Indian equity benchmarks joined
global meltdown on Monday, with Sensex and Nifty falling more than a percent
each. The start of day was slightly higher, buoyed by the Economic Advisory
Council to the Prime Minister (EAC-PM's) statement that the country's economic
growth is likely to remain in the range of 7-7.5 per cent in the next few
years. It added that the growth rate can be easily increased by 1 per cent by
addressing structural problems through reforms. Some support also came with
Union Commerce and Industry Minister Suresh Prabhu's statement that new
policies of the government will help to increase India's export from the
current $321 billion to almost double in a few years. However, markets soon
turned negative, with Moody's Investors Service's statement that the steps
announced by the government to aid MSMEs and the measures being planned to
support farmers will increase the risk of fiscal slippage and push deficit to
3.4 per cent of GDP in the current financial year. The government budgeted the
fiscal deficit for the current financial year at 3.3 per cent of the gross
domestic product (GDP). The indices continued their weak run for whole day to
end the session lower, tracking weak opening of European markets. Investors got
cautious with reports that foreign investors have pulled out close to Rs 6,000
crore so far from the Indian stock markets in January and experts believe this
trend will continue in the coming months as well. Sentiments were pessimistic
also because of a private report stating that the economy is likely to lose
steam and may clip at 6.6 percent in the first half of 2019 from 7.4 percent a
year ago, on account of the global slowdown and the uncertainty about the
outcome of the forthcoming general elections. Adding more concerns among the
market participants, another private report showed that the government is set
breach the fiscal deficit target yet again by 40 bps for 2018-19, and raise the
target to 3.5 percent for next fiscal in the forthcoming budget that may be
skewed towards the rural economy. Finally, the BSE Sensex lost 368.84 points or
1.02% to 35,656.70, while the CNX Nifty was down by 119.00 points or 1.10% to
10,661.55.
The US markets ended lower on Monday
as investors confronted the latest signs that economic malaise in China is
crimping corporate profits in the US. Sentiment was down after
weaker-than-expected quarterly earnings and guidance from Caterpillar, as well
as a big revenue forecast cut from chipmaker Nvidia, stoked fears about the
Chinese economy slowing. Caterpillar shares fell 9.1 percent after the
industrial giant posted weaker-than-expected earnings for the fourth quarter.
The company said its sales in the Asia/Pacific region declined because of lower
demand in China. Caterpillar is considered a bellwether for global trade given
the company's exposure to overseas markets. The company also issued
disappointing guidance. Meanwhile, Nvidia dropped 13.8 percent after slashing
its fourth-quarter revenue guidance to $2.2 billion from $2.7 billion. The
chipmaker said deteriorating macroeconomic conditions, particularly in China,
impacted demand for its graphics processing units. Wariness seeped in the
markets ahead of the Fed meeting and a huge week for earnings with 126 S&P
500 companies slated to report quarterly results. The central bank will convene
a two-day meeting on Tuesday, with no change in key interest rates expected.
Attention is instead likely to focus on a news conference afterward with Fed
Chairman Jerome Powell for any clues on future policy. Dow Jones Industrial
Average dropped 208.98 points or 0.84 percent to 24528.22, Nasdaq declined
79.18 points or 1.11 percent to 7085.69 and S&P 500 was down by 20.91
points or 0.78 percent to 2643.85.
Crude oil futures ended lower on
Monday on account of fresh concerns over supply after data late last week
showed a hefty weekly rise in the US oil-rig count, and the potential for a
slowdown in energy demand from China pressured prices. Traders also continued
to look to political developments in Venezuela for their potential impact on
production from the South American nation. Benchmark crude oil futures for
March plunged $1.70 or 3.2 percent to settle $51.99 a barrel on the New York
Mercantile Exchange, while March Brent crude dropped $1.71 or 2.8 percent to
settle at $59.93 a barrel on London's Intercontinental Exchange.
Indian
rupee ended marginally higher against US dollar on Monday, driven by weakening
of the greenback in overseas markets and easing crude prices. Traders took some
support with the Economic Advisory Council to the Prime Minister's (EAC-PM)
statement that the country's economic growth is likely to remain in the range
of 7-7.5 per cent in the next few years. It added that the growth rate can be
easily increased by 1 per cent by addressing structural problems through
reforms. However, gains were limited as anxiety remained among traders with
Moody's Investors Service's statement that the steps announced by the
government to aid MSMEs and the measures being planned to support farmers will
increase the risk of fiscal slippage and push deficit to 3.4 per cent of GDP in
the current financial year. The government budgeted the fiscal deficit for the
current financial year at 3.3 per cent of the gross domestic product (GDP). On
the global front, dollar eased versus most of its peers on Monday as investors
turned their attention to this week's Federal Reserve policy meeting, with
traders wagering policymakers will signal a pause in their tightening cycle.
Finally, the rupee ended at 71.10, 7 paise stronger from its previous close of
71.17 on Friday.
The FIIs as per Monday's data
were net buyers in equity and debt segments both. In equity segment, the gross
buying was of Rs 5154.89 crore against gross selling of Rs 4419.47 crore, while
in the debt segment, the gross purchase was of Rs 1193.39 crore with gross
sales of Rs 950.85 crore. Besides, in the hybrid segment, the gross buying was
of Rs 2.51 crore against gross selling of Rs 1.12 crore.
The US markets settled lower on
Monday as investors confronted the latest signs that economic malaise in China
is crimping corporate profits in the US. Asian markets are trading mostly in
red on Tuesday on the back of fresh concerns over a slowing Chinese economy and
renewed tensions between Washington and Beijing. Indian markets extended their losses
for second straight session to end Monday's trading session with cut of over a
percent following fresh selling in financial and automobile stocks. Today, the
markets are likely to make pessimistic start mirroring weak global cues as
hopes of US-China trade deal were again hit after the United States charged
Chinese telecom firm Huawei with bank fraud and for conspiring to steal trade
secrets. however, traders may take some support later in the day with the
Reserve Bank of India's (RBI) latest data showing that Foreign direct
investment (FDI) during the previous fiscal grew 18 per cent to Rs 28.25 lakh
crore. As per data, FDI increased by Rs 4,33,300 crore, including revaluation
of past investments, during 2017-18 to reach Rs 28,24,600 crore in March 2018
at market value. The RBI said as many as 23,065 companies responded to the
latest round of the census, of which, 20,732 firms had FDI or ODI in their
balance sheet in March 2018. Traders may take note of Union Steel Minister
Chaudhary Birender Singh's statement that the government is formulating a draft
National Scrap Policy. Currently, the country's requirement of scrap is around
8.3 million tonne (MT) and a large portion of the requirement is met through
imports. Meanwhile, newly-appointed interim Finance Minister, Piyush Goyal,
held a review meeting with public sector banks to deliberate on wide-ranging
issues including providing easy finance to micro, small and medium enterprises
(MSMEs) and home buyers. There will be some buzz in the steel sector stocks
with World Steel Association's report that India has replaced Japan as world's
second largest steel producing country, while China is the largest producer of
crude steel accounting for more than 51 per cent of production. There will be
some reaction in real estate sector stocks with report that ICRA has maintained
a negative outlook for the residential real estate (RRE) segment due to high
inventory, weak affordability and muted demand and a stable outlook for
commercial real estate (CRE) segment. There will be some important earnings
announcements too to keep the markets buzzing.
Support and Resistance:
NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,661.55
|
10,593.52
|
10,767.02
|
BSE Sensex
|
35,656.70
|
35,439.81
|
35,998.92
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
ZEEL
|
1,213.06
|
373.30
|
334.87
|
396.87
|
Yes Bank
|
580.16
|
207.50
|
201.40
|
218.30
|
ICICI Bank
|
343.62
|
343.55
|
335.17
|
353.42
|
SBI
|
189.05
|
281.60
|
277.07
|
286.37
|
Adani Ports and Special
Economic Zone
|
151.77
|
326.10
|
287.02
|
370.27
|
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