NSE Intra-day chart (02 April 2019)
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FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
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Market Commentary 03 April 2019
Benchmarks to make slightly positive start amid firm cues from Asian peers

 

Key equity benchmarks extended their rally on Tuesday to end with strong gains. The markets began with marginal gains, on the back of sluggish growth of microeconomic indicators. The growth of eight core infrastructure industries slowed down to 2.1% in February 2019 as compared to 5.4% in February 2018, due to fall in output of crude oil and refinery products, while the Indian manufacturing sector lost its growth momentum in the month of March, on the back of softer increases in new orders, production, input buying and employment. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 52.6 in March from 54.3 in February. Traders took a note of the report stating that apart from a shortfall of nearly Rs 35,000 crore in direct tax revenue, the Centre seems to have suffered a larger deficit of Rs 60,000 crore or thereabouts in its share of goods and services tax (GST) revenue also for the fiscal year (FY19). But, in volatile trade, key indices managed to add gains during noon deals, supported by the Reserve Bank of India's (RBI) statement that it will inject long-term liquidity worth $5 billion into the banking system through dollar-rupee buy-sell swap for a tenure of three years. The swap auction will be held on April 23, 2019. Some comfort also came with a private report that the government has been able to contain its fiscal deficit around 3.4% of the GDP in 2018-2019 by resorting to withdrawals/cash support from public accounts and savings on expenditure. Adding relief, ratings agency CRISIL in its half-yearly report on credit movements said that system wide non-performing asset (NPA) ratios will improve by 180 basis points (bps) to 8.5 percent in March 2020 from FY19 levels on the back of moderation in slippages coupled with recoveries from the bankruptcy resolutions. It also noted that public sector banks (PSBs) will turn more profitable for first time in four years. Finally, the BSE Sensex rose 184.78 points or 0.48% to 39,056.65, while the CNX Nifty was up by 44.05 points or 0.38% to 11,713.20.

 

The US markets ended mostly higher as investors stayed on the sidelines a day after a rally inspired by upbeat manufacturing data out of China and the US. Some cautiousness also prevailed in the markets after rising for three consecutive sessions, Treasury yields retreated 1.8 basis points to 2.478%, as investors worried about rising uncertainty surrounding Britain's planned exit from the European Union. The UK parliament failed for a second time to win a majority for an alternative option to Prime Minister Theresa May's rejected Brexit agreement, raising the chances that the UK could leave the European Union with no deal in place, a potentially destabilizing event for the European and global economies. Besides, traders were looking for more concrete developments out of ongoing US-China trade talks before making more significant moves. On the economic front, orders for US manufactured durable goods showed a steep drop in the month of February, according to a report released by the Commerce Department, with orders for transportation equipment leading the way lower. The Commerce Department said durable goods orders tumbled by 1.6% in February after inching up by a downwardly revised 0.1% in January. The significant decrease in durable goods orders came as orders for transportation equipment plummeted by 4.8% in February after rising by 0.4% in January. Orders for non-defense aircraft and parts nose-dived by 31.1% in February after soaring by 9.2% in the previous month. Nasdaq gained 19.78 points or 0.25 percent to 7848.69 and S&P 500 was up by 0.05 points to 2867.24, while Dow Jones Industrial Average declined 79.29 points or 0.30 percent to 26179.13.

 

Extending their gains for third straight session, crude oil futures ended higher on Tuesday, as traders continued to find encouragement in signs of tightening supplies and fading worries over global economic growth. The optimism has spread through investment banks, with many bumping up their price predictions for 2019. Banks have raised their forecast for the price of Brent crude, the global benchmark, in 2019. Brent will average just over $68 a barrel this year. Benchmark crude oil futures for May surged 99 cents or 1.6 percent to settle at $62.58 a barrel on the New York Mercantile Exchange. June Brent crude gained 36 cents or 0.5 percent to settle at $69.37 a barrel on London's Intercontinental Exchange.

 

Continuing strong recovery momentum for the second day, Indian rupee ended significantly higher against US dollar on Tuesday, on account of selling of American currency by banks and exporters. Traders took encouragement with report that the Reserve Bank of India (RBI) will again swap up to $5 billion to infuse durable liquidity in the system, a month after the first swaps saw a massive response from banks. Market participants offered up to $16.31 billion against the notified amount of $5 billion in the auction held on March 26. The next auction for three-year tenure will be held on April 23. Traders overlooked a private survey showing that India's manufacturing activity slowed to a six-month low in March as orders and output expanded at a weaker rate, thereby easing job creation to its lowest in eight months. On the global front, euro fell to a three-and-a-half week low and stood precariously near its weakest since June 2017 on Tuesday, as investors seized on relatively strong data out of the US to buy the dollar. Finally, the rupee ended at 68.74, 40 paise stronger from its previous close of 69.14 on Friday.

 

The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 20678.37 crore against gross selling of Rs 11126.57 crore, while in the debt segment, the gross purchase was of Rs 6936.50 crore with gross sales of Rs 1929.54 crore. Besides, in the hybrid segment, the gross buying was of Rs 641.22 crore against gross selling of Rs 38.37 crore.

 

The US markets ended mixed on Tuesday, as investors looked for more signs of strength in the economy in the wake of growth worries. Asian markets are trading higher in early deals on Wednesday as investors looking for more concrete developments out of ongoing US-China trade talks set to continue in Washington. Indian markets ended higher for fourth straight session on Tuesday, with Sensex closing at all-time high level supported by strong global cues. Today, the markets are likely to open marginally in green following positive trend in Asian peers. Traders will be getting some support with a report that India's exports are likely to register an all-time high of $330 billion in FY19, amid slowing global merchandise trade growth. Besides, March exports are expected to be above $30 billion, buoyed by strong performances by engineering and pharmaceuticals sectors. Investors also looking for the outcome of Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), which started on April 02, to be announce on April 04. There are expectations of a cut in key lending rate by another 25 basis points to boost economic activities. However, there may be some cautiousness with a private report that the Central Board of Direct Taxes (CBDT) has collected Rs 1,117,416.5 crore (11.17 lakh crore) in total direct taxes in FY 2018-19, a shortfall of around Rs 83,000 crore or 7.4 percent of the Rs 12 lakh crore collection target. Traders may be concerned as the World Trade Organisation's (WTO) forecasted that global trade growth is expected to be lower in 2019 than it was last year, citing widespread tensions and economic uncertainty. Meanwhile, SEBI has issued a circular regarding empanelment of insolvency professionals to be appointed as administrators under the regulator's framework. An administrator has to be a person registered as an insolvency professional with the Insolvency and Bankruptcy Board of India (IBBI) and empanelled with the board from time to time. There will be some buzz in the banking sector stocks with ICRA's report that the quashing of RBI's 180-day period resolution or NCLT mechanism of NPA recovery by the Supreme Court can lead to negative impact for the banks if the loans are not resolved. It added that higher provisioning would have left banks wanting for more funds from government to meet credit and regulatory capital. There will be some reaction in telecom sector stocks with report that Cellular Operators Association of India (COAI), an industry body representing telecom companies, has sought implementation of the National Digital Communications Policy 2018 from the new government. The policy approved by the Cabinet in September last year aims to attract $100 billion investment and create 4 million jobs in the sector by 2022.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,713.20

11,669.58

11,743.08

BSE Sensex

39,056.65

38,895.18

39,169.91

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

1,008.34

202.95

190.70

209.80

SBI

278.98

329.00

323.73

332.63

Yes Bank

247.09

280.30

276.05

283.30

Bharti Airtel

200.54

356.45

346.63

362.63

ZEEL

178.42

417.70

402.10

434.15

 

  • Maruti Suzuki India has increased price upto Rs 689 across models on account of regulatory compliances. 
  • Tata Motors Commercial and Passenger Vehicles Business sales in the domestic market for FY19 grew by 16% with 678,486 units as compared to 586,507 units over the same period last year. 
  • Coal India has breached the 600 MT mark in coal production and off-take ending FY 2019, clocking growths of 7% and 4.8% respectively.
  • M&M has reported a 31% decline in total tractor sales in March at 19,688 units.
News Analysis