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NSE Intra-day chart (27 December 2018)
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Market Commentary 28 December 2018
Markets likely to open in green amid positive global cues

 

Indian equity bourses ended higher on the last day of the December series of derivatives contracts, with both Sensex and Nifty surging around 0.45% each, amid firm global markets. The start of the Thursday's trading session was positive, buoyed by Reserve Bank of India study report showing that Private sector non-finance firms reported a 41 per cent growth in net profits during the July-September quarter, despite higher expenditure as other income contributed to growth. Domestic sentiments got boost with a private report that with global crude oil prices slumping to below $50 a barrel just months after crossing $86, the Prime Minister Narendra Modi-led government is now confident that the current account deficit (CAD) for 2018-19 (FY19) can be contained at about 2 per cent of gross domestic product (GDP). Some support also came in after another private report that the government is likely to infuse Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds by the end of this month. The amount infused will help the banks meet regulatory capital requirement, and its disbursement might take place before December 31. The markets remained in green throughout the session, as buying got intensified with the commerce and industry minister Suresh Prabhu's statement that that India will aim to receive $100 billion of foreign direct investments (FDI) in the next two years, from different sectors. He also noted that the country would remain a top destination for foreign investors in the next year 2019. Some relief also came after the government said that PSBs reported recovery of Rs 60,713 crore against non-performing assets (NPAs) in the April-September period (H1) of current fiscal year (FY19). It added that this is double of the amount recovered in the corresponding period last year and more significant returns on high-value accounts are expected. But, in the last hour of the trade, some of the markets gains got trimmed, with India Ratings and Research's report stating that farm loan waivers announced by a number of states recently will adversely impact the combined state government capex spending. Investors took note of Corporate Affairs Secretary Injeti Srinivas' statement that insolvency law is a game-changer but non-adherence to timelines and inordinate delay in admission of cases are major concerns. He also said the law has already impacted the behaviour of borrowers and lenders. Finally, the BSE Sensex surged by 157.34 points or 0.44% to 35,807.28, while the CNX Nifty was up by 49.95 points or 0.47% to 10,779.80.

 

Extending their previous session's rally, the US markets ended higher on Thursday, prevailing over political uncertainty that left the markets fluttering throughout the day. However, profit taking helped to drag stocks lower early in the day, as traders cashed in on the rally seen on Wednesday, when the Dow posted its single-day point gain in history. Meanwhile, lingering concerns about the global economic outlook also weighed on the markets. On a percentage basis, the Dow's move from a 2.67% decline at its session low to a positive finish marked its biggest such intraday swing since October 4, 2011, when it recovered from a fall of 2.75% at its low. The Thursday turnabout was the largest such swing for the S&P 500 since May 25, 2010, and the largest for the Nasdaq since November 18, 2008. On the economic front, the Labor Department released a report showing a slight drop in first-time claims for US unemployment benefits in the week ended December 22. The report said initial jobless claims slipped to 216,000, a decrease of 1,000 from the previous week's revised level of 217,000. Street had expected jobless claims to inch up to 217,000 from the 214,000 originally reported for the previous week. Meanwhile, a separate report from the Conference Board showed a significant deterioration in consumer confidence in the month of December. The Conference Board said its consumer confidence index slumped to 128.1 in December after dipping to a revised 136.4 in November. Street had expected the consumer confidence index to edge down to 134.0 from the 135.7 originally reported for the previous month. Dow Jones Industrial Average surged 260.37 points or 1.14 percent to 23138.82, Nasdaq gained 25.14 points or 0.38 percent to 6579.49 and S&P 500 was up by 21.13 points or 0.86 percent to 2488.83.

 

Crude oil futures ended lower on Thursday, fresh off the biggest one-day rally for futures in more than two years, highlighting the volatility that has gripped assets perceived as risky. Both crude grades have fallen four of the past five sessions and seven of the past nine. According to Dow Jones Market Data, US oil is headed for a monthly drop of 12.4%, which would mark its steepest December decline since 2014, when it tumbled 19.5%. Brent was down 11.2% on the month, which would representing its sharpest December since 2015. Benchmark crude oil futures for February dropped $1.61 or 3.5 percent to settle $44.61 a barrel on the New York Mercantile Exchange. February Brent crude declined $2.31 or 4.2 percent to settle at $52.16 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended significantly weaker against the Greenback on Thursday, following fresh demand for the US currency from banks and importers to meet the month end dollar demand. Sentiments weakened with India Ratings and Research's report stating that farm loan waivers announced by a number of states recently will adversely impact the combined state government capex spending. Investors ignored a private report that with global crude oil prices slumping to below $50 a barrel just months after crossing $86, the Prime Minister Narendra Modi-led government is now confident that the current account deficit (CAD) for 2018-19 (FY19) can be contained at about 2 per cent of gross domestic product (GDP). On the global front, the dollar held on to most of its overnight gains on Thursday as investors cheered signs of easing US-Sino trade tensions and stronger-than-expected US economic data, sending Wall Street stocks surging and Treasury yields up. Finally, the rupee ended at 70.35, 29 paise weaker from its previous close of 70.06 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 1845.64 crore against gross selling of Rs 1989.47 crore, while in the debt segment, the gross purchase was of Rs 440.05 crore with gross sales of Rs 487.46 crore. Besides, in the hybrid segment, the gross selling of was Rs 0.25 crore against no buying.

 

The US markets ended Thursday's volatile trading session in green, adding to the massive gains of the previous session, on the back of late hour buying. Political uncertainty left the markets fluttering throughout the day. Asian markets were trading mostly higher on Thursday, as investors heartened by Wall Street's best performance in nine years after the White House said Fed Chair Jay Powell would not be fired. Extending gains for second straight session, Indian equity markets ended Thursday's trading session on positive note, tracking rally in global stocks. Buying in IT, fast-moving consumer goods and energy stocks also pushed the markets higher. Today, the markets are likely to make optimistic start following positive global cues. There will be some support with report that under attack for the agrarian crisis, the government is contemplating several incentives, including a big financial package, to woo farmers ahead of the 2019 Lok Sabha elections. The government is looking at a sort of income support scheme for farmers, along with tweaking some existing programmes, to make them more beneficial and improve their acceptability among growers. Traders may take note of a private report that the new foreign direct investment (FDI) policy in the e-commerce sector may not impact jobs immediately. The new FDI policy released by the government on December 26 aims to protect the interests of local businessmen, who had accused the online marketplaces of butchering their revenue. However, some cautiousness may come later in the day with report that the central government's fiscal deficit widened further in November after crossing the budgeted target last month due to slower-than-expected growth in indirect tax collection. The Controller General of Accounts' data showed that the fiscal deficit stood at Rs 7.17 trillion at the end of November 2018, 114.8% of the budgeted target of Rs 6.24 trillion. There will be some cautiousness with India Ratings' report that the farm loan waivers announced by various states, including Madhya Pradesh, Rajasthan and Chhattisgarh, will adversely impact the combined capital spending of the states. For the current fiscal, states' capex is budgeted to be higher by 37.5%. It was 36.6% higher as per FY18 revised estimates. There will be some buzz in the public sector banks (PSBs) stocks with report that the government is likely to infuse Rs 28,615 crore into seven PSBs through recapitalisation bonds by the end of this month. The amount infused will help the banks meet regulatory capital requirement, and its disbursement might take place before December 31. There will  be some reaction in automobile sector stocks with the government's statement that the country's automobile sector, which attracted $16.5 billion in FDI between April 2000 and December 2016, is expected to attract $8-10 billion more in local and foreign investments by 2023.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,779.80

10,751.43

10,821.18

BSE Sensex

35,807.28

35,712.41

35,971.70

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

IOC

467.04

133.90

131.53

135.73

ONGC

443.57

149.70

146.67

152.07

Yes Bank

443.04

178.10

175.62

182.02

NTPC

274.22

148.30

145.08

150.63

Power Grid Corporation

261.49

196.55

193.53

199.53

 

  • Larsen & Toubro's construction arm -- L&T Construction has won orders worth Rs 2,357 crore. 
  • Tata Steel has supplied 15kT of Tata Tiscon rebars for the construction of Bogibeel Bridge. 
  • Dr. Reddy's Laboratories has launched Sevelamer Carbonate for Oral Suspension, in 0.8 g and 2.4 g packets, approved by the USFDA. 
  • Maruti Suzuki India has inaugurated a Centre of Excellence at Government Polytechnic, Manesar in Haryana.
News Analysis