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NSE Intra-day chart (26 December 2019)
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Market Commentary 27 December 2019
Markets to get an optimistic start amid positive global cues

 

Indian equity markets extended poor run on Thursday, with Sensex & Nifty plunging around 300 & 100 points, respectively. After a cautious start, bourses remained sluggish, as International Monetary Fund said that India should recommit to cutting on debt by bringing down its public sector borrowing requirements & enhance focus on having greater fiscal transparency to help investors make informed economic decisions. Adding more worries, RBI said non-banking financial company sector reported a sharp jump in gross non-performing assets ratio to 6.1 percent in FY19 from 5.3 percent in FY18. Bears tightened their grip on Dalal Street in the second half of the session, amid reports that merger and acquisitions seem to have become a big casualty of corporates' debt distress as India Inc learned it hard way in 2019 that their first priority was to meet their loan repayment obligations and suitors from abroad also seemed reluctant in wooing distressed targets for any matchmaking. This has led to a mostly muted scene on India's corporate deal street this year, after a blockbuster 2018, while economic slowdown fears further came in the way for any significant merger and acquisition deals. Finally, the BSE Sensex lost 297.50 points or 0.72% to 41,163.76, while the CNX Nifty was down by 88.00 points or 0.72% to 12,126.55.

 

The US markets ended higher on Thursday, hitting record highs as the markets rallied into the end of 2019. The likely signing of a phase one US-China trade deal has helped to maintain positive sentiment on markets. Chinese Foreign Ministry spokesman Geng Shuang said officials from Beijing and Washington were in close communication about detailed arrangements for the deal's signing and other follow-up work. Those comments follow remarks from President Trump, who on Christmas Eve said that the deal is done, it's just being translated right now. Trump also said that he and China's leader, Xi Jinping, would hold a signing ceremony for the partial trade resolution in January. He said we will be having a quicker signing because we want to get it done. Adding to the positive sentiment, the Labor Department released a report showing a continued pullback in first-time claims for US unemployment benefits in the week ended December 21. The Labor Department said initial jobless claims fell to 222,000, a decrease of 13,000 from the previous week's revised level of 235,000. Street had expected jobless claims to drop to 224,000 from the 234,000 originally reported for the previous week. Jobless claims fell for the second straight week after reaching their highest level since September of 2017 in the week ended December 7. Meanwhile, the report said the less volatile four-week moving average rose to 228,000, an increase of 2,250 from the previous week's revised average of 225,750. The Labor Department said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, fell by 6,000 to 1.719 million in the week ended December 14.

 

Crude oil futures ended higher on Thursday amid easing concerns about the outlook for energy demand following the US and China agreeing on a phase 1 trade deal. US President Donald Trump said earlier this week that he and Chinese President Xi Jinping would have signing ceremony for the agreement to end their ongoing trade dispute. Further some support also came in with report releasing by the American Petroleum Institute showed US crude stockpiles declined by 7.9 million barrels for the week ended December 20. That was significantly higher than what was forecast by Street. Benchmark crude oil futures for February surged 57 cents or 0.9 percent to settle at $61.68 a barrel on the New York Mercantile Exchange. February Brent rose 72 cents or 1.1 percent to settle at $67.92 a barrel on London's Intercontinental Exchange.

 

Extending weakness for the fifth day, Indian rupee ended marginally lower against dollar on Thursday, as good demand for the greenback from importers. Traders remain concerned as International Monetary Fund said that India should recommit to cutting on debt by bringing down its public sector borrowing requirements & enhance focus on having greater fiscal transparency to help investors make informed economic decisions. Moreover, sharp fall in equities along with dollar's strength against major global currencies overseas affected the rupee. On the global front, dollar edged up slightly against yen on Thursday while risk-sensitive currencies held firm on hopes of easing trade tensions between the United States and China and a pick up in the global growth. Finally, the rupee ended at 71.31, 4 paise weaker from its previous close of 71.27 on Tuesday.

 

The FIIs as per Thursday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 1955.30 crore against gross selling of Rs 1966.37 crore, while in the debt segment, the gross purchase was of Rs 1301.11 crore with gross sales of Rs 1316.79 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.55 crore against gross selling of Rs 0.89 crore.

 

The US markets ended higher on Thursday, helped by reports of record year-end retail sales. Asian markets are trading mostly in green on Friday following overnight gains on Wall Street. Though, Japanese retail sales data for November released earlier on Friday came in worse than expected. Indian markets ended lower for third day in a row on Thursday on the back of selling pressure in banking, energy and telecom stocks. Today, start of the session is likely to be optimistic tacking positive cues from global markets. Some support will come with report that the Reserve Bank of India announced simultaneous purchase and sale of government securities through special open market operations (OMOs) for Rs 10,000 crore each on December 30 following a review of liquidity situation. Traders may take note of the Food & Agriculture Organisation's data showing that select agri and agri-based commodities like meat, milk and fruits, among others, present export opportunity worth over $97 billion (about Rs 6.9 lakh crore) for India. However, worries over delay in divestment planned this fiscal is expected to weigh on investors' sentiment. As per a private report, the government could miss its FY20 divestment target by as much as Rs 50,000 crore. There may be some cautiousness as the International Monetary Fund (IMF) raised doubts over India's methodology to calculate gross domestic product (GDP) numbers, saying certain changes to historical series and discrepancies between GDP by activity and GDP by expenditure have made the growth calculation process complex. There may be some reaction with report that reflecting the woes of the broader economy, fund raising through IPOs plunged to a low Rs 12,362 crore in 2019, down a full 60 per cent from 2018 when the street mopped up Rs 30,959 crore. Meanwhile, Finance Minister Nirmala Sitharaman is set to hold a review meeting with chief executive officers (CEOs) of public sector banks (PSBs) on December 28. There will be some buzz in the auto stocks with CRISIL's report that on a low base, there will be some upward momentum in overall auto space in the financial year 2020-21. So on a calendar year basis, the first quarter (Q1) might not see a lot of momentum but the uptick will start from the second half of the year. Banking stocks will be in focus with ICRA's report that aided by better recoveries and declining slippages, overall net non-performing assets (NPAs) of the banking sector are likely to improve to 3.2-3.3 per cent by the end this fiscal from 3.7 per cent in September 2019. There will be some reaction in textile stocks with report that the operating margin of domestic cotton yarn spinners is expected to shrink by 2-4 percentage points in the 2020 fiscal following higher domestic cotton prices and a sharp fall in exports.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,126.55

12,089.75

12,192.45

BSE Sensex

41,163.76

41,016.50

41,427.41

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

2,163.80

48.65

47.40

50.75

SBI

246.17

329.85

327.48

332.83

ONGC

231.64

128.00

125.15

130.20

Vedanta

199.70

150.70

148.00

152.95

Tata Motors

187.85

174.60

173.65

176.00

 

  • HCL Technologies has opened a Global Delivery Center in Moncton, New Brunswick, Canada. 
  • NTPC is planning to add 10GW of solar energy generation capacity by 2022, which entails an investment of around Rs 50,000 crore, to be funded mainly by green bonds. 
  • Ashok Leyland has inked a MoU with Yes Bank for vehicle finance for a period of two years. 
  • Coal India's supply of coal to the power sector has registered a decline of 8.9 per cent to 291.4 million tonnes in April-November this year.
News Analysis