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NSE Intra-day chart (04 April 2018)
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Market Commentary 05 April 2018
Markets to make an optimistic start on firm global leads

 

Wednesday's session turned-out to be a dismal day of trade for Indian equity benchmarks, where frontline gauges ended the day with a cut of over a percent, breaching their crucial 33,100 (Sensex) and 10,150 (Nifty) levels, as trade war fears escalated after China announced 25% tariff on 106 products in 14 categories imported from the US, including soybeans, automobiles and chemicals. Markets started the session on positive note with traders taking some encouragement from Finance Minister Arun Jaitley's statement that direct tax collection has grown by 18 per cent to cross Rs 10.02 trillion in the financial year ended on March 31, 2018. He said demonetisation and GST implementation have resulted in higher formalisation of the economy which is evident from additional 10 million IT returns being filed in the previous financial year. The sentiments also remained upbeat on private weather forecasting agency report that monsoon rains in India are expected to be average in 2018, raising prospects of higher farm and economic growth in the $2 trillion economy. The report added that monsoon rains are expected to be 100 percent of the long-term average. However, markets pared all of their initial gains and entered into red terrain as traders turned anxious on report that the Reserve Bank of India (RBI) is unlikely to yield to the India Inc's pressure for a benign monetary policy stance by keeping policy rates unchanged in its first monetary policy review of 2018-19 to be announced on Thursday against the backdrop of hardening global crude oil prices. Some concerns also came with the Andhra Pradesh government's statement that the Centre grossly failed in effectively implementing the Goods and Services Tax and accused it of sidetracking the new taxation system. The market participants also took note of Chief Economic Advisor Arvind Subramanian's statement that it is easy to advocate one uniform GST rates for all goods, but it cannot be done ignoring political realities. Finally, the BSE Sensex declined 351.56 points or 1.05% to 33,019.07, while the CNX Nifty was down by 116.60 points or 1.14% to 10,128.40.

 

The US markets closed higher on Wednesday, in the latest example of heavy intraday volatility as investors continued to suss out the likelihood of, or the potential impact from, a trade war between the United States and China. St. Louis Fed President James Bullard said that the US Federal Reserve does not need to raise its benchmark interest rate much further given how close it is to the neutral rate. Bullard added that it is not necessary to raise the policy rate further in order to put downward pressure on inflation, since inflation is already below target. Bullard, who does not have a vote on the Fed's interest rate policy this year, has become critical of the central bank's plans to continue to raise rates as it seeks to normalize short-term borrowing costs amid a strong economy. On the economy front, private-sector employers expanded their workforce by a seasonally adjusted 241,000 jobs last month, Automatic Data Processing Inc. reported. This is the fifth straight gain above 200,000. According to data on 10 major industries tracked by ADP, professional/business services and trade/transportation/utilities posted the largest hiring gains in March followed by construction and manufacturing. By company size, small firms added 47,000 jobs in March, medium-sized businesses added 127,000 and large companies added 67,000. February's gain was upwardly revised to show 246,000 growth instead of a previously estimated 235,000. The Dow Jones Industrial Average added 230.94 points or 0.96 percent to 24,264.30, the Nasdaq gained 100.825 points or 1.45 percent to 7,042.11, while the S&P 500 was up by 30.24 points or 1.16 percent to 2,644.69.

 

Crude oil futures edged slightly lower on Wednesday on concerns over an escalating trade war between the U.S. and China. However, the decline was trimmed after government data showed an unexpected drop in U.S. crude inventories. Oil trimmed its decline after the U.S. Energy Information Administration (EIA) released its weekly petroleum status report showing that U.S. commercial crude inventories decreased by 4.6 million barrels last week. That's roughly in line with yesterday's report from the American Petroleum Institute, which reported a draw of 3.3 million barrels. Benchmark crude oil futures for May delivery declined 14 cents or 0.2 percent to settle at $63.37 a barrel on the New York Mercantile Exchange. May Brent crude lost 10 cents 0.2 percent to settle at $68.02 a barrel on London's Intercontinental Exchange.

 

Indian rupee turned weak against the dollar on Wednesday, on sustained buying of the US currency by importers and banks. The market sentiment remained cautious ahead of RBI's two-day policy meet outcome. The first bi-monthly monetary policy review for FY19 is to be announced by the RBI on April 5. Investors even overlooked private weather forecasting agency report that monsoon rains in India are expected to be average in 2018, raising prospects of higher farm and economic growth in the $2 trillion economy. The report added that monsoon rains are expected to be 100 percent of the long-term average. Besides, heavy selling in last hour of trade in the domestic equity markets too weighed on the rupee, but dollar's reduced clout against other currencies overseas helped to cap the losses in rupee. On the global front, U.S. dollar pulled lower on Wednesday, after China took further trade retaliatory measures against the US today, imposing a 25% import tariff on key US products. Finally, the rupee ended at 65.14, 12 paise weaker from its previous close of 65.02 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity and debt segments both, in equity segment, the gross buying was of Rs 5478.65 crore against gross selling of Rs 5953.63 crore, while in the debt segment, the gross purchase was of Rs 1101.31 crore with gross sales of Rs 1803.37 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.84 crore against gross selling of Rs 0.97 crore.

 

Stocks showed a substantial turnaround over the course of the trading session on Wednesday after moving sharply lower at the open. The rebound on Wall Street came as traders shrugged off trade war concerns after China issued a list of 106 U.S. products that will be subject to additional tariffs. Asian markets are trading mostly in green as investors welcomed signals the U.S. and China are open to negotiations rather than escalating threatened tit-for-tat trade tariffs. Indian markets gave up early gains to end sharply lower on Wednesday amid persisting worries about global trade war. Today, the markets are likely to make positive start on Thursday, tracking firm global cues. Traders will be getting support with report that the trade deficit between India and the US dropped by almost six per cent in 2017 compared to the previous year, even as it continued to harp on issues such as market access and high tariffs on several American products being imported into India. Some support will also come from NITI Aayog CEO Amitabh Kant's statement that the government has been able to save Rs 83,000 crore through direct benefit transfer (DBT) scheme. He said that advantages of digitization are so enormous in making India a progressive, effective society. Traders will also take some encouragement with private weather forecasting agency Skymet's forecast that Monsoon in India is likely to be normal with no chances of drought this year. The forecaster said there were 5 per cent chances of excess rainfall that is more than 110 percent of long-period average (LPA). The average, or normal, rainfall in the country is defined between 96 and 104 per cent of a 50-year average for the entire four-month monsoon season. Meanwhile, the government said India's prospects to become a top steel exporter depends on a range of factors, including competitiveness and demand, and will not be impacted by the trade barriers the US has put on imports. 


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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,128.40

10,066.52

10,235.07

BSE Sensex

33,019.07

32,825.91

33,358.88

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ICICI Bank

334.87

268.65

265.00

272.80

Tata Motors

271.57

355.60

346.67

364.12

SBI

188.24

247.30

244.20

251.70

Hindalco

177.53

200.80

197.17

207.27

Tata Steel

139.10

560.55

548.57

581.52

 

  • Reliance Industries' JV - Jio Payments Bank has commenced the commercial operations.  
  • IndusInd Bank has received the RBI's approval for proposed acquisition of 100 percent stake in IL&FS Securities Services. 
  • HDFC Bank has inked a MoU with Indian Army for Defence Salary Package on April 3, 2018. 
  • Kotak Mahindra Bank has launched Keya, India's first AI-powered voicebot in the banking sector.
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