NSE Intra-day chart (01 February 2019)
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Market Commentary 04 February 2019
Markets to make pessimistic start on Monday

 

Indian equity benchmarks lauded the Interim Budget 2019 on Friday, with Sensex and Nifty closing the trading session with the gains of over half a per cent each. The start of the day was positive, as the government revised India's gross domestic product (GDP) growth rate upwards by 50 basis points to 7.2 per cent from 6.7 per cent for fiscal 2017-18 and by 110 basis points to 8.2 per cent from 7.1 per cent for 2016-17. Adding enthusiasm among the market participants, the Finance Ministry said that revenue collection from Goods and Services Tax (GST) in the month of January 2019 surpassed Rs 1 lakh crore-mark, after a gap of 2 months. It noted that this has been a significant improvement over collection of Rs 94,725 crore during December 2018 and Rs 89,825 crore during the same month last year. Sentiments remained upbeat, aided by rising manufacturing PMI data. The Indian manufacturing sector surged in the month of January, with the quickest increase in order books. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 53.9 in January from 53.2 in December. The manufacturing sector activity expanded for the 18th consecutive month as the PMI reading stood above the watershed 50 mark, which differentiates growth from contraction. The markets extended their gains in noon deals, as Finance Minister Piyush Goyal started presenting the budget in the Parliament. Goyal said that India has emerged as the brightest spot in the world in the last five years during which the country witnessed the fastest GDP growth higher than under any previous governments. Separately, the Finance Minister proposed higher allocation for MNREGA by 9 percent to Rs 60,000 crore for the financial year 2019-20, as a part of the NDA government's larger plan to focus specifically on the country's rural sector, amid concerns over rising agrarian crisis. However, in the last leg of the trade, the key indices pared some their gains, amid reports that the growth of eight core infrastructure industries slowed down to 2.6 percent in December 2018, on account of negative growth in expansion of crude oil, refinery products and fertilisers. According to data released by the ministry of Commerce and Industry, the combined Index of eight core industries stood at 132.1 in December, 2018. Finally, the BSE Sensex gained 212.74 points or 0.59% to 36,469.43, while the CNX Nifty was up by 62.70 points or 0.58% to 10,893.65.

 

The US markets ended Friday's choppy trading session mostly in green, as an unexpectedly strong January jobs report overshadow the sting of a weak outlook from e-commerce giant Amazon.com Inc. The Labor Department showed much stronger than expected job growth in the month of January but also an uptick in the unemployment rate. The Labor Department said non-farm payroll employment surged up by 304,000 jobs in January compared to street estimates for an increase of about 165,000 jobs. However, the report also showed the spike in employment in the previous month was downwardly revised to 222,000 jobs from the initially reported 312,000 jobs. Meanwhile, Amazon reported fourth quarter results that exceeded street estimates but forecast weaker than expected first quarter revenues. Besides, a separate report from the Institute for Supply Management (ISM) showed growth in the manufacturing sector unexpectedly reaccelerated in January after seeing a substantial slowdown in December. The ISM said its Purchasing Managers' Index (PMI) climbed to 56.6 in January from a revised 54.3 in December, with a reading above 50 indicating growth in the manufacturing sector. Street had expected the manufacturing index to edge down to 54.0 from 54.1 originally reported for the previous month. Dow Jones Industrial Average jumped 64.22 points or 0.26 percent to 25063.89 and S&P 500 gained 2.43 points or 0.09 percent to 2706.53, while Nasdaq was down by 17.87 points or 0.25 percent to 7263.87.

 

Crude oil futures ended significantly higher on Friday as US sanctions on Venezuela's oil exports and reports of notable drop in The Organization of the Petroleum Exporting Countries' (OPEC) oil output eased concerns about any excess supply in the market. As per the report, OPEC's crude oil production dropped by as much as 890,000 barrels per day in January, from the previous month. That was the largest month-on-month decline since January 2017. Besides, a report from energy services firm Baker Hughes said drillers cut 15 oil rigs in the week to February 1, bringing the total count down to 847, the lowest since May 2018. Benchmark crude oil futures for March gained $1.47 or 2.7 percent to settle $55.26 a barrel on the New York Mercantile Exchange, while April Brent crude surged $1.91 or 3.1 percent to settle at $62.75 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended weaker against the US dollar on Friday, on the back of consistent demand for the greenback from state-run banks and importers. Traders remained cautious as the government overshot the fiscal deficit target for the current financial year and announced some populist measures, which will increase fiscal burden on the exchequer. Some concern also came with reports that the growth of eight core infrastructure industries slowed down to 2.6 percent in December 2018, on account of negative growth in expansion of crude oil, refinery products and fertilisers. On the global front, Sterling briefly dived below a key market level on Friday after weak survey data highlighted the degree of uncertainty sweeping across British factories as the country heads towards Brexit in less than two months. Finally, the rupee ended at 71.25, 17 paise weaker from its previous close of 71.08 on Thursday.

 

The FIIs as per Friday'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 10924.60 crore against gross selling of Rs 8168.97 crore, while in the debt segment, the gross purchase was of Rs 551.51 crore with gross sales of Rs 648.26 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.20 crore against gross selling of Rs 0.20.

 

The US markets ended mostly higher on Friday after the US created more jobs than expected in January. Asian markets were trading mostly in green on Monday following strong US economic data and positive comments out of Washington on the trade talks. Indian markets ended higher for second straight session on Friday as investors cheered major announcements in the interim budget presented in Parliament. Today, the start of the new week is likely to be slightly in red, as investors will be looking ahead to the first Reserve Bank of India (RBI) policy meeting under the new governor later in the week. There will be some cautiousness with Moody's Investors Service's statement that the government will find it difficult to meet the fiscal deficit target of 3.4% in 2019-20 on account of higher spending and low revenue growth. Observing that Indian government's debt is stubbornly high as a percentage of GDP, Moody's said it could be brought down only if the Centre sticks to the fiscal consolidation path. Traders will be concerned about a report that Foreign Portfolio Investors (FPIs) withdrew over Rs 5,300 crore from the Indian capital markets in January, indicating their wait and watch approach ahead of the general election. Also, traders will be reacting to report that the government has reduced the allocation for Startup India programme in the Budget 2019-20 but added more monies to the Make in India kitty. According to the budget documents, the allocation for Startup India programme has been slashed to Rs 25 crore for 2019-20 from the revised estimate of Rs 28 crore in 2018-19. Meanwhile, Fitch Ratings said pre-election spending has led to fiscal slippage by a modest margin but the sovereign rating profile of India would be evaluated based on the medium term outlook in the post-election Budget. However, traders may get some support later in the day with the finance ministry's statement that GST collections in January rose to Rs 1.02 lakh crore - the second highest monthly mop-up after April. The total number of sales return or GSTR-3B filed for the month of December up to January 31, 2019 is 73.3 lakh. Traders may also take note of Federation of Indian Export Organisations' (FIEO) saying that the new logistics portal and upcoming national policy would help boost the country's export growth. There will be buzz in the oil industry stocks with report that state-owned oil firms' capital expenditure has hit a four-year low with PSUs such as ONGC and IOC planning to invest Rs 93,693 crore in oil and gas exploration, refining and petrochemicals in the 2019-20 fiscal year. There will be some reaction in the stocks related to construction equipment sector with report that the growth of construction equipment sector has hit a bumper after liquidity crisis gripped NBFCs following the IL&FS default. As per the report, the construction equipment sector was growing around 20% prior to the IL&FS crisis. The growth has now slowed down to 10%.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,893.65

10,810.25

10,980.25

BSE Sensex

36,469.43

36,201.12

36,757.94

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Vedanta

985.62

162.15

153.53

175.38

Yes Bank

665.98

185.60

178.83

194.78

SBI

600.16

284.40

276.70

297.40

ICICI Bank

256.05

354.65

347.30

363.45

ZEEL

245.41

354.40

335.38

386.63

 

  • Maruti Suzuki India has reported total sales of 151,721 units in January 2019, as compared 151,351 units in January 2018, registering marginal rise of 0.2%. 
  • Tata Motors has inked pact to deliver Tigor electric vehicles to technology major Capgemini. 
  • M&M has reported auto sales performance for January 2019 which stood at 55,722 vehicles, compared to 52,063 vehicles during January 2018, a growth of 7%. 
  • Bharti Airtel has lost 5.70 crore mobile customers in December 2018, its mobile customer base in India stood at 28.42 crore at the end of December 2018.
News Analysis