NSE Intra-day chart (03 April 2019)
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Market Commentary 04 April 2019
Markets to make optimistic start ahead of RBI's monetary policy decision

 

Indian equity markets witnessed sharp fall to end Wednesday's session near their intraday low points, with Sensex and Nifty settling below their crucial psychological levels of 38,900 and 11,650, respectively. After a fabulous start, the markets remained bullish for the most part of the session, aided by Asian Development Bank's (ADB) flagship report that India's Gross domestic product (GDP) growth is set to pick up at 7.2 percent in 2019, on the back of strengthening consumption. It also said that the country's economy is also expected to clock a growth rate of 7.3 percent in 2020 as policy rates are cut and farmers receive income support, bolstering domestic demand. Market participants were seen taking encouragement 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. But, in the last leg of the trade, key indices lost the momentum to close the session in red terrain, on the back of below normal monsoon forecast. Private weather forecaster Skymet said India's monsoon rains were seen below normal this year. According to Skymet Weather, monsoon in 2019 was likely to be below normal to the tune of 93 per cent of the long period average (LPA) of 887 mm for the fourth-month period from June to September. Adding more worries on the street, International Monetary Fund (IMF) Managing Director Christine Lagarde said that global growth has lost momentum amid rising trade tensions and tighter financial conditions, but pauses in rate hikes will help boost activity in the second half of 2019. Traders also got cautious with a private report that the Central Board of Direct Taxes (CBDT) 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. Finally, the BSE Sensex declined 179.53 points or 0.46% to 38,877.12, while the CNX Nifty was down by 69.25 points or 0.59% to 11,643.95.

 

The US markets ended higher on Wednesday amid investor optimism the US and China may be close to settling their trade dispute. A private report stated that US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute. Officials are still haggling over how to implement and enforce the agreement. The two sides remain apart on two key issues the fate of existing US tariffs on Chinese goods and the terms of an enforcement mechanism demanded by Washington to ensure that China abides by the deal. However, service sector growth in the US cooled off in March after a significant acceleration in the previous month, according to a report released by the Institute for Supply Management (ISM). The ISM said its non-manufacturing index slid to 56.1 in March after jumping to 59.7 in February, although reading above 50 still indicates growth in the service sector. Street had expected the index to show a more modest pullback, with forecasts calling for the index to dip to 58.0. The bigger than expected decrease by the headline index came as the business activity index tumbled to 57.4 in March from 64.7 in February and the new orders index slumped to 59.0 from 65.2. Meanwhile, payroll processor ADP released a report showing much weaker than expected private sector job growth in the month of March. ADP said private sector employment rose by 129,000 jobs in March after jumping by an upwardly revised 197,000 jobs in February. The report said employment in the service-providing sector increased by 135,000 jobs, while employment in the goods-producing sector fell by 6,000 jobs. Dow Jones Industrial Average surged 39.00 points or 0.15 percent to 26218.13, Nasdaq gained 46.86 points or 0.60 percent to 7895.55 and S&P 500 was up by 6.16 points or 0.21 percent to 2873.40.

 

Crude oil futures ended lower on Wednesday after data showed a larger-than-expected jump in US crude inventories. The Energy Information Administration (EIA) said crude inventories rose 7.2 million barrels to 449.5 million barrels in the week ended March 29, leaving them at the five-year average. Analysts surveyed by S&P Global Platts had produced a consensus forecast for a drop of 100,000 barrels. However, the American Petroleum Institute late Tuesday had reported a 3 million barrel rise in inventories. Benchmark crude oil futures for May declined 34 cents or 0.5 percent to settle at $62.24 a barrel on the New York Mercantile Exchange. June Brent crude dropped 21 cents or 0.3 percent to settle at $69.16 a barrel on London's Intercontinental Exchange.

 

Indian rupee continued its upward march for the third straight session on Wednesday, on persistent selling of the American currency by exporters. Sentiments got up-beat with Asian Development Bank's report that India's growth is set to pick up and is expected to grow 7.2% in the current fiscal on strengthening consumption. Investors remained hopeful ahead of the outcome of Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), which started on April 02, to be announced on April 04. There are expectations of a cut in key lending rate by another 25 basis points to boost economic activities. On the global front, British pound rose against dollar Wednesday after Prime Minister Theresa May offered cross-party talks with the leader of the opposition Labour Party, Jeremy Corbyn, in a political gamble aimed at resolving the Brexit impasse. Finally, the rupee ended at 68.41, 33 paise stronger from its previous close of 68.74 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 5388.89 crore against gross selling of Rs 4914.92 crore, while in the debt segment, the gross purchase was of Rs 1129.85 crore with gross sales of Rs 2872.67 crore. Besides in the hybrid segment, the gross buying was of Rs 86.26 crore against gross selling of Rs 61.10 crore.

 

The US markets ended higher on Wednesday, but off their intraday highs, as investors reacted to upbeat comments on US-China trade talks but weighed a shaky private-sector employment report. Asian markets are trading in green on Thursday, as investors awaited developments on trade talks between the United States and China. Indian markets snapped four-day winning streak and ended lower after private weather agency Skymet forecast a below-normal monsoon this year, citing a developing El Nino phenomenon, marked by a warming of the sea surface on the Pacific Ocean. Today, the start of the session is likely to be in green ahead of the Reserve Bank of India's (RBI) monetary policy decision, which is due later in the day. Market participants are expecting a rate cut from the monetary policy committee in its first bi-monthly policy of 2019-20. Global cues are also likely to support the sentiment as Asian markets reached their 8-month high in early trade. On the domestic front, investors will also be eyeing Services PMI data for the month of March to be out later in the day. Traders will be getting encouragement with Commerce and Industry Minister Suresh Prabhu's statement that India's exports are expected to reach $32.38 billion in March, the highest in any month so far, on account of healthy growth in sectors such as pharmaceuticals. He said that exports would cross $331 billion mark in the 2018-19 fiscal year. There will be some support with Vice President M Venkaiah Naidu's statement India would continue to grow at a higher economic growth rate until 2021, while citing the World Bank estimates. World Bank estimates suggest that India would continue to grow at a high rate until 2021. However, there may be some cautiousness with a private report that India saw the lowest number of new investment proposals since 2004-05 during the last fiscal ended March. The report said that this lowest figure of new investments recorded in 14 years added up to a dismal Rs 9.5 trillion (9.5 lakh crore). The report added that 2018-19 would be the fourth consecutive year of decline in new investment proposals which began in 2015-16. Meanwhile, telecom regulator Trai has directed operators to submit before it all tariff plans that they offer to select segments of customers at the end of every month. The new order for segmented tariff disclosures comes after the Supreme Court on January 21 held that there will be no stay on the impugned judgment (of TDSAT) except to the extent of remand. There will be some buzz in the IT sector stocks as Nasscom report stating that with increased adoption of futuristic technologies such as Artificial Intelligence (AI) and Machine Learning (ML), the cloud market in India is poised to grow three-fold to $7.1 billion by 2022.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,643.95

11,595.07

11,726.92

BSE Sensex

38,877.12

38,712.41

39,155.99

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

817.80

201.35

197.38

207.13

Yes Bank

318.09

273.70

268.60

282.40

SBI

305.52

320.50

315.85

328.80

Indiabulls Housing Finance

191.57

869.85

843.68

894.33

NTPC

125.97

134.80

133.37

136.87

 

  • Wipro has completed divestment of Workday and Cornerstone OnDemand Business consisting of business and employees in USA, UK, Ireland, Portugal, India and certain other countries. 
  • L&T has entered into a definitive agreement with Kobe Steel for the divestment of its entire stake in L&T Kobelco Machinery, a 51:49 joint venture between L&T and Kobe Steel. 
  • M&M has become the first Indian tractor brand to rollout 3 million tractors and the company achieved this manufacturing milestone during March 2019. 
  • Reliance Industries' telecom arm -- Jio has transferred control of its fibre and mobile tower units to two infrastructure investment trusts set up by RIIHsL.
News Analysis