Dalal Street headed for the worst
performance on Monday, with Sensex and Nifty crashing nearly 2 per cent each.
After a sluggish start, key indices traded in red terrain for the whole day,
impacted by apex exporters' body FIEO's statement that further escalation in
the tension between the US and Iran will have implications on India's exports
to the Persian Gulf nation. Market participants also got cautious due to a
report stating that foreign portfolio investors (FPIs) began the year with
profit booking as they withdrew a net sum of Rs 2,418 crore from the Indian
capital markets in the first three trading sessions of January. Bears tighten
their grip over the street in the second half of the trading session, on
account of weak cues from global markets. Domestic sentiments remained
pessimistic, amid reports that investors wealth tumbled by a whopping Rs 3.11
lakh crore in two successive sessions of decline in the equity market following
escalation in tensions in the Middle East. Adding more anxiety among investors,
economic think tank NIPFP said that states might be facing a consolidated
revenue gap of up to Rs 1.23 lakh crore on account of withdrawal of compensation
after the five-year GST transition period ends on June 30, 2022. Finally, the
BSE Sensex fell 787.98 points or 1.90% to 40,676.63, while the CNX Nifty was
down by 233.60 points or 1.91% to 11,993.05.
The US markets ended higher on
Monday as traders seem optimistic that the bluster will not amount to much and
that tensions will eventually subside without a major impact on the global
economy. Besides, Chinese officials were set to arrive in
Washington on January 13 for a four-day meeting with US counterparts, to sign a
preliminary trade pact to end their protracted tariff conflict- a trade clash
that had been a the center of investors' minds before the Mideast worries.
Reports said that China had planned to arrive earlier, but delayed their plans
after President Trump announced a January 15 date for the signing of the deal.
However, upside remained capped as rising geopolitical tensions continued to
weigh on the markets after contributing to the pullback off record highs seen
last Friday. Washington and Tehran continue to engage in an escalating war of
words after the US killing of top Iranian military commander Qasem Soleimani in
an airstrike last week. With Iran's Supreme Leader Ali Khamenei vowing severe
revenge against the US, President Donald Trump threatened to retaliate against
any attacks on Americans or American assets. Trump said the US has targeted 52
Iranian sites to strike if Tehran launches an attack, with the number
representing the 52 American hostages held during the Iran hostage crisis.
Meanwhile, Trump also threatened to impose harsh sanctions on Iraq after its
parliament passed a resolution calling on US forces to leave the country.
Crude oil futures ended higher on
Monday amid concerns about possible supply disruptions due to an escalation in
tensions in the Middle East. President Donald Trump threatened potentially disproportionate
attacks if Iran strikes back against US targets. Trump also threatened harsh
sanctions against Iraq if it expels US troops, and doubled down on earlier
comments threatening to target Iranian cultural sites if Iran were to strike
back against the US. Meanwhile, traders also took note of reports that all the
four oil export terminals in eastern Libya were forced to shut on Sunday due to
bad weather and that the closure could last three days. Crude oil futures for
February added 22 cents or 0.4 percent to settle at $63.27 a barrel on the New
York Mercantile Exchange. March Brent gained 31 cents or 0.5 percent to settle
at $68.91 a barrel on London's Intercontinental Exchange.
Indian
rupee continued to slide against the American currency for the third day on
Monday, on increased demand for the greenback from importers and banks. Traders
remained anxious with apex exporters' body FIEO's statement that further
escalation in the tension between the US and Iran will have implications on
India's exports to the Persian Gulf nation. Besides, a sharp sell-off in the
domestic stock market put pressure on the rupee. However, local unit cut most
of the early losses, taking support from the a private survey showed that the
services industry accelerated to a five-month high in December 2019, raising
hopes of an economic recovery. The IHS Markit Services Purchasing Managers'
Index (PMI) rose to 53.3 in December from 52.7 in November. This is the second
straight month of expansion for Services PMI. On the global front, safe-haven
Japanese yen hit a three-month high on Monday, as increasing tensions between
Iran and the United States sent investors scurrying to less risky assets.
Finally, the rupee ended at 71.93, 13 paise weaker from its previous close of
71.80 on Friday.
The
FIIs as per Monday'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
4535.04 crore against gross selling of Rs 3233.07 crore, while in the debt
segment, the gross purchase was of Rs 1459.13 crore with gross sales of Rs
2758.24 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.32
crore against gross selling of Rs 0.38 crore.
The US markets ended in green on
Monday as heavyweight technology companies led a rebound. Asian markets are
trading mostly higher on Tuesday after surveys of service sectors out overnight
showed an improvement in the United States, U.K. and EU. Indian markets ended
sharply lower with losses of around 2 percent on Monday as investors flocked to
safe havens after tensions in the Middle East lifted crude oil prices amid
depression in rupee. Today, the markets are likely to make positive start on
short-covering after a steep fall in the previous session following Asian
peers. Investors will be eyeing the release of the first advance estimates of
the GDP for FY20 by the government later in the day. The estimates will be
keenly watched for as the economic turbulence has taken a toll on growth
numbers in the first and the second quarter. Some support will come with
Commerce and Industry Minister Piyush Goyal's statement that use of artificial
intelligence (AI) in different forms can help achieve the target of making
India a $5 trillion economy in the coming years. However, there may be some
cautiousness amid concerns over fiscal deficit and CAD imbalances. A private
report said that India's government is likely to cut spending for the current
fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of
the biggest tax shortfalls in recent year. It added that Asia's third largest
economy, which is growing at its slowest pace in over six years because of lack
of private investment, could be hurt further if the government cuts spending.
There will be some buzz in the banking stocks with a report that starting the
January-March quarter, banks will begin to see the impact of the Reserve Bank
of India's June 7 circular, in the form of higher provisioning for stressed
accounts that have not found resolution thus far. Telecom stocks will be in
focus as the telecom industry urged the government to facilitate funding for
telecom companies at lower interest rates to help them reduce capital costs.
There will be some reaction in non-bank finance companies (NBFCs) stocks with
ICRA's report indicating that infrastructure finance companies might have to
brace for additional pressure on asset quality from exposure to renewable
energy (RE) projects, which face rate risks.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,993.05
|
11,918.47
|
12,123.37
|
BSE Sensex
|
40,676.63
|
40,400.95
|
41,165.33
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
1,028.80
|
45.15
|
44.52
|
46.27
|
SBI
|
356.45
|
319.00
|
313.90
|
327.90
|
Tata Motors
|
286.21
|
185.65
|
183.47
|
189.42
|
ZEEL
|
172.25
|
261.50
|
256.20
|
271.00
|
ONGC
|
146.11
|
126.25
|
124.30
|
129.00
|
Bharti Airtel has received shareholder's approval for rising up to $2 billion in equity and another $1 billion in debt.
HDFC is all set to raise up to Rs 5,000 crore by issuing bonds on a private placement basis to shore up its long-term capital needs.
Vedanta has proposed to offer Rated, Secured, Redeemable, Non-Cumulative, Non-Convertible Debentures aggregating upto Rs 2,000 crore in one or more tranches.
HDFC Bank has opened 8 more branches in the state of Rajasthan, taking its total branch network in the state to 200.