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NSE Intra-day chart (26 March 2018)
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Market Commentary 27 March 2018
Markets to make optimistic start as trade tensions ease

 

Monday turned-out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges recapturing their crucial 33,000 (Sensex) and 10,100 (Nifty) levels, as sentiments got soothed on reports that the United States and China have quietly started negotiations to improve US access to Chinese markets eased fears of a trade war between the two economic giants. Markets started the session with caution and traded choppy for most part of the day, as traders remained concerned on Assocham's report that the escalation of global trade protectionist measures into a full-scale global trade war will damage the Indian economy as well. A full-scale global trade war will impact the country's exports and enlarge its current account deficit (CAD). FICCI has said India should play a proactive role in defusing the emerging possibilities of a global trade war that can derail the positive outlook in the world trade. Sentiments also remained dampened on report that the country's foreign exchange reserves decreased marginally by $152.4 million to $421.334 billion in the week to March 16, on account of a fall in foreign currency assets. In the previous week, the reserves had increased by $728.9 million to $421.487 billion. The reserves had touched a life-time high of $421.914 billion on February 9, FY18. Adding some worries on the street, the government reported that as many as 359 infrastructure projects, each worth Rs 150 crore and above, have shown cost overrun to the tune of Rs 2.18 lakh crore owing to delays and other reasons. However, markets pared all of their initial losses and turned green, as traders went for value buying after two sessions of drubbing. Traders took encouragement with finance ministry stating that India is on track to doubling the size of its economy to $5 trillion by 2025. Economic Affairs Secretary Subhash Chandra Garg said that the country is well poised to click a growth rate of 7-8% and with focus on start-ups, MSMEs and infrastructure investment it can step on to higher growth pedestal. Also, traders got some relief with report that SEBI is planning to increase the maximum investment by angel funds in venture capital undertakings to Rs 10 crore from the current Rs 5 crore. Finally, the BSE Sensex surged 469.87 points or 1.44% to 33,066.41, while the CNX Nifty was up by 132.60 points or 1.33% to 10,130.65.

 

Snapping three day losing streak, the US markets ended the Monday's trade with massive gains, as trade tensions between the U.S. and China appeared to ease. Treasury Secretary Steven Mnuchin said that he is cautiously hopeful a trade agreement can be reached. He said that the U.S. would proceed with plans to impose tariffs on Chinese imports but stressed that negotiations are ongoing. He added, we are not putting them on hold unless we have an acceptable agreement that the president signs off on. Chinese Premier Li Keqiang also told a conference on Monday that the U.S. and China should maintain negotiations to avoid a trade war. Fears of a trade war mounted this month after Trump slapped tariffs on steel and aluminium imports and then on Thursday announced plans for tariffs on up to $60 billion of Chinese goods. Signs of potential compromise were also supported by news that South Korea would be exempt from U.S. steel tariffs in a revision of the bilateral trade pact between the two countries. The Dow Jones Industrial Average surged 669.40 points or 2.84 percent to 24,202.60, the Nasdaq soared 227.88 points or 3.26 percent to 7220.54, while the S&P 500 was up by 70.29 points or 2.72 percent to 2,658.55.

 

Crude oil futures edged slightly lower on Monday, trimming last week's significant gains, with traders weighing trade tensions between the U.S. and China, as China marked the start of trading for its own crude futures contract. Oil traders also factored in the appointment of John Bolton as U.S. national security adviser, which has potential implications on the nuclear deal with Iran. Meanwhile, on Friday, Baker Hughes reported that U.S. drillers continued to add rigs last week. The rig count has jumped to its highest since 2015. Benchmark crude oil futures for May delivery slipped 33 cents or 0.5 percent at $65.55 a barrel on the New York Mercantile Exchange. May Brent crude shed 33 cents or 0.5 percent to settle at $70.02 a barrel on London's Intercontinental Exchange.

 

Extending gains for the third straight session, Indian rupee ended stronger against dollar on Monday, owing to dollar sale by exporters and banks. Market participants got some comfort with finance ministry's statement that India is on track to doubling the size of its economy to $5 trillion by 2025. Economic Affairs Secretary Subhash Chandra Garg said that the country is well poised to click a growth rate of 7-8 percent and with focus on start-ups, MSMEs and infrastructure investment it can step on to higher growth pedestal. Besides, last hour recovery in local equity markets also influenced the rupee sentiments. On the global front, the pound strengthened against its major counterparts on Monday amid risk appetite, as fears over a trade war eased after news that US and China have begun talks for refining access of American goods to China. Finally, the rupee ended at 64.86, 15 paise stronger from its previous close of 65.01 on Friday.

 

The FIIs as per Monday's data were net buyers in equity and debt segments both, in equity segment, the gross buying was of Rs 8219.81 crore against gross selling of Rs 5589.01 crore, while in the debt segment, the gross purchase was of Rs 1615.83 crore with gross sales of Rs 1301.75 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.45 crore against gross selling of Rs 0.33 crore.

 

Bargain hunting contributed to the rally on Wall Street, with the Dow bouncing off its lowest closing level in nearly four months. Traders were inspired to pick up stocks at reduced levels amid easing concerns about a potential trade war between the U.S. and China. Asian stocks rally in early deals on Tuesday after Wall Street rebounded on the first day of the trading week amid a slight easing in trade tensions. Indian markets edged higher on Monday as concerns eased over the U.S. action of selective imposition of import tariffs. Today, the start of the session is likely to be on the positive side tracking firm global cues amid easing concerns about a potential trade war. Traders will be taking some support with the government's decision to bring down market borrowings during the first-half of FY19 following careful assessment of its financial needs. The Centre will raise a gross Rs 2.88 lakh crore from market borrowings in the first half of the fiscal. It has also chosen to introduce shorter duration government securities and will also an additional Rs 25,000 crore from the National Small Savings Fund against the Budgeted Rs 75,000 crore to cut down its requirement for fund raising. The markets will continue to take some support with Economic Affairs Secretary Subhash Chandra Garg's statement that the country is well poised to click a growth rate of 7-8 per cent and with focus on start-ups, MSMEs and infrastructure investment it can step on to higher growth pedestal. Traders may also draw some support with NITI Aayog's statement that the Indian economy is growing at 7 -8 per cent which needs to be reflected on the human development index (HDI) wherein the country stands at 131st position out of 188 nations. Meanwhile, Chief Economic Adviser Arvind Subramanian has said the task force on direct tax reforms will submit its report in the next 4-5 months. Some strength may also come from report that More than 1,200 new foreign investors were registered with Sebi in the first 10 months of the ongoing fiscal, primarily due to their continued interest in the Indian capital markets.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,130.65

10,011.63

10,196.58

BSE Sensex

33,066.41

32,682.58

33,282.82

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

SBI

303.74

246.50

237.88

251.48

ICICI Bank

246.19

281.65

277.35

284.55

Yes Bank

242.40

303.35

291.27

310.17

Vedanta

148.76

283.30

272.70

289.95

Indian Oil Corporation

132.72

167.20

164.70

169.35

 

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