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NSE Intra-day chart (14 October 2019)
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Market Commentary 15 October 2019
Benchmarks to get an optimistic start tracking Asian peers

 

Indian equity bourses closed Monday's trading in green terrain, with Sensex & Nifty reclaiming their crucial levels of 38,200 & 11,300, respectively. After a positive start, indices slipped into red, as the World Bank slashed its economic growth forecast for India to 6% for the current fiscal (FY20) from its April projection of 7.5%. It also warned that the severe slowdown could further weaken the country's stuttering financial sector. But soon, recovery staged over markets, as India's Wholesale price index (WPI) inflation fell sharply at 0.33% in the month of September 2019 as against 1.08% (provisional) for the previous month and 5.22% during the corresponding month of the previous year. In second half of the trading session, key markets traded near their intraday high points, amid Reserve Bank of India's (RBI) report which showed that India's foreign exchange reserves increased by $4.239 billion to hit a record high of $437.833 billion as on October 4. However, most of the gains got trimmed in the last leg of the trade, amid reports India's factory output growth, measured by the Index of Industrial Production (IIP), contracted by 1.1% in August, recording the poorest performance in seven years due to a sharp decline in production of capital goods and consumer durable. The IIP had shown a growth of 4.8% in August 2018. Finally, the BSE Sensex gained 87.39 points or 0.23% to 38,214.47, while the CNX Nifty was up by 36.10 points or 0.32% to 11,341.15.

 

The US markets ended marginally lower on Monday on renewed uncertainty about a trade deal with China. President Donald Trump announced on Friday that the US and China have reached a very substantial phase one deal, although reports suggest China wants another round of talks before signing the agreement. China may send a delegation led by Vice Premier Liu He to finalize a written deal that could be signed at the Asia-Pacific Economic Cooperation summit next month in Chile. China wants Trump to also scrap a planned tariff hike in December in addition to the hike scheduled for this week. Trump said the deal includes up to $40 to $50 billion in Chinese purchases of US agricultural products as well as Chinese concessions on intellectual property and financial services. In exchange for the concessions by China, the US agreed to hold off on an increase in tariffs originally scheduled for this week. Meanwhile, the choppy trading on markets came amid light volume due to the Columbus Day holiday. Besides, investors also were eyeing developments in negotiations over Britain's exit from the European Union, after optimism that a deal could be reached rose Friday following productive negotiations between UK Prime Minister Boris Johnson and Irish Prime Minister Leo Varadkar on the difficult question of the customs border between Britain's Northern Ireland and the Republic of Ireland. 

 

Crude oil futures ended lower on Monday as fading optimism about US-China trade deal raised concerns about the outlook for energy demand. China has reportedly asked for more talks with the US before signing phase one of a trade deal that President Donald Trump announced on Friday. Besides, Brexit concerns also weighed as well on the commodity. Britain and the European Union said that a lot of work remains to be done to secure an agreement on Britain's departure from the bloc. On the geopolitical front, Saudi Arabia has denied any involvement on last week's apparent attack on an Iranian oil tanker near the Saudi Arabian city of Jeddah. Benchmark crude oil futures for November declined $1.11 or 2 percent to settle at $53.59 a barrel on the New York Mercantile Exchange. December Brent dropped $1.16 or 1.9 percent to settle at $59.35 a barrel on London's Intercontinental Exchange.

 

Continuing strong recovery momentum for the second straight day, Indian rupee ended higher against US dollar on Friday, on dollar selling by exporters and banks. The rupee sentiment was buoyed with Reserve Bank of India's (RBI) report which showed that India's foreign exchange reserves increased by $4.239 billion to hit a record high of $437.833 billion as on October 4. Traders also found some support with India's Wholesale price index (WPI) inflation fell sharply at 0.33% in the month of September 2019 as against 1.08% (provisional) for the previous month and 5.22% during the corresponding month of the previous year. Besides, good going in the local equity markets supported the rupee. On the global front, dollar rose on Monday as investors headed into safer assets after they became more cautious that progress was being made toward a comprehensive US-China trade deal. Finally, the rupee ended at 71.23, 21 paise stronger from its previous close of 71.02 on Friday.

 

The FIIs as per Monday'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 4326.42 crore against gross selling of Rs 4894.54 crore, while in the debt segment, the gross purchase was of Rs 2044.49 crore with gross sales of Rs 843.95 crore. Besides, in the hybrid segment, the gross buying was of Rs 32.87 crore against gross selling of Rs 28.98 crore.

 

The US markets ended marginally in red on Monday as investors concluded the trade deal with China will not lead to significantly lower trade barriers or foster global economic growth in the near term. Asian markets are trading mostly higher on Tuesday as some investors held out hope that Britain still had a chance to avoid a messy exit from the European Union at key negotiations this week. Indian markets ended with modest gains on Monday, extending their winning streak to second consecutive session with firm global cues. Today, the markets are likely to make optimistic start tracking firm cues from Asian peers amid fall in crude oil prices. Investors will be eyeing balance of trade data to be released later in the day. Traders will be getting some encouragement with Minister of State for Finance Anurag Thakur's statement that Indian economy is structurally and fundamentally very strong and the current slowdown, which is cyclical in nature, would not affect it much. He also exuded confidence that India would achieve the target of becoming $5 trillion economy by 2024-25. Though, some cautiousness may come as the data released by the Central Statistics Office (CSO) showed that India's retail inflation rate grew 3.99% in September which is very close to the Reserve Bank of India's (RBI) target level of 4%. The retail inflation for August was 3.21%. Also, former RBI Governor Raghuram Rajan has expressed concern over India's fiscal deficit figures, stating that it is the likely reason behind the slowdown in Indian economy. He also criticised the government over its populist decision-making which failed to focus on economic growth. Meanwhile, Corporate Affairs Secretary Injeti Srinivas said the government is examining suggestions to raise the threshold of Rs 1 lakh default to invoke the Insolvency and Bankruptcy Code (IBC) to reduce the number of cases in the NCLT. Banking stocks will be in focus as RBI governor Shaktikanta Das will meet the heads of the state-run banks on October 15. The meeting is likely to discuss NPA resolution, potential stressed assets, restructuring of MSME loans and stress in the realty sector are among the issues which are likely to feature at the meeting. There will be some buzz in the oil and gas stocks as Oil Minister Dharmendra Pradhan made a vehement appeal to Finance Minister Nirmala Sitharaman for bringing jet fuel and natural gas under the ambit of GST to reduce multiplicity of taxes and improve business climate. There will be some reaction in telecom stocks as Telecom Minister Ravi Shankar Prasad assured the industry of reforms in spectrum pricing, and said auctions will take place in the current financial year. Also, healthcare stocks will be in focus with Icra's report that the healthcare sector is on a recovery path after two previous years of muted performance marred by several regulatory measures. There will be some result announcements to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,341.15

11,280.65

11,411.05

BSE Sensex

38,214.47

38,015.84

38,463.40

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

2,237.27

40.10

38.77

41.47

Tata Motors

680.49

127.85

123.57

131.07

SBI

282.65

255.45

253.17

258.57

ONGC

194.60

135.25

130.68

138.13

ICICI Bank

172.11

428.85

424.43

434.83

 

  • Sun Pharmaceutical Industries' one of wholly-owned subsidiaries has commercialized CEQUA 0.09% in the US. 
  • Bharti Airtel has closed its 3G network in Haryana and migrated customers to 4G services. 
  • Maruti Suzuki India has selected five startups for Proof of Concept under its Mobility & Automobile Innovation Lab program. 
  • Hindustan Unilever has reported a rise of 23.42% in its consolidated net profit at Rs 1,818 crore for Q2FY20 as compared to Rs 1,473 crore for Q2FY19.
News Analysis