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NSE Intra-day chart (12 April 2018)
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Market Commentary 13 April 2018
Markets likely to make optimistic start on positive economic data

 

Extending northward journey for sixth straight session, Indian equity benchmarks ended the Thursday's trade in green terrain with frontline gauges recapturing their crucial 34,100 (Sensex) and 10,450 (Nifty) levels. Despite making a cautious start, markets gained strength and traded in green throughout the session as traders took some encouragement with report that India has jumped 13 places in the last one year to 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 also came with a report highlighting 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. Markets extended rally in last leg of trade with traders taking some support with the International Monetary Fund's (IMF) report stating that it is optimistic on the outlook for global growth but warned darker clouds are looming due to fading fiscal stimulus and rising interest rates. The trade conflict between the United States and China is creating significant uncertainty for businesses and their global supply chains. The street shrugged off a study published in RBI's monthly bulletin that India's social sector spending remains woefully below peers, including Latvia and Iceland, in terms of GDP. The social sector expenditure primarily constitutes health and education in India. The conclusion is based on an analysis of 17 countries, including India, with respect to their social sector expenditure as percent of GDP (2016). Meanwhile, former RBI governor Raghuram Rajan has said that proper implementation of the Goods and Services Tax (GST) in India can be worked upon and is not an unfixable problem. Finally, the BSE Sensex surged 160.69 points or 0.47% to 34,101.13, while the CNX Nifty was up by 41.50 points or 0.40% to 10,458.65.

 

The US markets closed higher on Thursday, as investors looked past the latest headlines and tweets coming from the White House and turned their focus to earnings season, which kicks off on Friday. Geopolitical issues appeared to fade after President Donald Trump tweeted that a military strike on Syria may not be imminent. Meanwhile, worries about a potential global trade war are persisting, as a Chinese government denied Thursday that recently announced policy changes constitute concessions to the Trump administration in the countries' trade skirmish. On the economy front, the rate of layoffs in the US fell in the first week of April and returned near the lowest levels since the early 1970s. Initial jobless claims fell by 9,000 to 233,000 in the week ended April 7. The more stable monthly average of claims rose by 1,750 to 230,000. The number of people already collecting unemployment benefits, known as continuing claims, also increased by 53,000 to 1.87 million. Layoffs are near a 45-year low and show no sign of rising. Companies increasingly complain about a shortage of skilled labor with the unemployment rate at a 17-year low of 4.1%, making it harder for them to fill a record number of job openings. Meanwhile, the import price index was flat in March because of the lower cost of oil. Excluding fuel, import prices rose 0.2% last month. The cost of energy, mainly petroleum and natural gas, fell for the second month in a row and temporarily caused the price of imports to ease up. The Dow Jones Industrial Average added 293.6 points or 1.21 percent to 24,483.05, the Nasdaq gained 71.222 points or 1.01 percent to 7,140.25, while the S&P 500 was up by 21.8 points or 0.83 percent to 2,663.99.

 

Crude oil futures ended mixed on Thursday, with the global crude benchmark ending slightly lower, but the U.S. benchmark shifting higher in late trading session to hold hit more than three-year highs. Traders followed developments in the Middle East, including the possibility of a U.S. strike on Syria, which have the potential to disrupt the flow of crude in the region. U.S. West Texas Intermediate crude got a boost from reports on Thursday afternoon that the Saudis intercepted another missile attack, this time over Jazan. That followed Wednesday's reports that the Saudis shot down a missile over Riyadh. Benchmark crude oil futures for May delivery gained 25 cents or 0.4 percent to settle at $67.07 a barrel on the New York Mercantile Exchange. June Brent crude declined 4 cents or less than 0.1% percent to settle at $72.02 a barrel on London's Intercontinental Exchange.

 

Indian rupee pared all of its initial losses and ended marginally higher against dollar on Thursday, owing to dollar sale by exporters and banks. Traders took some support with report that India has jumped 13 places in the last one year to 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. Besides, dollar's weakness against other currencies overseas along with positive trend in equity market too supported the rupee.  However, gains were limited as investors preferred to remain on sidelines ahead of key economic data -- February IIP and March CPI, to be announced later today. On the global front, dollar held near a two-week low on Thursday against a basket of currencies as investors remained cautious over possible Western military action against Syria, while the euro was also steady before minutes of the ECB's March meeting. Finally, the rupee ended at 65.25, 6 paise stronger from its previous close of 65.31 on Wednesday.

 

The FIIs as per Thursday's data were net buyers in equity segment, while they were net sellers in debt segment, the gross buying was of Rs 4824.49 crore against gross selling of Rs 4380.52 crore, while the debt segment, the gross purchase was of Rs 468.77 crore with gross sales of Rs 1836.24 crore. Besides, in the hybrid segment, the gross buying was of Rs 19.68 crore against no selling.

           

The U.S. stocks edged higher on Thursday as President Donald Trump sought to downplay concerns about an attack on Syria. Some support also came with report that initial jobless claims fell to 233,000, a decrease of 9,000 from the previous week's unrevised level of 242,000. Asian markets were buoyed on Friday, with indexes in the region trading higher across the board after U.S. markets gained in the last session, as trade and geopolitical worries receded. Indian equity markets rose for a sixth straight session on Thursday even as overall gains remained limited amid rising oil prices and lingering concerns over a possible U.S. missile strike on Syria. Today, the markets are likely to make an optimistic start as reports on industrial output and inflation painted a positive picture of the economy. India's industrial output grew 7.1 percent year-on-year in February, bigger than the expected 6.8 percent expansion. The cumulative growth for the period April-February 2017-18 over the corresponding period of the previous year stood at 4.3%. India's Consumer Price Index (CPI) for the month of March came to 4.28% as compared to 4.44% in February. CPI food inflation for March also eased substantially to 2.81% versus 3.26% in last month. Traders will take some encouragement with report that the Confederation of Indian Industry (CII) is expecting India's gross domestic product (GDP) to grow at 7.3-7.7 per cent during the 2018-19 financial year. This is based on strengthening demand in the rural economy, including agriculture and non-farm activities, as well as better global growth climate. Traders will also take some support with report that India's merchandise exports are expected to grow 5.96 per cent during the fourth quarter ended March 31, 2018. There will be buzz in software related stocks as Infosys will unveil its Q4 earnings later in the day, with street expecting the IT firm to post good numbers compared to the previous year and signal better growth ahead.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,458.65

10,412.63

10,487.28

BSE Sensex

34,101.13

33,958.19

34,210.75

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Indian Oil

283.97

168.25

161.37

172.77

ICICI Bank

229.54

286.75

283.57

289.92

Bharat Petroleum

193.48

418.65

406.32

427.12

SBI

186.61

253.80

251.53

256.78

 

  • L&T has signed a MoU with BEL to cater to the needs of evolving domestic and export markets for defence products and systems. 
  • Tata Motors Group global wholesales in March 2018, including Jaguar Land Rover, stood at 153,156 units, higher by 18%, over March 2017. 
  • BPCL, HPCL and IOC have signed MoU with Saudi Aramco to jointly develop and build the integrated refinery and petrochemicals complex at Ratnagiri in the state of Maharashtra through a JV named RRPCL. 
  • NCLT has approved the Composite Scheme of Arrangement and Amalgamation between ZEEL, Zee Digital Convergence, India Webportal, Zee Unimedia and Sarthak Entertainment and their respective shareholders.
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