NSE Intra-day chart (02 January 2019)
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Market Commentary 03 January 2019
Markets likely to open in green amid positive global cues

 

Easing microeconomic data dragged the Indian equity markets lower on Wednesday, with both the larger peers, Sensex and Nifty, saw a drastic loss of around 1% each. The start of the day was lackluster, as the government once again missed its Rs 1 lakh crore target of gathering revenue from Goods and Services Tax (GST) in the month of December 2018. The GST collection declined to Rs 94,726 crore in December, lower than Rs 97,637 crore collected in November. The fall in revenue collection raised concerns that the government may not be able to contain the fiscal deficit to 3.2% of the Gross Domestic Product (GDP). Domestic sentiments got further hit after the Indian manufacturing sector slowed down in the month of December, despite easing cost inflationary pressures. Growth was curtailed by competitive pressures, labour issues and challenging public policies. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 53.2 in December from 54 in November. The market participants also got cautious with a private report stating that the Reserve Bank of India's (RBI) estimates of the gross non-performing asset (GNPA) ratio, in severe stress scenarios, for the quarter ahead have been inaccurate five out of six times in its financial stability reports (FSR) since FY16. In the second half of the session, the equity benchmarks saw steep fall, on the back of weak cues from European and Asian markets. Adding to the worries, Anil Gupta, vice president of ICRA said that MSME restructuring scheme will spoil credit culture because earlier the borrowers were sticking to their repayment schedule but now with this forbearance definitely any borrower will try to get a restructuring with a longer repayment schedule. So overall it is not good for the credit culture. Traders failed to take any sense of relief with reports that the government has waived late fees for non-filers of summary and final sales returns for the July 2017-September 2018 period by businesses registered under the GST. The market participants even overlooked a report showing that India remained ahead of China to retain the tag world's fastest growing large economy withstanding several ups and downs, spike in oil prices and global trade war like situation during 2018. Indian economy's roller-coaster ride during the year gone by was best captured by the Gross Domestic Product (GDP) growth. In the first quarter of 2018-19 ending June 30, it grew at an impressive 8.2%. Finally, the BSE Sensex lost 363.05 points or 1.00% to 35,891.52, while the CNX Nifty was down by 117.60 points or 1.08% to 10,792.50.

 

The US markets ended marginally higher on Wednesday as traders picked up stocks at reduced levels following the steep losses posted last year. Meanwhile, participants were watching a partial US government shutdown that is nearing its second week as President Trump mets with top lawmakers to discuss reopening the government by resolving a dispute over funding for the expansion of the US-Mexico border wall. However, gains remained capped amid lingering concerns about the outlook for to the global economy following the release of a report showing a contraction in Chinese manufacturing activity in the month of December. The report said the Caixin/Markit manufacturing purchasing managers' index edged down to 49.7 in December from 50.2 in November. The reading below 50 indicated the first contraction in nineteen months. Besides, trump said that equities should recover when the US completes trade deals with countries like China. He said our country is doing better by far than any other country in the world. We are the talk of the world.  Further he asserted we had a little glitch in the stock market last month, but we are still up about 30% from the time I got elected. Dow Jones Industrial Average gained 18.78 points or 0.08 percent to 23346.24, Nasdaq added 30.66 points or 0.46 percent to 6665.94 and S&P 500 was up by 3.18 points or 0.13 percent to 2510.03.

 

Crude oil futures ended higher on Wednesday, buoyed by a reported drop in December crude exports from Saudi Arabia, as the New Year marked the start of output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies. Observed crude exports from Saudi Arabia declined to 7.253 million barrels a day in December, from 7.717 million in November. Meanwhile, at a meeting in December, OPEC and some non-member producers, including Russia, agreed to cut production by 1.2 million barrels from October 2018 levels, effective as of January 2019, for an initial period of six months. They plan to review output levels in April. Benchmark crude oil futures for February surged $1.13 or 2.5 percent to settle $46.54 a barrel on the New York Mercantile Exchange. March Brent crude rose $1.11 or 2.1 percent to settle at $54.91 a barrel on London's Intercontinental Exchange.

 

Indian rupee witnessed depreciation and settled on weaker note amid strengthening of the American currency and weakness in domestic equities. Rupee sentiments also remained dampened after the government once again missed its Rs 1 lakh crore target of gathering revenue from Goods and Services Tax (GST) in the month of December 2018. The GST collection declined to Rs 94,726 crore in December, lower than Rs 97,637 crore collected in November. Sentiments also weighed down on report that the Indian manufacturing sector slowed down in the month of December, despite easing cost inflationary pressures. Growth was curtailed by competitive pressures, labour issues and challenging public policies. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 53.2 in December from 54 in November. Finally, the rupee ended at 70.18, 75 paise weaker from its previous close of 69.43 on Tuesday.

 

The FIIs as per Wednesday'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 2193.74 crore against gross selling of Rs 1722.12 crore, while in the debt segment, the gross purchase was of Rs 39.00 crore with gross sales of Rs 601.18 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.72 crore against gross selling of Rs 0.21 crore.

 

The US markets ended marginally higher on Wednesday, extending a recent stretch of volatility as anxiety about global growth and interest rates rippled across markets. Asian markets were trading mostly in green on Thursday thanks to bargain hunting and a bump in crude oil prices. However, upside remain limited after Apple Inc. added to global growth concerns by cutting its guidance due to weaker sales in China. Indian equity markets ended Wednesday's trading session with cut of over a percent following weak cues from Asia and Europe as the US government shutdown entered its 12th day and manufacturing data from China disappointed investors. Today, the markets are likely to open in green tracking positive global cues. Traders will be taking encouragement with the Finance Ministry in its 2018 review saying that the Indian economy is projected to be the fastest-growing major economy in the current and upcoming fiscal 2019-20. It also emphasized that the government has taken several steps to boost investors' confidence. It added that the average growth of the Indian economy between 2014-15 and 2017-18 was 7.3%, fastest among the major economies in the world. Some support may also come with the Finance Ministry's another statement that the direct tax-to-GDP ratio of 5.98% achieved during 2017-18 fiscal is the best in the last 10 years. It was 5.57% in 2016-17 and 5.47% in 2015-16. Also, traders will be getting some support with the government's decision to provide 3% interest subsidy to merchant exporters, entailing an expenditure of Rs 600 crore, to enhance liquidity with a view to boosting outbound shipments. There will be some reaction in IT sector stocks with R Chandrashekhar, Former President of the industry body NASSCOM, saying that the ongoing digital transformation taking place globally is making India's information technology (IT) industry stronger, a trend that would continue its growth momentum at least in the foreseeable future.  There will be some buzz in the banking sector with the Reserve Bank of India's (RBI) data showing that the banking sector failed to meet the priority-sector lending (PSL) targets overall. The banks also failed to meet targets of specific sectors such as agriculture and micro, small and medium enterprises (MSMEs). PSBs met their PSL target for agriculture of 18%, private banks and foreign banks failed to meet the targets at 16.2% and 16.7%, respectively.  Also, there will be some buzz in coal sector stocks with Minister for Coal, Piyush Goyal's statement that the current focus of the government is on boosting production from operational coal mines.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,792.50

10,719.92

10,880.22

BSE Sensex

35,891.52

35,671.45

36,174.14

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

325.83

184.65

182.43

186.93

SBI

255.60

293.90

290.50

299.90

Vedanta

189.35

193.15

190.43

197.93

ICICI Bank

182.43

364.60

360.63

368.23

ONGC

174.37

147.05

145.75

148.35

 

  • Tata Consultancy Services has launched Jile 2.0, a new major release of Jile, its Agile DevOps product-on-cloud. 
  • Bajaj Auto has registered a rise of 18% in total sales to 346,199 units in December 2018 against 292,547 units in December 2017. 
  • Eicher Motors and Volvo Group's joint venture -- VE Commercial Vehicles has reported 2.4% increase in sales for December 2018 to 6,236 units. 
  • Coal India's subsidiary -- Northern Coalfields production and offtake grew by 11% and 7%, respectively, during the April-December period.
News Analysis