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NSE Intra-day chart (17 October 2018)
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Market Commentary 19 October 2018
Markets to make negative start on weak global cues


A huge reversal in gaining trend seen on the markets on Wednesday, as both the larger peers, Sensex and Nifty halted three-day winning streak to settle the session on pessimistic note. The markets made a firm opening, as the World Economic Forum (WEF) in its latest Global Competitiveness Report for 2018 ranked India the 58th most competitive economy. As per the report, India's rank rose by five places from 2017, the largest gain among G20 economies. Traders' sentiments got boost with the Reserve Bank of India's (RBI) forecast that the share of investments in gross domestic product (GDP) will rise to 33% by FY23 from 31.4% recorded in the last fiscal, suggesting that the upturn in the current investment cycle that started in FY17 could last for five more years. Some support also came after a latest commerce ministry study showed that the extra US tariffs on its imports from China in the ongoing trade war have opened a window of opportunity for India to push for higher exports in 171 items - ranging from textiles to marine products - with additional outbound shipment potential of up to $8.7 billion a year. However, in the second half of the session, the key indices gave up all of their gains to enter into red terrain, amid sharp sell-off by traders. The trade was also got hit by reports that the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) hit a nearly nine-and-a-half year low of Rs 79,548 crore in September 2018. Adding some anxiety among the investors, Commerce and industry minister Suresh Prabhu said that India is the ‘worst sufferer' of declining trade and slow global economic growth as the country has a huge stake and its share in world trade is rising. Some cautiousness also came after Niti Aayog CEO Amitabh Kant said that the country needs to work a lot on exports and gender parity so as to grow at 9-10% annually in the next three decades, ensuring that India has growth with equity. Separately, Finance Minister Arun Jaitley has said that India needs strong and decisive leadership at the Centre to promote growth, get rid of poverty and transform the country into a developed nation. Finally, the BSE Sensex plunged 382.90 points or 1.09% to 34,779.58, while the CNX Nifty was down by 131.70 points or 1.24% to 10,453.05.


The US markets declined on Thursday on rising worries over US-Saudi relations after the suspected murder of journalist Jamal Khashoggi and unease over the eurozone due to Italy's controversial budget plans. Sentiments remained under pressure after Treasury Secretary Steven Mnuchin announced he was withdrawing from a big investment summit in Saudi Arabia, the most concrete sign the Trump administration is distancing itself from Saudi Arabia since Khashoggi's disappearance this month intensified scrutiny of the big oil exporter. Besides, European Central Bank chief Mario Draghi reportedly told EU leaders at a Brussels summit that nations should adhere to the EU's budget rules - comments that were seen as a swipe at Italy, which plans a steep increase in deficit spending. However, investors overlooked solid earnings reports. On the economic front, the Labor Department's report showed a modest decrease in first-time claims for US unemployment benefits in the week ended October 13. The report said initial jobless claims slipped to 210,000, a decrease of 5,000 from the previous week's revised level of 215,000. A separate report released by the Federal Reserve Bank of Philadelphia showed manufacturing activity in the Philadelphia area grew at a slightly slower rate in the month of October. The Philly Fed said its diffusion index for current general activity edged down to 22.2 in October from 22.9 in September, although a positive reading still indicates growth in regional manufacturing activity. Meanwhile, the Conference Board said its leading economic index climbed by 0.5% in September after rising by 0.4% in August. Dow Jones Industrial Average declined 327.23 points or 1.27 percent to 25,379.45, Nasdaq slipped 157.56 points or 2.06 percent to 7,485.14 and S&P 500 was down by 40.43 points or 1.44 percent to 2,768.78.


Extending previous session losses, crude oil futures ended lower on Thursday due to a sharp jump in US crude inventories last week and on demand growth concerns. The Energy Information Administration's data showed US crude inventories rose by 6.5 million barrels in the week ended October 12, much more than the expected quantum of increase. That was the fourth successive weekly build. Crude stockpiles had risen by 6.0 million barrels a week earlier. According to a report from independent oil cargo surveyor Tanker Trackers, Iran exported 2.2 million barrels per day in the first fortnight of this month, about 0.5 million barrels lower than the peak export of 2.7 million barrels per day seen in May this year. Benchmark crude oil futures for November slipped $1.10 or 1.6% to settle at $68.65 a barrel on the New York Mercantile Exchange. December Brent crude dropped 76 cents or nearly 1 percent to settle at $79.29 a barrel on London's Intercontinental Exchanged.


Indian rupee ended lower against US dollar on Wednesday, due to fresh demand for the American currency from banks and importers. Traders remained cautious with Commerce and Industry Minister Suresh Prabhu's statement that no country can benefit from the decline in the world trade, and the slowing global economy is a concern for all nations including India. The rupee's losses were also caused by late hour sell-off in domestic equity markets along with a firm dollar against some currencies overseas. On the global front, dollar edged higher on Wednesday as a rally on Wall Street boosted risk appetite, although gains were capped before the release of Fed minutes later in the day. Finally, the rupee ended at 73.61, 13 paise weaker from its previous close of 73.48 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3986.89 crore against gross selling of Rs 5069.34 crore, while in the debt segment, the gross purchase was of Rs 4629.39 crore with gross sales of Rs 6017.21 crore. Besides, in the hybrid segment, the gross selling was of Rs 0.69 crore against no buying.


The US markets ended sharply lower on Thursday, on worries about global growth and as investors continued to weigh minutes of the Federal Reserve's September meeting, which were viewed as hawkish. Asian markets were trading in red on Friday as global trade worries, higher US interest rates and growth concerns in China are likely to weigh on investors' risk appetite. Snapping three-session gaining streak, Indian markets wiped out all of their early gains to end Wednesday's trade near intra-day low level amid a massive sell-off in financial stocks on liquidity concerns. Today, the markets are likely to make pessimistic start on weak global cues. There will be some cautiousness with SBI's research report - Ecowrap stating that the rupee depreciation has neither helped in improving exports nor in slowing imports, leading to an incremental trade deficit of $4 billion in the first half of the current fiscal. Traders will also be concerned about a private report that the impact of the current tightness in the credit market is unlikely to impact economic growth in any meaningful way beyond the next two quarters, notwithstanding the cautious view on the domestic equity market. Traders may react to a report that even as India clocked a good growth of 6.7% in the financial year 2018-19, job creation by corporate India dropped to just 3.8%, which can be seen as confirming fears of jobless growth in the country. Meanwhile, the commerce ministry is working on a new World Trade Organisation (WTO)-compliant export incentive scheme for merchandise shipments to replace the existing Merchandise Exports from India Scheme (MEIS). Currently, exporters of goods avail incentives under the MEIS. In this, the government provides duty benefits depending on product and country. There will be some buzz in gems and jewellery sector related stocks with report that the government is expected to come out with a comprehensive gold policy soon to promote the metal industry and the gems and jewellery sector, which is a major contributor to the export basket. The policy also aims at creating jobs in the gold sector. There will be some reaction in steel sector stocks with Union Minister Birender Singh's statement that the government has no plans to scale down its target for steel production unlike other countries as consumption of the alloy in India is growing slower than expected.


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Indiabulls Housing Finance






  • Hero MotoCorp has reported a marginal fall of 3.39% in its net profit at Rs 976.28 crore for Q2FY19 as compared to Rs 1,010.49 crore for Q2FY18. 
  • Axis Bank has raised $50 million under the GMTN Programme through its Dubai International Financial Centre branch. 
  • Mahindra Group and Ford have strengthened their ongoing strategic alliance in India with the signing of two definitive agreements. 
  • SBI is planning for raising up to Rs 5,000 crore through issue of Basel III compliant Tier 2 bonds in USD/INR to overseas and/or Indian investors during FY19, through a public offer / private placement.
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