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NSE Intra-day chart (29 January 2020)
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Market Commentary 30 January 2020
Benchmarks to open slightly in red amid weakness in Asian peers

 

Indian equity bourses came back in green on Wednesday to settle higher after a two days of continuous fall. The start of the day was fabulous aided by NITI Aayog CEO Amitabh Kant's statement that a $5 trillion economy goal is achievable even as it's a tough task, noting that the states need to play a critical role for the national economy to meet the challenging target. Some support also came with report that in order to protect prudent commercial decision of bankers, the government has taken a slew of decisions, including doing away with personal responsibilities of MD and CEO of PSBs for compliance in dealing with large value frauds committed by bank officials. Benchmarks maintained their strong gains throughout the trading session, on account of positive cues from the global markets.  Market participants remained optimistic, after the commerce ministry said that India has pitched for elimination of trade-distorting subsidies on agriculture and ensuring differential treatment to developing countries by the WTO members. Adding more comfort among traders, a private report stated that government is expected to raise spending on infrastructure and cut some personal tax in its 2020-2021 budget, to spur consumer demand and investment. Finally, the BSE Sensex rose 231.80 points or 0.57% to 41198.66, while the CNX Nifty was up by 73.70 points or 0.61% to 12129.50.

 

The US markets ended mostly higher on Wednesday after the Federal Reserve announced its widely expected decision to leave interest rates unchanged. The Fed decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent, keeping rates unchanged for the second straight meeting after three straight quarter-point rate cuts. The accompanying statement was largely unchanged from last month, with the Fed noting that recent data indicates the labor market remains strong and that economic activity has been rising at a moderate rate. The central bank did describe household spending as rising at a moderate pace compared to last month's description of spending as rising at a strong pace. Meanwhile, Fed Chairman Jerome Powell acknowledged that some of the uncertainties around trade have diminished following the signing of the phase one US-China trade deal. On the economic data front, pending home sales in the US unexpectedly showed a sharp pullback in the month of December, according to a report released by the National Association of Realtors (NAR). NAR said its pending home sales index plunged by 4.9 percent in December after jumping by 1.2 percent in November. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. The unexpected nosedive in pending home sales in December reflected notable decreases in pending sales in all four regions of the country.

 

Crude oil futures ended marginally lower on Wednesday on data showing a rise in inventories. According to data released by Energy Information Administration (EIA), crude oil inventories rose by 3.5 million barrels in the week ended January 24, compared to expectations for a build of 482,000 barrels. Some cautiousness also prevailed amid concerns about outlook for near term energy demand due to the impact of the coronavirus outbreak on the global economy. However, Brent crude prices settled higher on the back of reported conflicts in the Middle East. Crude oil futures for March declined 15 cents or 0.3 percent to settle at $53.33 a barrel on the New York Mercantile Exchange. However, March Brent gained 30 cents or 0.5 percent to settle at $59.81 a barrel on London's Intercontinental Exchange.

 

Gaining for the second day, Indian rupee ended higher against the US dollar on Wednesday, on continued selling of the US currency by banks and exporters. Traders took solace with NITI Aayog CEO Amitabh Kant's statement that the goal of India becoming a $5 trillion economy is achievable even as it's a tough task. However, the states would have to play a critical role for the national economy to meet the challenging target. Traders also took a note of report that India and the US are likely to finalise a trade deal pegged above $10 billion (over Rs 71,200 crore) in February. The report also adds that the issue of medical devices-a bone of contention between the two sides-has been resolved. Besides, positive trend in equity market too supported the rupee. On the global front, dollar held near two-month highs on Wednesday and other currencies seen as safe havens stabilised as investors regained their composure after an outbreak of coronavirus in China, awaiting more news on possible economic damage. Finally, the rupee ended at 71.25, 6 paise stronger from its previous close of 71.31 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4964.79 crore against gross selling of Rs 5750.70 crore, while in the debt segment, the gross purchase was of Rs 496.91 crore with gross sales of Rs 1720.55 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.06 crore against gross selling of Rs 1.20 crore.

 

The US markets ended mostly higher on Wednesday amid the US Federal Reserve kept interest rates on hold and investors continued to watch for developments on the ongoing coronavirus outbreak. Asian markets are trading mostly lower on Thursday amid the increasing evidence of a hit to economic growth from the deadly coronavirus. Indian markets snapped two sessions of losses and ended higher on Wednesday, on the back of strong Q3 earnings. Today, the start of the F&O series expiry session is likely to be mildly soft tailing the weakness in Asian peers. Traders will be concerned as India Ratings and Research (Ind-Ra) expects aggregate fiscal deficit of the states to come close to 3 per cent of gross domestic product in the current fiscal year, higher than the budgeted 2.6 per cent. In its note, it has revised the outlook on state finances to stable-to-negative for the current fiscal year from stable. Also, there will be some cautiousness as industry body Ficci said its Economic Outlook Survey has projected the country's annual median GDP growth for 2019-20 at 5 percent, in line with the projections made by the National Statistical Organisation (NSO). The survey has put the median growth forecast for agriculture and allied activities at 2.6 percent for 2019-20, the industry and services sector at 3.5 percent and 7.2 percent, respectively, during the current year. Though, it added that growth is likely to improve to 5.5 percent in 2020-21 as per the projections. Meanwhile, in a move that will help lessen the burden on the National Company Law Tribunal (NCLT), the government has notified the rules for winding up of companies under the companies law. There will be some buzz in the cement stocks with ICRA's report that Even though the demand growth has slowed down, profitability of the cement companies is expected to rise supported by the higher realisations and benign input cost. Oil and gas stocks will be in focus as ahead of the Union Budget, the Oil Ministry made a renewed pitch for the inclusion of natural gas in the ambit of GST to promote the use of the environment-friendly fuel by reducing the multiplicity of taxes and improving the business climate.  There will be some reaction in textile stocks as Southern India Mills' Association said the new Remission of Duties or Taxes on Export Product benefit would refund all embedded/ blocked duties and taxes and cover all textile products like fibres, yarn, fabrics and garments across the value chain to have a level playing field globally and remain competitive. There will be some result announcements to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,129.50

12,099.00

12,164.80

BSE Sensex

41,198.66

41,092.95

41,319.62

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,414.76

41.20

40.68

42.03

Tata Motors

615.86

188.05

181.43

191.78

SBI

239.14

316.45

314.77

318.92

IOC

213.35

118.30

117.42

119.57

ITC

204.70

236.65

232.65

239.15

 

  • Yes Bank has offloaded shares worth over Rs 5.7 crore in Reliance Power through an open market transaction. 
  • HDFC Bank has chalked out expansion plans in Tamil Nadu, including adding 125 new branches, taking the total network to over 400 in two years. 
  • TCS has strengthened and expanded its strategic partnership with ABN AMRO to help the latter build a new, scalable technology core that will increase its innovation velocity and support its digital ambitions. 
  • Hero MotoCorp has commenced dispatches of its first BS-VI scooter - the updated and stylish Pleasure Plus 110 FI.
News Analysis