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Market Commentary 02 April 2018
Markets to make flat-to-negative start on Monday

 

March F&O expiry session turned out to be a dismal day of trade for Indian equity benchmark with frontline gauges ending below their crucial 33,000 (Sensex) and 10,150 (Nifty) levels, as traders remained cautious ahead of a long holiday weekend, with domestic equity markets likely to remain closed on Thursday and Friday, on account of Mahavir Jayanti and Good Friday, respectively. Markets started the session on pessimistic note as sentiments remained downbeat with report that Goods and Services Tax (GST) collections slid for the second straight month to Rs 851.74 billion in February as only 69% of the assessees filed returns. Around 5.951 million GSTR 3B returns were filed for the month of February till March 25. This is 69 per cent of total taxpayers who are required to file monthly returns. Sentiments also remained dampened with a private report stating that weak macroeconomic indicators like current account deficit and inflation have exposed India to adverse global macro developments such as US monetary policy trajectory and trade war risks. Factors like expiry of futures and options contracts for the month of March and profit booking on the last trading day for the current financial year 2017-18 before the long term capital gains tax (LTCG) kicks in from April 2, 2018,  also weighed on the sentiments. Meanwhile, government's Chief Economic Advisor Arvind Subramanian has said that he wanted a simpler GST structure. He also said that once the GST Council is confident that the revenue through indirect tax is stabilising, it will do more simplification future. Traders failed to get any sense of relief with the commerce ministry's statement that India and China have agreed to draw-up a medium and long term roadmap with action points and timelines in order to increase bilateral trade in a balanced and sustainable manner. It also pointed out that two neighbouring nations in Asia are the largest emerging economies of the world with 35% of the world's population and about 20% of the world's GDP, but bilateral trade between the two nations is less than 1% of global trade. Finally, the BSE Sensex declined 205.71 points or 0.62% to 32,968.68, while the CNX Nifty was down by 70.45 points or 0.69% to 10,113.70.

 

The US markets closed higher on Thursday, with major indexes climbing 1% in a broad rally that had nearly every sector participate in the gains and post strong weekly advances. The Atlanta Federal Reserve's GDPNow forecast model showed that the US economy is on track to expand at a 2.4 percent annualized rate in the first quarter following the latest data on advanced trade data and personal spending. The latest estimate on gross domestic product was faster than the 1.8 percent growth pace calculated on March 23. US President Donald Trump said he may hold up a trade agreement reached this week with South Korea until after a deal is reached with North Korea on denuclearization. On the economy front, the rate of layoffs in the US fell again in late March and dropped to the lowest level since 1973. Initial US jobless claims declined by 12,000 to 215,000 in the seven days ended March 24. The more stable monthly average of claims dipped by 500 and stood at 224,500. The number of people already collecting unemployment benefits, known as continuing claims, rose by 35,000 to 1.87 million. Separately, incomes for US workers increased strongly again in February, but consumers pocketed some of the money instead of spending it. Inflation also crept higher. Consumer spending advanced 0.2% last month, just half as fast as the 0.4% rise in incomes. The Dow Jones Industrial Average added 254.69 points or 1.07 percent to 24,103.11, the Nasdaq gained 114.219 points or 1.64 percent to 7,063.44, while the S&P 500 was up by 35.87 points or 1.38 percent to 2,640.87.

 

Snapping three-day losing streak, Crude oil futures ended higher on Thursday after a data showed that the number of US oil rigs declined surprisingly. According to data from energy services firm Baker Hughes, the number of oil rigs operating in the US fell by six to 798 in the week to March 29,easing from three-year highs. It was the first time in three weeks that the US energy companies cut oil rigs count. However, Geopolitical concerns and indications from the Organization of the Petroleum Exporting Countries that members are considering action that could trigger higher prices limited moves for oil, as the holiday-shortened week of trading draws to a close for Passover and Easter over the weekend. Benchmark crude oil futures for May delivery surged 56 cents or 0.9 percent at $64.94 a barrel on the New York Mercantile Exchange. May Brent crude rose 74 cents or 1.1 percent to settle at $70.27 a barrel on London's Intercontinental Exchange.

 

Piling on yesterday's loss, Indian rupee weakened further against the American currency on Wednesday, following bouts of month-end dollar demand from banks and importers. Traders remained cautious with a private report stating that weak macroeconomic indicators like current account deficit and inflation have exposed India to adverse global macro developments such as US monetary policy trajectory and trade war risks. Investors even ignored the commerce ministry's statement that India and China have agreed to draw-up a medium and long term roadmap with action points and timelines in order to increase bilateral trade in a balanced and sustainable manner. Besides, extremely bullish dollar sentiment overseas coupled with sluggish equity markets also adversely impacted local unit. On the global front, dollar pushed higher against a basket of the other major currencies on Wednesday as trade tensions remained elevated following reports that China will soon announce a list of retaliatory tariffs on US imports.  Finally, the rupee ended at 65.18, 22 paise weaker from its previous close of 64.96 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in equity and debt segments both, in equity segment, the gross buying was of Rs 6242.79 crore against gross selling of Rs 5148.87 crore, while in the debt segment, the gross purchase was of Rs 2326.84 crore with gross sales of Rs 1677.54 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.21 crore against gross selling of Rs 10.01 crore.

 

The US markets ended higher on Thursday on report from the Labor Department showing initial jobless claims fell to their lowest level in over 45 years in the week ended March 24th. Asian stocks are trading mostly in green in early deals, even as China imposed new tariffs on U.S. goods after previously floating the proposal last month. Indian shares succumbed to selling pressure once again on Wednesday after financial and technology shares came under heavy selling pressure elsewhere in the U.S, Europe and Asia on privacy concerns and on worries about tighter industry regulations. Today, the markets are likely to open slightly in red, as traders return to their desks after a four-day long holiday weekend. Investors will look ahead to the RBI policy meeting on April 4-5, although the central bank is unlikely to raise rates despite increased risks to inflation posed by rising oil prices and a hike in minimum support price (MSP) announced in the Budget 2018. Traders will remain concern with the country reporting a fiscal deficit of Rs 7.2 trillion ($110.42 billion) for April-February or 120.3% of the budgeted target for the current fiscal year that ends this month. Net tax receipts in the first 11 months of 2017/18 fiscal year were Rs 1.03 trillion. Adding to the pessimism, the CBI has decided to examine ICICI bank CEO Chanda Kochhar over the Rs 3,250 crore loan sanctioned to the Videocon Group in 2012, notwithstanding a clean chit given by the bank board. Meanwhile, the e-way (electronic way) bill system under Goods and Services Tax (GST) for inter-state movement of goods has come into force from April 1, with over 1.7 lakh electronic invoices expected to have generated on the first day of the rollout aimed at curbing tax evasion by traders and transporters. 


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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,113.70

10,087.62

10,149.07

BSE Sensex

32,917.66

32,981.82

32,975.80

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

SBI

366.74

249.90

247.00

254.50

ICICI Bank

271.73

278.35

275.87

282.07

Tata steel

186.55

571.05

563.23

580.93

IOC

177.42

176.60

172.72

179.52

Ambuja Cement

172.68

232.95

228.50

237.15

 

  • Wipro has unveiled its Texas Technology Center in Plano, Texas.
  • L&T's construction arm -- L&T Construction -- has won orders worth Rs 1521 crore across various business segments.
  • Indiabulls Housing Finance has raised Rs 1500 crore through NCDs.
  • Lupin has launched its Clobetasol Propionate Spray 0.05% having received an approval from the USFDA earlier.
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