NSE Intra-day chart (31 January 2019)
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Market Commentary 01 February 2019
Markets to make a positive start ahead of interim Budget 2019

 

Bulls took charge on Dalal Street on Thursday, as both Sensex and Nifty, ended the trading session with the strong gains of over 1.50% each. The markets made a fabulous start of the day, after SBI Research's latest report indicated that the government is likely to meet the fiscal deficit target this year and pegged fiscal deficit at Rs 6.72 trillion or 3.2% of gross domestic product (GDP) for next fiscal year (2019-20), assuming a moderate nominal GDP growth of 11.7%. It added that the fiscal gap will be met at the budgeted 3.3 percent for FY19. Traders took encouragement with Commerce Minister Suresh Prabhu's statement that the government will release the new e-commerce policy soon which is awaiting approval from the Department of Industrial Policy and Promotion (DIPP). The street also took note of report that Indian companies' foreign borrowing nearly trebled to $3.81 billion in December 2018 as compared to the same period last year. According to data from the Reserve Bank of India (RBI), of the total borrowing amount in December, $3.77 billion was mobilized through external commercial borrowings (ECBs) in the overseas markets, while $37.04 million was through rupee-denominated bonds (RDBs). The markets extended their gains in the second half of the session to settle near their intraday high points, mirroring positive European markets. Intense buying by the traders ahead of expiry of January futures & options contracts, also contributed to the gaining momentum. The markets participants were seen taking support from a report that the GST officials are working out mechanism to prompt taxmen to initiate profiteering complaints, which could be taken up for further investigation by the Directorate General of Anti-Profiteering. The street paid no heed towards the National Sample Survey Office's (NSSO) latest report showing that India's unemployment rate reached to 6.1% in 2017-18, hitting a 45-year high. The rate was the highest since 1972-73. Investors also shrugged off Fitch Ratings' latest report warning of a second consecutive year of fiscal slippage in the event of Finance Minister Piyush Goyal resorting to populist spending to win over lost vote base. Finally, the BSE Sensex gained 665.44 points or 1.87% to 36,256.69, while the CNX Nifty was up by 179.15 points or 1.68% to 10,830.95.

 

The US markets ended mostly higher on Thursday, with the S&P 500 notching its best January in over three decades, after the Federal Reserve signaled that rate increases are on pause and that its next policy move will depend on economic data. For the month, the S&P 500 climbed 7.9% for its best January since 1987, while the Dow rose 7.2%, its best January since 1989. The Nasdaq had its best January since 2001 on the back of a 9.7% monthly gain. Meanwhile, traders were watching developments between the US and China as officials there attempted to forge the framework toward a resolution of tariff disputes in the final day of this round of negotiations. President Donald Trump said that no final deal would be made until my friend President Xi, and I meet in the near future to discuss and agree on some of the long standing and more difficult points. On the economic front, the Labor Department released a report showing a significant rebound in initial jobless claims in the week ended January 26. The report said initial jobless claims surged up to 253,000, an increase of 53,000 from the previous week's revised level of 200,000. With the much bigger than expected increase, jobless claims reached their highest level since hitting 254,000 in September of 2017. The slightly upwardly revised reading on jobless claims in the previous week was still the lowest since a matching figure in October of 1973. Meanwhile, a separate report from the Commerce Department showed new home sales rebounded by much more than anticipated in November. The report released showed new home sales soared by 16.9 percent to an annual rate of 657,000 in November after plunging by 8.3 percent to a revised rate of 562,000 in October. Nasdaq gained 98.66 points or 1.37 percent to 7281.74 and S&P 500 was up by 23.05 points or 0.86 percent to 2704.10, while Dow Jones Industrial Average declined 15.19 points or 0.06 percent to 24999.67.

 

Crude oil futures ended lower on Thursday on the back of profit booking, but still finished the month with an 18% gain-the strongest monthly rise in nearly three years. The upbeat tone for continued a day after weekly US crude supplies were reported up less than expected and amid continued reaction to US sanctions on Venezuela's state-run oil company, all of which helped to lift US benchmark prices higher. Meanwhile, the oversupply narrative from US production will likely be more relevant after winter, but it should still cap any rallies that target $60 to $70 range. Benchmark crude oil futures for March declined 44 cents or 0.8 percent to settle $53.79 a barrel on the New York Mercantile Exchange, while March Brent crude rose 24 cents or 0.4 percent to settle at $61.89 a barrel on London's Intercontinental Exchange.

 

Indian rupee, after making a good start, gave away most of its gains to end marginally higher against dollar on Thursday, driven by weakening of the greenback in overseas markets. Local currency got some support with SBI Research's report that the government meeting the fiscal targets this year and for FY20, fiscal deficit is likely to be Rs 6.72 trillion or 3.2 percent of GDP, assuming a modest 11.7 percent of nominal GDP growth. It added that for FY19 the fiscal gap will be met at the budgeted 3.3 percent. A spectacular relief rally in local equities also supported the forex sentiment. However, local unit cut most of the early gains, as anxiety remained among the traders with the National Sample Survey Office's (NSSO) latest report showing that India's unemployment rate reached to 6.1% in 2017-18, hitting a 45-year high. The rate was the highest since 1972-73. On the global front, dollar weakened on Thursday after the Federal Reserve pledged to be patient with further interest rate hikes, a move that lifted the euro and the Australian dollar. Finally, the rupee ended at 71.08, 4 paise stronger from its previous close of 71.12 on Wednesday.

 

The FIIs as per Thursday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 6884.34 crore against gross selling of Rs 6650.71 crore, while in the debt segment, the gross purchase was of Rs 1013.75 crore with gross sales of Rs 1447.82 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.03 crore against gross selling of Rs 0.10 crore.

 

The US markets ended mostly higher on Thursday as strong earnings and a Federal Reserve indicating it will pause rate hikes caused boosted investors sentiments. Asian markets are trading mostly in green on Friday on the back of optimism on the US-China trade front. Snapping four-day losing streak, Indian markets ended significantly higher on Thursday tracking strength in Asian peers as a dovish stance by the Federal Reserve boosted sentiment. Today, the start is likely to be optimistic, on the day of interim Budget 2019, on the back of supportive global cues. Investors will be eyeing manufacturing PMI data to be out later in the day. There are expectations that Budget may focus on an income support scheme for distressed farmers who have seen their incomes stagnate because of plunging prices, barely enough to pay for loans and input costs. Traders will be getting encouragement with the finance ministry's statement that revenue collection from Goods and Services Tax (GST) witnessed a substantial jump, crossing Rs 1 lakh crore in January from Rs 94,726 crore in December. It said this increase has been achieved despite various tax relief measures implemented by the GST Council to lower the tax burden on the consumers. Meanwhile, the government revised the Gross Domestic Product (GDP) growth rates by 110 basis points from 7.1 per cent to 8.2 per cent for 2016-17 and by 50 basis points from 6.7 per cent to 7.2 per cent for fiscal 2017-18. However, some cautiousness may be there as growth in the eight core sectors of the economy continued to tumble, crashing to an 18-month low of 2.6 per cent in December, down from the 3.4 per cent growth in November. There will be some buzz in the aluminium industry stocks with Union Mines Secretary Anil Mukim's statement that the Indian aluminium industry must slash production costs and raise output to tackle the global downturn. The auto sector stocks will also be in action, reacting to their monthly sales numbers. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,830.95

10,726.98

10,886.48

BSE Sensex

36,256.69

35,905.13

36,443.19

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ICICI Bank

859.17

364.45

353.48

376.03

Yes Bank

677.95

194.10

188.68

200.98

NTPC

366.96

139.70

138.73

140.93

Axis Bank

352.40

722.70

698.88

736.68

IOC

323.33

136.85

133.30

139.35

 

  • Hero MotoCorp has set-up its first Research and Development center at a global location - the Hero Tech Center Germany GmbH. 
  • L&T's wholly-owned subsidiary -- LTHE has won two significant orders from Indian Oil Corporation. 
  • Tata Steel-owned rebar brand Tata Tiscon has achieved 100% roll out of its latest grade of steel called SD – super ductile rebar in India. 
  • IOC has reported 90.91% fall in its net profit at Rs 716.82 crore for Q3FY19 as compared to Rs 7,883.22 crore for Q3FY18.
News Analysis