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NSE Intra-day chart (05 April 2018)
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Market Commentary 06 April 2018
Markets likely to make negative start on Friday

 

Thursday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls went brisk on Dalal Street, with Nifty conquering its crucial 10,300 level, while Sensex ending just shy of 33,600 mark after the Reserve Bank of India (RBI) kept the repo rate unchanged at 6% in the first Monetary Policy Committee (MPC) meet of FY19. Sentiments remained up-beat since beginning of the trade as markets started the session with a gap-up opening, as investors welcomed signals the US and China are open to negotiations rather than escalating threatened tit-for-tat trade tariffs. Traders took some encouragement 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 also came 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. Markets extend rally in last leg of trade after RBI on expected lines kept the repo rate unchanged at 6% in its First Bi-monthly Monetary Policy Review, 2018-19. Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) remained at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25% each. This is the fourth time when the RBI maintained status quo on repo rate. Meanwhile, the central bank has projected the India's Gross Domestic Product (GDP) growth to strengthen to 7.4% in 2018-19 from 6.6% in 2017-18. Traders also took 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% chances of excess rainfall that is more than 110% of long-period average (LPA). The average, or normal, rainfall in the country is defined between 96 and 104% of a 50-year average for the entire four-month monsoon season. Finally, the BSE Sensex surged 577.73 points or 1.75% to 33,596.80, while the CNX Nifty was up by 196.75 points or 1.94% to 10,325.15.

 

The US markets closed higher on Thursday, with major indices posting their first three-day rally in several weeks as worries about trade hostilities between the two biggest economies in the world continued to ease. Investors are increasingly looking to the start of earnings season next week, with plenty of optimism baked in. Atlanta Fed President Raphael Bostic said that the Federal Reserve should get interest rates up to neutral and then take a wait-and-see approach from there. The Atlanta Fed president said his definition of a neutral rate was federal funds rate in the range of 2.25% and 2.75%. The neutral setting of the policy rate is a value that puts neither upward nor downward pressure on inflation. In March, the Fed raised rates a quarter point to 1.5%-1.75%. So two more rate hikes this year would get the Fed into the low end of his neutral range. Bostic added that inflation is trending in the right direction and should hit the Fed's 2% target in the next quarter or two. On the economy front, the US trade deficit rose 1.6% in February to reach nearly a 10-year high, underscoring the seemingly near impossible task of the Trump administration to dramatically reduce the gap as the president has vowed. The US trade deficit rose to $57.6 billion in February from $56.7 billion in the prior month. The Dow Jones Industrial Average added 240.92 points or 0.99 percent to 24,505.22, the Nasdaq gained 34.445 points or 0.49 percent to 7,076.55, while the S&P 500 was up by 18.15 points or 0.69 percent to 2,662.84.

 

Crude oil futures edged slightly higher on Thursday staying in a narrow trading range amid conflicting reports about OPEC's supply quota plans. Earlier in the week, a top Russian official said that it wants to extend its supply quota plan with OPEC beyond 2018. However, other reports say Russian production may be rising as the Kremlin does not want to lose market share. The up-move was also supported by report that oil supplies are signaling strong demand as oil inventories fall when they should be rising. The EIA on Wednesday said U.S. crude stockpiles fell by 4.6 million barrels last week, in the biggest weekly decline since January, beating analysts' forecasts. Benchmark crude oil futures for May delivery gained 17 cents or 0.3 percent to settle at $63.54 a barrel on the New York Mercantile Exchange. May Brent crude jumped 31 cents or 0.5 percent to settle at $68.33 a barrel on London's Intercontinental Exchange.

 

Indian rupee strengthened against dollar on Thursday, on fresh selling of the US currency by banks and exporters. Rupee throughout the day remained positive, taking support with the India Ratings and Research (Ind-Ra) upgrading its India's economic growth forecast to 7.4% for FY19 from 7.1% forecasted earlier. Sentiments improved further after the Reserve Bank of India (RBI) kept the repo rate unchanged at 6% in the first Monetary Policy Committee (MPC) meet of FY19. Besides, abundant capital inflows into domestic equities supported the rupee. However, dollar's strength against major global currencies overseas restricted the local unit's further up move. On the global front, dollar rose to a two-week high against a basket of major currencies on Thursday as investors reassessed the danger of a trade war between the China and the United States. Finally, the rupee ended at 64.96, 18 paise stronger from its previous close of 65.14 on Wednesday.

 

The FIIs as per Thursday's data were net buyers in equity and debt segments both, in equity segment, the gross buying was of Rs 4495.71 crore against gross selling of Rs 4204.03 crore, while in the debt segment, the gross purchase was of Rs 2438.77 crore with gross sales of Rs 736.05 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.81 crore against gross selling of Rs 2.31 crore.

 

The US markets closed higher for the third straight day on easing concerns about a potential trade war between the U.S. and China. Asian stocks are trading mixed on Friday, as the overnight rally on Wall Street failed to translate after President Donald Trump indicated that more tariffs against China could be in the works. Indian markets rallied on Thursday as trade-war worries eased and the RBI left its key interest rates unchanged for the fourth straight meeting. Today, the markets are likely to make pessimistic start after U.S. President Donald Trump ordered his administration to consider tariffs on a $100 billion worth of Chinese imports, dashing hopes for a cooling of trade tensions. However, markets may get some support later in the day after the finance ministry welcomed the Monetary Policy Committee's (MPC) projection of higher GDP growth and lower inflation in the current fiscal. The MPC's growth projection of 7.4 percent is in line with the Economic Survey. Traders may get some support with private report that Indian services sector climbed back into expansion zone in March, helped by the flow of new work, encouraging companies to hire at the fastest pace in seven years. There will be buzz in Fast moving consumer goods (FMCG) related stocks on report that FMCG firms are expected to post a net revenue growth of 11.8 percent in the March quarter, highest in the past 18 quarters, on acceleration in volume growth, GST-led savings and higher leverage benefits. Gems & Jewellery stocks too will be buzzing after Gems and jewellery council has set a target of $100 billion by 2025 for the domestic gems and jewellery sector. Stocks related to fertilisers space will also be buzzing on report that the demand for fertilisers in the first half of the current financial year is likely to remain stable on the outlook for normal monsoon and higher farm income.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,325.15

10,257.80

10,362.15

BSE Sensex

33,596.80

33,363.95

33,733.55

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

288.86

362.20

357.22

369.77

ICICI Bank

267.59

278.65

270.90

283.20

Hindalco

242.02

214.15

208.55

217.35

SBI

228.81

259.30

252.23

264.13

Vedanta

154.57

289.90

282.82

294.37

 

  • IndusInd Bank in association with the JSW Foundation has launched the IndusInd Bank Girl Power Programme to support junior as well as established girl athletes. 
  • ICICI Bank has launched a service that enables NRIs to send money to a beneficiary in India using social media like WhatsApp as well as by email. 
  • L&T's construction arm -- L&T Construction -- has won orders worth Rs 3,376 crore across various business segments. 
  • Maruti Suzuki India has reported 11.91% rise in its production to 172,195 units in March 2018, as compared to 153,868 units in March 2017.
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