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NSE Intra-day chart (16 April 2018)
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Market Commentary 17 April 2018
Markets likely to open slightly in green

 

Indian equity benchmarks continued winning streak and once again ended in green for the eighth day in a row, with frontline gauges recapturing their crucial 34,300 (Sensex) and 10,500 (Nifty) levels. Markets started the session on pessimistic note as geopolitical concerns linger and focus gradually shifts to corporate earnings. Traders also remained concerned with report that India's merchandise exports fell for the first time in five months in March and the trade deficit widened amid concerns over global trade, and US moves to review a programme allowing duty-free imports of goods. India's merchandise exports in March fell 0.7% year-on-year to $29.1 billion, and the trade deficit widened to $13.7 billion. Imports rose 7.2% on year to $42.8 billion in March. Sentiments also weighed down on report that investments through Participatory notes (P-notes) plunged to nearly nine-year low of Rs 1.06 lakh crore in the capital market at March-end amid stringent norms put in place by the regulator SEBI to check misuse of these instruments. According to the SEBI data, total value of P-note investments in Indian markets -- equity, debt, and derivatives -- slumped to a low of Rs 1,06,403 crore at March-end from Rs 1,06,760 crore at the end of the preceding month. Prior to that, the figure was Rs 1.19 lakh crore. Markets pared all of their losses to enter into green terrain with report highlighting that India's inflation on wholesale level softened slightly in the month of March, in line with easing retail inflation, aided by fall in prices of food articles, mainly pulses and vegetables. The Wholesale Price Index (WPI)-based inflation came in at 2.47% for March 2018, the lowest since July 2017. Some support also came with Indian Meteorological Department's (IMD) statement that the south-west monsoon is likely to be 97% of the long period average (LPA), implying normal summer rains. Skymet, a private forecasting agency, has also predicted normal monsoon this year. The Met will release its next official forecast in June. Finally, the BSE Sensex surged 112.78 points or 0.33% to 34,305.43, while the CNX Nifty was up by 47.75 points or 0.46% to 10,528.35.

 

The US markets closed higher on Monday, as optimism persisted over the first-quarter earnings season and as geopolitical tensions showed signs of fading. According to FactSet, earnings for companies in the S&P 500 are expected to grow 17.3% in the first quarter, while sales grow 10%. For both, such rates would represent the fastest pace of growth since the first quarter of 2011. Dallas Federal Reserve Bank President Robert Kaplan said he expects the US central bank to raise interest rates three times this year and further next year to levels that could put the brakes on US economic growth, but that he does not want to push short-term rates above long-term borrowing costs. On the economy front, sales at US retailers rose 0.6% in March to end a streak of three straight declines, underscoring the improved financial picture of American households and the resiliency of an economic expansion that could turn out to be the longest ever. Sales rose a smaller 0.3% last month if autos and gas are stripped out. The decline in sales in February was left at 0.1%. On the other hand, the Empire State manufacturing index gave up most of the gains in April that it saw in the prior month. The index slipped to a reading of 15.8 in April from 22.5 in March. The index is slightly above the 13.1 reading seen in February. The Dow Jones Industrial Average added 212.9 points or 0.87 percent to 24,573.04, the Nasdaq gained 49.635 points or 0.70 percent to 7,156.28, while the S&P 500 was up by 21.54 points or 0.81 percent to 2,677.84.

 

Crude oil futures ended lower on Monday amid fading worries of potential retaliation from Russia following weekend airstrikes on the country's ally Syria. A barrage of U.S., French and British missiles launched on Saturday destroyed much of Syria's chemical-weapons capabilities, but left President Bashar al-Assad's conventional military intact. Meanwhile, Crude-oil production from the shale sector is expected to rise by 125,000 barrels a day in May to 6.996 million barrels a day, according to a report from the Energy Information Administration (EIA). That's due in large part to the continued U.S. shale boom in the Permian basin. Benchmark crude oil futures for May delivery fell $1.17 or 1.7 percent to settle at $66.22 a barrel on the New York Mercantile Exchange. June Brent crude declined 1.16% or 1.6% percent to settle at $71.42 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably weaker to hit a fresh five-month low against dollar on Monday, as the country's trade deficit widened more than estimated in March. As per the data, India's trade deficit widened 28.5% to $13.7 billion in March, taking the annual deficit to $87.2 billion, amid concerns over global trade. Besides, India's exports fell by 0.66% in the month of March 2018 after four months of continues rise. Investors overlooked report that inflation based on wholesale prices eased marginally to 2.47% in March from 2.48% in February and 5.11% in March last year, on falling prices of food items, especially vegetables and pulses. However, weakness in the dollar against some other currencies overseas along with gains in equity markets capped further losses in rupee. On the global front, the dollar slipped against the yen on Monday as markets assessed the fallout from US-led missile strikes on Syria on Friday, but losses were limited amid expectations that the conflict would not escalate further. Finally, the rupee ended at 65.49, 28 paise weaker from its previous close of 65.21 on Friday.  

 

The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment. In the equity segment the gross buying was of Rs 4629.83 crore against gross selling of Rs 4713.75 crore, while in the debt segment, the gross purchase was of Rs 2106.10 crore with gross sales of Rs 1141.09 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.22 crore against no selling.

           

The US markets ended higher on Monday as traders reacted positively to earnings news from financial giant Bank of America (BAC), which reported first quarter earnings that beat analyst estimates on strong loan growth. Asian markets were trading mostly in green on the back of release of better-than-expected China GDP. China's economy grew 6.8 percent in the first quarter of 2018. Indian shares rose for an eighth straight session on Monday as fears of a wider escalation in the Middle East faded following the weekend's U.S.-led strike. Today, the markets are likely to make a flat-to-positive opening amid firm global cues but investors keep a wary eye on geopolitical tensions and oil price movements. Traders will get some respite on the monsoon front as the India Meteorological Department (IMD) forecast that the country will receive normal monsoon for a third consecutive year. Traders will get some encouragement with the World Bank forecasting a growth rate of 7.3 per cent for India this year and 7.5 per cent for 2019 and 2020, and noted that the country's economy has recovered from the effects of demonetisation and the Goods and Services Tax. The World Bank also said that India should strive to accelerate investments and exports to take advantage of the recovery in global growth. Meanwhile, Niti Aayog Vice Chairman Rajiv Kumar said there is a need for close coordination between the finance ministry and the Reserve Bank. He said the 3.5 percent fiscal deficit target, which deviates from the original fiscal consolidation road map, is not very big and affirmed that India is better placed on other macro-economic indicators like inflation, forex reserves and the current account gap.

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,528.35

10,436.42

10,580.22

BSE Sensex

34,305.43

34,022.69

34,464.81

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

191.57

339.15

333.53

348.78

ICICI Bank 

168.74

287.60

284.82

289.67

SBI

164.08

249.00

246.97

251.17

Indian Oil 

127.02

165.00

163.02

166.72

Infosys 

123.73

1,133.20

1,110.13

1,148.13

 

  • Infosys has entered into a definitive agreement to acquire WONGDOODY, a US-based, full-service creative and consumer insights agency. 
  • Mahindra & Mahindra has launched Automobili Pininfarina, the world's newest sustainable luxury car brand. 
  • Tata Steel achieved a 6.88% rise in production in FY18 to 12.48 MT in its Indian operations with sales increasing by 10.97% to 12.13 MT during the year. 
  • Reliance Industries' telecom arm - Jio has signed a JPY 53.5 billion Samurai Term Loan with 7 year bullet maturity.
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