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NSE Intra-day chart (11 April 2018)
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Market Commentary 12 April 2018
Markets likely to make negative on geopolitical worries

 

Indian equity benchmarks ended the Wednesday's trade slightly in green, extending their winning streak for fifth straight day. Markets started the session on cautious note and entered into red terrain in first half of the trade, as traders remained cautious ahead of quarterly earnings this week, with IT major Infosys likely to declare its March quarter results on April 13. Traders also remained watchful ahead of industrial output figures for February and retail inflation data for March slated to be released on April 12. Sentiments also remained down beat on foreign brokerage report that the trend of earnings downgrade for Indian equities that began three years ago is not showing signs of abating despite growth in the three quarters to December 2017. The report highlighted that the consensus estimate for the earnings per share (EPS) of the MSCI India index for 2018 is lowered by 10.3% since December 2016. On the other hand, the EPS estimate of the MSCI Asia ex-Japan index has increased by 13.6%. However, bourses pared all of their losses and entered into green terrain in last leg of trade to end with marginal gains as traders took some encouragement with Asian Development Bank's report that India is expected to bounce back to 7.3% in fiscal 2018 and firm to 7.6% in 2019 as the new tax regime improves productivity and as banking reform and corporate deleveraging take hold to reverse a downtrend in investment. Some support also came with World Economic Forum's (WEF) statement that India can play a pivotal role in shaping the global fourth Industrial revolution as over half of its population is under the age of 27. The WEF has already partnered with the Indian government to set up the Centre for the Fourth Industrial Revolution India in Mumbai. Some comfort also came with the commerce ministry's statement that the government is working on an action plan to increase the growth rate at the district level by 3-4% per annum by accelerating economic activities. Finally, the BSE Sensex gained 60.19 points or 0.18% to 33,940.44, while the CNX Nifty was up by 14.90 points or 0.14% to 10,417.15.

 

The US markets closed lower on Wednesday, as investors assessed rising geopolitical tensions. Major indexes came under pressure in early trade after tweets from President Donald Trump suggested he was preparing for a military strike in Syria and underlined a tense relationship with Russia. China's commerce ministry said that the country is well prepared and will not hesitate to fight back if the United States escalates its trade spat with Beijing, adding Chinese President Xi Jinping's pledge to cut import tariffs is not a concession. On the economy front, the federal government's budget deficit was $209 billion in March, up 18% from the same month a year ago. Receipts were $211 billion, down 3%, and spending rose 7% to $420 billion. The new tax law continues to widen the deficit, with withholding of individual income and payroll taxes off by 2% in March. In January, the IRS issued new withholding tables based on the law enacted by President Donald Trump in December. Meanwhile, the consumer price index fell slightly in March to mark the first drop in 10 months, but the decline was entirely due to the lower cost of gasoline. Americans paid more for almost everything else as inflation continues to creep higher. The CPI dipped 0.1% last month. Yet the rate of inflation over the past 12 months rose to 2.4% from 2.2% and hit a one-year high. After stripping out gas and food, the more closely followed core rate of inflation advanced 0.2% in March. And the 12-month rate of core inflation jumped to 2.1% from 1.8%, the highest level in more than a year. The Dow Jones Industrial Average lost 218.55 points or 0.90 percent to 24,189.45, the Nasdaq dropped 25.275 points or 0.36 percent to 7,069.03, while the S&P 500 was down by 14.68 points or 0.55 percent to 2,642.19.

 

Extending northward journey for seventh straight session, Crude oil futures edged higher on Wednesday, hitting 3-year highs, as rising tensions in the Middle East continued to feed concerns over potential supply disruptions in the region. Fears that the supply of crude could be interrupted as a result of an international strike is the main reason behind the oil price rally. Markets shrugged off reports that Crude inventories rose by 3.3 million barrels (bbl) in the week ended April 6, compared with street's expectations for a decrease of 189,000 bbl. Benchmark crude oil futures for May delivery gained $1.31 or 2 percent to settle at $66.82 a barrel on the New York Mercantile Exchange. June Brent crude jumped $1.02 or 1.4 percent to settle at $72.06 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably weaker against the US dollar on Wednesday, on the back of consistent demand for the greenback from state-run banks and importers. Traders shrugged off a report highlighting that RBI projected Consumer Price Index (CPI) based inflation to follow a downward trend and remain in the 4.7%-5.1% band. Having lowered inflation expectations, the RBI has raised its GDP growth projections by 80 bps to 7.4% from 6.6%. Investors even overlooked Asian Development Bank's report that India is expected to bounce back to 7.3% in fiscal 2018 and firm to 7.6% in 2019 as the new tax regime improves productivity and as banking reform and corporate deleveraging take hold to reverse a downtrend in investment. Besides, dollar weakened against some currencies overseas failed to cast any impact on the rupee. On the global front, US dollar slipped against its most major counterparts on Wednesday, as investors awaited US inflation data and the minutes from the latest Fed meeting for more clues about policy outlook. Finally, the rupee ended at 65.31, 32 paise weaker from its previous close of 64.99 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity and debt segments both, in the equity segment, the gross buying was of Rs 4205.12 crore against gross selling of Rs 4922.40 crore, while in debt segment, the gross purchase was of Rs 2346.29 crore with gross sales of Rs 2610.90 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.77 crore against no selling.

 

The U.S. stocks edged lower on Wednesday amid geopolitical concerns after President Donald Trump warned Russia get ready for missiles being launched at Syria. On the U.S. economic front, the Labor Department released a report showing a modest decrease in consumer prices in the month of March. Asian stocks are trading sideways on Thursday, as investor confidence seen earlier in the week wavered overnight amid geopolitical tensions. Indian equity markets eked out modest gains on Wednesday despite rising oil prices and mounting tensions in the Middle East. Today, the markets are likely to make negative start tracking weak global cues amid geopolitical tensions. Investors will remain on sidelines ahead of macroeconomic readings on inflation and industrial output due today and Infosys' quarterly earnings scheduled to be released on Friday for clues about near-term direction of markets. Traders may get some support with report that India has jumped 13 places in the last one year to be earn 130th spot in the latest annual Index of Economic Freedom released by a top American think-tank. In 2017, India with a score of 52.6 points was ranked at 143 among 180 countries, two spots below neighbour Pakistan. Some support may also come with report that FDI inflows have increased by 34% to an average of $10.2 billion quarterly since the NDA-government assumed power in 2014. The report notes that FDI inflows in India have nearly doubled to $42 billion in FY17. There will be buzz in banking stocks after the Reserve Bank has ruled out any relaxation in bad loan rules, saying the tough norms will discipline borrowers and prevent banks from pushing distressed loans under the carpet

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,417.15

10,372.45

10,445.00

BSE Sensex

33,940.44

33,800.27

34,031.07

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Indian Oil

283.52

167.35

162.83

174.68

Vedanta

227.72

296.80

290.20

300.55

Hindalco

188.02

234.20

231.37

236.77

Bharat Petroleum

184.88

417.30

404.60

440.50

ICICI Bank

168.11

284.55

281.97

287.52

 

  • Tata Steel has entered into a definitive agreement to subscribe to additional 4.19% equity shares of Subamarekha Port on April 09, 2018. 
  • Tech Mahindra has entered into a strategic partnership with Balbix for launching an artificial intelligence-powered threat assessment platform to check cyber security breaches. 
  • Yes Bank has entered into partnership with payment and transaction processing solutions provider, Euronet India. 
  • Maruti Suzuki India's parent company -- Suzuki Motor Corporation has started export of the all-new Swift on April 10, 2018.
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