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NSE Intra-day chart (12 September 2018)
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Market Commentary 14 September 2018
Markets to make a positive start amid firm global cues


 

Bulls which woke up in last leg of trade mainly helped the benchmarks to end near intraday highs on Wednesday, with frontline gauges recapturing their crucial 37,700 (Sensex) and 10,350 (Nifty) levels. Markets made a cautious start and traded choppy for most part of the day as traders remained on sidelines ahead of macroeconomic data such as Index of Industrial Production (IIP) and Consumer Price Index (CPI) to be announced after the market hours. Market participants remain concerned with private report that regulatory policies pose the biggest risks for companies over the next three years, followed by cyber security and technology disruptions. The report showed a divide on the viewpoint of risk management amongst Indian organisations. Key gauges gained momentum and changed gear in last leg of trade to end near intraday highs, as traders took encouragement with report that India's exports grew by 19.21% to $27.84 billion in August on account of healthy performance by sectors such as petroleum. Merchandise imports too rose by 25.41% in August to $45.24 billion due to the rising crude oil prices, leaving a trade deficit of $17.4 billion. In July, trade deficit soared to a near five-year high of $18.02 billion. Some support also came with Moody's Investors Service's report that the sharp depreciation in rupee's valuation is unlikely to impact India's sovereign credit profile as rupee-denominated government bonds and robust foreign exchange reserves mitigate the risk. Market participants also got some relief with the Finance Ministry's statement that the decision to double the limit to Rs 20 lakh for filing applications in debt recovery tribunals will help them focus on high value matters leading to quicker recovery of bad loans. Some optimism also came with report that India's GDP growth is likely to have peaked in the first quarter of this fiscal and going ahead some moderation is expected as weaker rupee and rising oil prices remain two major headwinds for the economy. Some optimism also came with the department of financial services (DFS) expecting good recovery of bad loans by the public sector banks (PSBs) in the second quarter of the current financial year. Finally, the BSE Sensex surged 304.83 points or 0.81% to 37,717.96, while the CNX Nifty was up by 82.40 points or 0.73% to 11,369.90.

 

The US markets ended higher on Thursday with gains of over half a percent following reports the US is proposing a new round of trade talks with China in the near future. US Treasury Secretary Steven Mnuchin has reportedly sent an invitation for talks to senior Chinese officials, proposing a meeting in the next few weeks. Traders also reacted positively to a report from the Labor Department showing consumer prices rose by less than expected in the month of August. The Labor Department said its consumer price index rose by 0.2% in August, matching the increase seen in July. Excluding food and energy prices, core consumer prices inched up by 0.1% in August after rising by 0.2% for three straight months. Core prices had been expected to show another 0.2% increase. The report also said the annual rate of consumer price growth slowed to 2.7% in August from 2.9% in July. Core consumer prices were up by 2.2% year-over-year in August compared to the 2.4% increase in the previous month. Meanwhile, according to a report released by the Labor Department, first-time claims for US unemployment benefits unexpectedly edged slightly lower in the week ended September 8. The report said initial jobless claims dipped to 204,000, a decrease of 1,000 from the previous week's revised level of 205,000. Dow Jones Industrial Average surged 147.07 points or 0.57 percent to 26145.99, the S&P 500 rose 15.26 points or 0.53 percent to 2904.18 and Nasdaq was up by 59.48 points or 0.75 percent to 8013.71.

 

Crude oil futures settled lower on Thursday, with benchmark prices plunging back from the nearly two-month high seen a day earlier, as an industry report showed global supplies at a record and Hurricane Florence weakened ahead of its expected landfall on the East Coast. In a closely followed monthly report, the International Energy Agency (IEA) said daily crude-oil output in the Organization of the Petroleum Exporting Countries climbed in August by 420,000 barrels a day, to average 32.63 million a day. That output more than made up for an expected decline in Iranian supply due to extant and pending US economic sanctions. Benchmark crude oil futures for October plunged $1.78 or 2.5 percent to settle at $68.59 a barrel on the New York Mercantile Exchange. November Brent crude dropped $1.56 or 2% to settle at $78.18 a barrel on London's Intercontinental Exchanged.

 

Recovering from its all-time low, Indian rupee ended considerably stronger against the Greenback on Wednesday on fresh selling of dollar by exporters as well as banks. Rupee sentiment was support by report highlighting that India's exports grew by 19.21% to $27.84 billion in August on account of healthy performance by sectors such as petroleum. Market-men took encouragement with Moody's Investors Service's report stating that the sharp depreciation in rupee's valuation is unlikely to impact India's sovereign credit profile as rupee-denominated government bonds and robust foreign exchange reserves mitigate the risk. On the global front, the dollar consolidated gains on Wednesday as markets remained cautious about trade talks between the US and Canada, as protracted weakness in China's currency weighed on sentiments. Finally, the rupee ended at 72.18, 27 paise stronger from its previous close of 72.45 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 8066.35 crore against gross selling of Rs 9461.75 crore, while in the debt segment, the gross purchase was of Rs 1064.47 crore with gross sales of Rs 975.14 crore. Besides, in the hybrid segment, the gross selling of Rs 0.28 crore against no buying.

 

The US markets ended higher on Thursday following recent reports that the US is proposing a new round of trade talks with China in the near future. Asian markets were trading in green on Friday as moves by the US and China to resolve a bitter trade dispute and a sharp interest rate hike in crisis-hit Turkey supported global risk appetite. The Indian markets made a strong come back on Wednesday after two sessions of continues fall, amid a recovery in the rupee coupled with reports that India's exports grew by 19.21% to $27.84 billion in August. Today, the markets are likely to make a gap-up opening following positive cues from global markets coupled with good macroeconomic data. Retail inflation of India cooled to an 11-month low of 3.69% in August mainly due to a fall in prices of kitchen items, including fruits and vegetables, while industrial production grew at 6.6% in July, slightly faster than the expected 6.5% expansion, on the back of good performance by the manufacturing sector and higher offtake of capital goods and consumer durables. There will be some support with a private report that private equity (PE) and venture capital (VC) investments stood at $1.6 billion across 50 deals in August, with buyout deals recording two times increase in value compared to the year-ago period. Traders may take note of a report that the government is determined to keep fiscal deficit within the budgeted level of 3.3% of GDP as the country cannot afford to have a twin deficit problem. Meanwhile, the government has notified October 1 as the date for implementing the tax deducted at source (TDS) and tax collected at source (TCS) provisions under GST law. As per the Central GST (CGST) Act, the notified entities are required to collect TDS at 1% on payments to goods or services suppliers in excess of Rs 2.5 lakh. Also, states will levy 1% TDS under state laws. There will be some buzz in banking sector stocks with report that banks need to take a haircut of 40-60% to have a rating of RP4 for implementation of any resolution plan, with bad loans worth over Rs 50,000 crore under RBI's independent credit evaluation (ICE) framework. There will be some reaction among the textiles sector stocks as India Ratings and Research maintained a stable outlook on the cotton and synthetic textiles sector for the remaining period of this financial year. It expects the domestic demand for textiles to remain robust from end-users, supported by a strong rise in private consumption during the rest of FY19.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,369.90

11,286.48

11,417.03

BSE Sensex

37,717.96

37,455.78

37,866.36

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

261.21

314.30

309.95

319.30

SBI

227.18

285.30

281.30

288.00

ITC

194.24

306.80

298.93

311.13

ICICI Bank

152.63

322.90

318.58

327.13

Tata Motors

144.56

262.40

258.10

267.45

 

  • Lupin has received approval for its Atovaquone Oral Suspension USP, 750 mg/5 mL from the USFDA to market a generic version of GlaxoSmithKline LLC's Mepron Oral Suspension, 750 mg/5 mL. 
  • GAIL is planning to expand its pipeline network capacity by about 50% by constructing 5,500-kilometers of new lines in the next three years. 
  • Wipro has entered into partnership with Anaplan to deliver cloud-based EPM solutions that will simplify and automate core enterprise functions for clients, across industry sectors. 
  • Tech Mahindra will setup 5G Center of Excellence which is powered by Intel technology in Redmond, Washington in USA and Bengaluru in India.
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