Indian equity benchmarks showed a
volte-face on Tuesday as what started on a promising note ended as a dismal
show. The optimism in domestic markets petered out completely by the end of
trade and the benchmarks even drifted in to the negative territory despite
getting off to a gap-up opening. Marketmen were optimistic for most part of the
session, as softer-than-expected inflation data fuelled hopes of a rate cut by
the central bank at its next policy review in August. Data released late on
Monday showed consumer inflation easing to 2.18% in May, helped by a drop in
food prices - the lowest since India started publishing an economy-wide
consumer price index in 2012. Some support also came with Union Finance
Minister Arun Jaitley's statement that the Reserve Bank of India (RBI) was at a
fairly advanced stage of preparing a list of borrowers from whom non-performing
assets (NPAs) of public sector banks could be recovered under the Insolvency
and Bankruptcy Code. The move would help beleaguered public sector banks (PSBs)
recover part of their NPAs, estimated at over Rs 6 lakh crore. However, the
sanguinity in local markets was under check as profit booking in IT, Metal and Auto counters exerted downside pressure
on the frontline indices and dragged near the psychological 9,600 (Nifty) and
31,100 (Sensex) levels. Investors turned jittery ahead of the US Federal
Reserve's two-day policy meeting that kicks off later today where they are
widely expected to hike the policy rate this time. Adding the pessimism among
investors, Industrial production growth slipped to 3.1% in April compared to
the same period last year, when industrial production grew by 6.5%, though it
was better than last month. Finally, the BSE Sensex gained 7.79 points or 0.03%
to 31103.49, while the CNX Nifty was down by 9.50 points or 0.10% to 9,606.90.
The US markets closed higher on
Tuesday, rebounding from a two-day decline but the market's focus was on the
Federal Reserve's two-day monetary policy meeting and Attorney General Jeff
Sessions' testimony before the Senate Intelligence Committee. The two-day
Federal Open Market Committee meeting will wrap up Wednesday with a news
conference hosted by Fed Chairwoman Janet Yellen. According to the CME Group,
market observers are nearly unanimous in the view that the fed-funds rate will
be raised, with a nearly 100% chance of an interest-rate increase. On the
economy front, small-business sentiment held steady in May after three straight
declines as business owners still expect Washington action on taxes and health
care despite partisan tension over numerous probes into the Trump campaign's
possible ties with Russia. The National Federation of Independent Business said
its small-business optimism index held steady at a seasonally adjusted 104.5 in
May from the prior month. This is slightly above the consensus forecast of 104.
In May, five of the 10 index components gained, four declined and one remained
unchanged. Separately, lower costs of gasoline and other fuels kept wholesale
US inflation in check in May. The Dow Jones Industrial Average added 92.80
points or 0.44 percent to 21,328.47, Nasdaq was up 44.90 points or 0.73 percent
to 6,220.37, while S&P 500 edged higher by 10.96 points or 0.45 percent to 2,440.35.
Crude oil futures continued
moving higher on Tuesday for the second straight session, amid signs that Saudi
Arabia will further cut production in order to preserve OPEC's supply quota
deal with Russia. Saudi Arabia pledged to reduce exports to customers in July,
in an effort to help curb the glut in supply. Though, investors looked ahead to
fresh US crude inventory data expected to show draw in crude stockpiles,
offsetting concerns about an uptick in output from OPEC members. OPEC's output
rose 336,000 barrels a day or 1% to over 32.14 million barrels in May. Benchmark
crude oil futures for July delivery ended higher by $0.38 or 0.8 percent to $46.46
on the New York Mercantile Exchange. In London, Brent crude for July delivery ended
up by $ 0.81 to $48.67 on the ICE.
Indian
rupee ended marginally higher against dollar on Tuesday due to sustained
selling of the US currency by exporters and banks. Sentiments remained
positive, as retail inflation as well as industrial output data served to
bolster expectations of a rate cut by the RBI. Data released late on Monday
showed consumer inflation easing to 2.18% in May, helped by a drop in food
prices - the lowest since India started publishing an economy-wide consumer
price index in 2012. Besides, India's industrial production grew by 3.1 percent
in April 2017, as compared to 2.7 percent in the month of March 2017 and
against a drop of 1.2 percent in February 2017. The growth was due to good
performance of electricity, mining and manufacturing sectors. On the global
front, dollar gained against yen ahead of a two-day US Federal Reserve meeting
that is likely to provide hints on the central bank's interest rate policy for
the remainder of the year. Finally, the
rupee ended at 64.34, 10 paise stronger from its previous close of 64.44 on
Monday.
The
FIIs as per Tuesday's data were net sellers in equity segment, while they were
net buyers in debt segment. In equity segment, the gross buying was of Rs
3517.45 crore against gross selling of Rs 3522.11 crore, while in the debt
segment, the gross purchase was of Rs 684.04 crore with gross sales of Rs
567.17 crore.
The US markets bounced back and
the Dow and the S&P 500 both climbed to new record closing highs. The gains
were partly due to bargain hunting, with traders picking up stocks at
relatively reduced levels, though there was some cautiousness too ahead of
tomorrow's Federal Reserve announcement on monetary policy. The Asian markets
have made a cautious start though many of the indices in the region are in
green, tailing the record closing highs overnight on Wall Street. The Indian
markets after losing their momentum in the final hours, managed a flat closing
in the last session. Today, the start is likely to remain cautious with traders
looking ahead to the US Federal Reserve's monetary policy decision due later in
the day. There will be some concern with a private report stating that Indian employers expect steady hiring outlook
for next three months, but their confidence have dipped to the least optimistic
level since 2005 amid uncertainties in global markets. However, some support
can come with reports that the government is working on a new industrial policy
with a view to promoting and developing frontier technologies, innovation and
enhancing competitiveness of domestic products. Also, the government has put an
end to speculation that the rollout of the goods and services tax (GST) will be
delayed, with revenue secretary Hasmukh Adhia and the Central Board of Excise
and Customs (CBEC) saying the tax reform is on track for July 1 rollout. There
will be buzz in the PSU banking space, as the Reserve Bank of India (RBI) has
said it had identified 12 of the largest loan defaulters and would order
lenders to start bankruptcy proceedings against them to start unclogging the
$150 billion in bad debt. Also, the RBI is looking into request for extending
the NPA classification period from the current 90-day window to help small and
medium enterprises.
Support and Resistance: NSE
(Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
9606.90
|
9583.48
|
9642.23
|
BSE Sensex
|
31103.49
|
31023.63
|
31222.06
|
Nifty Top volumes
Stock
|
Volume
(in Lacs)
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
Vedanta
|
96.43
|
238.50
|
235.87
|
242.87
|
Sun Pharma
|
95.78
|
537.20
|
531.60
|
547.40
|
SBI
|
91.71
|
283.85
|
282.23
|
286.23
|
Power Grid
|
88.74
|
210.25
|
206.45
|
213.60
|
ICICI Bank
|
84.60
|
314.85
|
312.93
|
317.73
|
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