Tuesday's session turned out to
be a disappointing session for the Indian benchmarks which crumbled like a
‘house of cards' and went on to breach various key technical levels in the over
one and half percent freefall. The
frontline indices which appeared to be on a southbound journey, desperately
kept searching for a bottom through the session, but to no avail as the
downward journey only halted with the session's close. Sentiments turned
pessimistic on report that exports of over half of the sectors, out of the 30
closely monitored by the Commerce Ministry, were in the negative zone in
January due to a fall in global prices and demand. Investors were also jittery
ahead of the government's 2016/17 budget, which is due on February 29, though
hopes are high that policymakers will deliver a fiscally responsible budget
that nonetheless steers spending to key areas such as infrastructure.
Sentiments weakened further after Moody's Investors Service stated that India's
fiscal metrics will remain weaker than its peers in the near term even if the
Finance Minister Arun Jaitley was to stick to the fiscal consolidation roadmap.
The global credit rating agency added that the importance of the upcoming
Budget 2016 lies in its message on the government's fiscal consolidation plans.
Meanwhile, foreign institutional investors (FIIs/FPIs) continued their selling
spree on Monday as well, and were net sellers of Indian equities worth Rs
656.93 crore, indicting diminishing trust over market fundamentals. On the
global front, Asian markets ended mostly lower, while the European shares too retreated
on Tuesday, with falling commodities prices. Back home, after making a flat but
positive start, Indian benchmark indices dropped into the red terrain sooner
than later, lacking any significant upside cues. Thereafter, the frontline
indices lost the plot and kept tumbling down the hill without any stoppage. The
steep fall turned even acute after the opening of European markets in the noon
trades, as one negative report after another from the continent kept creating
havoc for the local bourses. Finally, the BSE Sensex plunged by 378.61 points
or 1.59% to 23410.18, while the CNX Nifty dropped 125.00 points or 1.72% to
7,109.55.
The US markets closed lower on
Tuesday, erasing most of their gains from Monday's session, as a fresh selloff
in crude-oil prices weighed on Wall Street investors, who have viewed plunging
energy prices as a signal that the health of the global economy is on shaky
footing. On the economy front, consumers' confidence fell in February to the
lowest level in seven months, as Americans became a bit more pessimistic about
job prospects and business conditions. The consumer confidence index dropped to
92.2 from a revised 97.8 in January. Last fall, confidence effectively matched
a post-recession high as the index hit 102.6 before tapering off. But it still
falls short of the 111.9 peak reached during the 2001-2007 expansion, and it's
well below an all-time high of 144.7 achieved in mid-2000. On the other hand,
US home prices were steady in December, but home values in 2015 increased much
faster than inflation on a combination jobs growth and low inventories. The Dow
Jones Industrial Average lost 188.88 points or 1.14 percent to 16,431.78, the
Nasdaq was down 67.03 points or 1.47 percent to 4,503.58 while, the S&P 500
dropped 24.23 points or 1.25 percent to 1,921.27.
Crude oil futures just after a
day of rally, suffered sharp slump on Tuesday reacting to bearish comments from
officials in Saudi Arabia and Iran, which dampened hopes of forthcoming
reductions in the massive global supply glut in the near-term future. Iranian
Oil Minister Bijan Namdar Zanganeh said that any Iranian involvement in the
plan is ridiculous. Benchmark crude oil futures for March delivery plunged by $1.58
or 4.73 percent to $31.81a barrel after trading in a range of $31.66 and $33.52
a barrel on the New York Mercantile Exchange. In London, Brent crude for April
delivery closed at $33.24, down $1.43 or 4.18 percent on the ICE.
Indian rupee recouped early
losses and ended stronger against dollar on Tuesday on fresh selling of
American currency by banks and exporters. Besides, the dollar's weakness
against some other currencies overseas too supported the rupee. Some support
came in with reports that the total collection from direct taxes stood at Rs
5.47 lakh crore as on February 13, which is 68.7% of the budget target for the
fiscal. Though the government is likely to face a shortfall of Rs 40,000 crore
in direct tax collection for the current fiscal, the shortfall would be made
good as the indirect tax revenues are likely to overshoot budget target by a
similar margin. However, losses in domestic equity market capped the rupee
gains. Meanwhile, investors remained on the sidelines ahead of the Railway
Budget on February 25 and government's 2016/17 union budget, which is due on
February 29. On the global front, yen gained largely on Tuesday as a recent
rally in risky assets and crude oil fizzled out reviving demand for the
safe-haven currency. Finally, the rupee ended at 68.58, 3 paise stronger from
its previous close of 68.61 on Monday.
The FIIs as per Tuesday's data
were net sellers in equity and in debt segments both. In equity segment, the
gross buying was of Rs 2750.12 crore against gross selling of Rs 3031.82 crore,
while in the debt segment, the gross purchase was of Rs 805.63 crore with gross
sales of Rs 2203.52 crore.
The US markets suffered sharp
slump in last session, following a rally of previous day, the decline of the
day was partially contributed by the profit taking and partially by the drop in
crude oil prices. The Asian markets have made mostly a weak start with some
indices trading lower by around a percent, with revival in demand for low-risk
assets once again. The Japanese market too was in red despite the yen steadying
against the dollar. The Indian markets as usual initiated the southward journey
of the global equity markets and slumped in last session. Today, the start of
the penultimate session of the February F&O series and the rail budget is
likely to be in red, tailing the slump in the global markets. Traders will be
concerned with Moody's Investors Service's statement that India's fiscal
metrics will remain weaker than its peers in the near term even if Finance
Minister Arun Jaitley was to stick to fiscal consolidation roadmap. It said
that the government's fiscal deficits have reduced over the last five years,
and this has supported the stabilisation of government debt ratios. Without
fiscal consolidation going forward, India's government finances will continue
to compare poorly to peers. Meanwhile, the industry body Ficci has said that Indian
economy is expected to grow at 7.4 percent in the current fiscal, slightly
lower than 7.6 percent projected in advance estimates of Central Statistics
Office. However, there will be some support too, with President Pranab
Mukherjee, in a joint sitting of Parliament at the start of the Budget session,
stating that India is a haven of stability in an increasingly turbulent global
economy. GDP growth has increased making India the world's fastest growing
economy among large economies. There will be some buzz in the steel stocks, on
report that the steel production has fallen by 1.5 percent to 7.4 million
tonnes (MT) in January 2016 compared with the output in the same month last
year. The railways related stocks will remain in action a day ahead of the Rail
Budget.
Support
and Resistance: NSE Nifty and BSE Sensex
Index
|
Previous close
|
Support
|
Resistance
|
CNX Nifty
|
7109.55
|
7052.93
|
7203.93
|
BSE Sensex
|
23410.18
|
23230.91
|
23720.48
|
Nifty Top volumes
Stock
|
Volume
(in Lacs)
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
Vedanta
|
206.96
|
73.05
|
71.55
|
75.15
|
SBI
|
202
|
158.50
|
156.00
|
163.00
|
ICICI Bank
|
181.84
|
192.00
|
188.37
|
197.52
|
Tata Motors
|
116.36
|
318.55
|
313.75
|
324.05
|
BHEL
|
104.12
|
98.45
|
96.73
|
101.43
|
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