicted 2.2% contraction on October 1.

 

Extending their previous session's gains, crude oil futures ended higher on Monday amid renewed optimism about the outlook for global demand. Oil prices got support as hope for a Sino-American trade resolution and Saudi Arabia's plans to launch a public offering of Aramco helped to bolster sentiment in the energy complex. Saudi Arabia formally began an initial public offering on Sunday of a portion of Saudi Aramco after years of delays, with the de facto leader of the Organization of the Petroleum Exporting Countries hoping for a $2 trillion valuation for the oil-processing facility. Benchmark crude oil futures for December gained 34 cents or 0.6 percent to settle at $56.54 a barrel on the New York Mercantile Exchange. January Brent surged 44 cents or 0.7 percent to settle at $62.13 a barrel on London's Intercontinental Exchange.

 

Giving up most of its early gains, Indian rupee ended slightly higher against dollar on Monday on account of selling of US dollar by bankers and exporters. Traders took some support with Prime Minister Narendra Modi's statement that the country is among the top 10 destinations for foreign direct investment (FDI) in the world and had received $286 billion of FDI in the last five years. Besides, positive trend in equity market supported the rupee. However, gains were capped as investors remained cautious with Centre for Monitoring Indian Economy's report which highlighted that India's unemployment rate rose to 8.5% in October 2019, the highest level since August 2016. On the global front, euro edged down on Monday as investors awaited Christine Lagarde's first speech as European Central Bank president, but hopes that the United States may choose not to impose tariffs on auto imports kept it near its highest level in weeks. Finally, the rupee ended at 70.77, 4 paise stronger from its previous close of 70.81 on Friday.

 

The FIIs as per Monday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 7887.62 crore against gross selling of Rs 6080.46 crore, while in the debt segment, the gross purchase was of Rs 2480.19 crore with gross sales of Rs 824.52 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.88 crore against gross selling of Rs 2.15 crore.

 

The US markets ended higher on Monday as investors reveled in strong economic data, blockbuster earnings and trade optimism. Asian markets are trading mostly in green on Tuesday on increasing signs the US and China are inching closer to a truce in their trade war. Indian markets ended higher on Monday amid reports of further tax reforms. Today, the markets are likely to make flat-to-negative start amid rise in crude oil prices. Investors will be eyeing Services PMI data to be out later in the day. Traders will be concerned with SBI report stating that India's Gross Domestic Product (GDP) growth is likely to slow further in the July-September quarter of this financial year to below 5 per cent amid decline in consumption, weak investments and an under-performing service sector. Also, a private report said that despite efforts mounted by the government, demand has been muted during the festive time, and this leads to a 0.30 percent cut in FY20 GDP growth forecast to 5.8 percent. There will be some cautiousness with report that India has decided not to join the mega Regional Comprehensive Economic Partnership (RCEP) deal as negotiations failed to address the government's concerns. However, some respite may come later in the day with positive global cues. Meanwhile, the Securities and Exchange Board of India (SEBI) has said that listed Indian firms' employees, including foreign nationals, are required to follow the code of conduct while trading in American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). Banking stocks will be in focus with ICRA's report that growth in bank credit may decelerate sharply to 8-8.5 percent during 2019-20 from 13.3 percent last fiscal, mainly due to a decline in incremental credit in the first half of the current financial year. There will be some reaction in NBFCs as Reserve Bank asked the already fund-starved NBFCs to adopt better risk monitoring tools that capture the strains early on and also to maintain a liquidity buffer as per the mandated liquidity coverage ratio. Also, there will be some buzz in the IT stocks as Finance Minister Nirmala Sitharaman unveiled two new information technology (IT) initiatives for improved monitoring of clearance of the imported goods and making it easier for international passengers to arrive in India. There will be some earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,941.30

11,901.38

11,985.18

BSE Sensex

40,301.96

40,164.43

40,461.35

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

4,209.98

66.15

58.10

72.75

Tata Motors

406.41

172.20

169.22

176.82

ZEEL

317.55

296.10

288.18

305.83

SBI

315.36

314.30

311.43

318.08

Infosys

293.82

709.00

680.60

734.95

 

  • Tata Motors has reported domestic sales of 39,152 units for October 2019, as compared to 57,710 units for October 2018, posting a decline of 32%. 
  • Eicher Motors' motorcycle division has reported 2% rise in sales at 71,964 units in October 2019 as compared to 70,451 motorcycles sold in October 2018. 
  • Coal India has reported fall in its production by 20.9% to 39.35 million tonnes in October. 
  • Infosys has entered into a strategic long-term partnership with Siemens Gamesa Renewable Energy to support its digital transformation journey.
News Analysis