NSE Intra-day chart (04 April 2019)
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FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
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Market Commentary 05 April 2019
Benchmarks to make positive start amid firm Asian cues

 

Indian equity bourses failed to take any sense of relief from the Reserve Bank of India's (RBI) repo rate cut on Thursday, as Sensex and Nifty settled with losses of around 200 and 50 points, respectively. The RBI in its First Bi-Monthly Monetary Policy Statement, 2019-20, has cut the policy repo rate under the liquidity adjustment facility (LAF) ) by 25 basis points (bps) to 6.0% from 6.25% earlier for the second time in a row. After a cautious start, key indices remained lackluster throughout the session, amid a private report stating that Indian businesses are getting squeezed. As economic growth slows and inflation sinks they have little ability to raise prices without losing sales, and yet they are getting almost no relief from borrowing costs with lending rates remaining high. Adding more worries among traders, India's services sector grew at slower pace, on the back of a slower expansion in new work. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 52 in March from 52.5 in February. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- also slipped to 52.7 in March as against 53.8 in February. The markets extended their losses in the second half of the session to settle in red territory, after RBI Governor Shaktikanta Das said that even though the headline credit demand is growing at a healthy 14 percent, it is not broadbased while those to MSMEs have been muted so far. Das further said the RBI will continue to watch macroeconomic factors and will act timely on the same. Market participants overlooked 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. The street also paid no heed towards 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. Finally, the BSE Sensex declined 192.40 points or 0.49% to 38,684.72, while the CNX Nifty was down by 45.95 points or 0.39% to 11,598.00.

 

The US markets ended mostly higher on Thursday as investors continued to monitor trade talks between the US and China, which are reportedly in their final stretch. Meanwhile, Trump said the China talks were moving along nicely even while taking yet another swipe at the Federal Reserve for raising interest rates last year. At the same time, there are reportedly major hurdles to overcome regarding US desires to maintain some tariffs on Chinese goods as a means to ensure Chinese adherence to any deal. Besides, New York Fed President John Williams said that current monetary policy is appropriate for how the economy is performing. He also added that changes in long-run economic fundamentals, like lower growth potential and projected inflation, means that interest rates are likely to be lower for longer than what we saw in the 1990s. On the economic front, with the more closely watched monthly jobs report looming, the Labor Department released a report showing an unexpected decrease in first-time claims for US unemployment benefits in the week ended March 30. The report said initial jobless claims dipped to 202,000, a decrease of 10,000 from the previous week's revised level of 212,000. The drop surprised participants, who had expected jobless claims to inch up to 216,000 from the 211,000 originally reported for the previous week. With the unexpected decrease, initial jobless claims fell to their lowest level since hitting a matching number in December of 1969. The Labor Department said the less volatile four-week moving average also edged down to 213,500, a decrease of 4,000 from the previous week's revised average of 217,500. Dow Jones Industrial Average surged 166.50 points or 0.64 percent to 26384.63 and S&P 500 was up by 5.99 points or 0.21 percent to 2879.39, while Nasdaq declined 3.77 points or 0.05 percent to 7891.78.

 

Crude oil futures ended lower for second straight day on Thursday, while global benchmark Brent crude settled higher after briefly trading above the $70-a-barrel threshold for the first time since November. The upside was limited in part, amid broader financial market cautiousness, as investors eagerly await what could be a breakthrough in the trade negotiations between China and the US, though the final leg of negotiations has proven the most contentious. Benchmark crude oil futures for May dropped 36 cents or 0.6 percent to settle at $62.10 a barrel on the New York Mercantile Exchange.  However, June Brent crude gained 9 cents or 0.1 percent to settle at $69.40 a barrel on London's Intercontinental Exchange.

 

Snapping 3-day winning streak, Indian rupee ended considerably weaker against the American currency on Thursday, after the Reserve Bank of India delivered widely anticipated second rate cut of the year, but refrained from shifting to a more easy stance on monetary policy. Traders remain worried with the data indicating that the India's services sector grew at slower pace, on the back of a slower expansion in new work. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 52 in March from 52.5 in February. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- also slipped to 52.7 in March as against 53.8 in February. On the global front, dollar rose on Thursday as market players gained optimism amid the global trade situation and the U.S. jobs statistics. Finally, the rupee ended at 69.17, Rs 1.30 weaker from its previous close of 68.41 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 5965.39 crore against gross selling of Rs 6797.66 crore, while in the debt segment, the gross purchase was of Rs 4034.77 crore with gross sales of Rs 6212.74 crore. Besides in the hybrid segment, the gross buying was of Rs 7.09 crore against gross selling of Rs 1.22 crore.

 

The US markets ended mostly higher on Thursday as investors watched for more details about a potential trade deal between China and the US, while there was some cautiousness ahead of US payrolls data. Asian markets are trading in green in thin trade on Friday, following gain on Wall Street, amid holiday in China and Hong Kong. Indian markets extended their losses for second straight session on Thursday and settled lower with losses of around half a percent, after the Reserve Bank of India (RBI) cut its repo rate by 25 bps, as widely expected, but trimmed the growth and inflation outlook, saying the domestic economy is facing headwinds, especially on the global front. Today, the markets are likely to open in green tracking gains in Asian peers. Traders will be getting encouragement with Finance Secretary Subhash Chandra Garg's statement that the government is close to meeting fiscal deficit target of 3.4 per cent for 2018-19. The government in the interim Budget in February revised upward the fiscal deficit target to 3.4 per cent from 3.3 per cent of Gross Domestic Product (GDP) estimated earlier for the financial year ended March 31. Some support will also come with report that the Income Tax department said it added 1.07 crore new taxpayers while the number of dropped filers came down to 25.22 lakh in 2017-18, showing the positive impact of demonetisation. However, there may be some cautiousness as Fitch Ratings kept India's sovereign rating unchanged at the lowest investment grade of BBB- with a stable outlook. This is the 13th year in a row that Fitch has rated India at BBB-. Fitch had last upgraded the rating from BB+ to BBB- with a stable outlook on August 1, 2006. It said India's ratings balance a strong medium-term growth outlook and relative external resilience stemming from strong foreign reserve buffers, against high public debt, a weak financial sector and some lagging structural factors. Meanwhile, Chief Economic Advisor Krishnamurthy Subramanian has said the government and the RBI will work together to ensure smooth implementation of the Supreme Court's recent ruling on the central bank's stressed assets circular but ruled out changes in the Insolvency and Bankruptcy Code (IBC) due to the ruling. There will be some buzz in the banking sector stocks with report that the RBI said it will hold further discussions with banks on linking interest rates on personal, home, auto and MSME loans with various benchmark rates, a move that would further delay issuance of final guidelines on the issue. Also, there will be some reaction in agriculture related stocks with report that India has issued a combined 650,000 tonne import quota for pulses for the fiscal year to March 2020, allowing overseas purchases of protein-rich pulse varieties that are a staple of Indian cuisine.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,598.00

11,550.62

11,653.97

BSE Sensex

38,684.72

38,530.72

38,889.03

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

420.04

268.05

263.70

273.70

Tata Motors

412.69

206.15

202.50

208.35

SBI

278.32

321.80

318.15

325.60

Indiabulls Housing Finance

210.62

898.15

878.57

911.32

ZEEL

187.96

417.30

398.87

427.87

 

  • Reliance Industries' subsidiary -- Reliance Jio Digital Services has entered into a definitive business transfer agreement with Haptik Infotech. 
  • Bharti Airtel has launched of its e-book services which will be offered to subscribers through mobile app Airtel Books. 
  • NTPC's Vindhyachal Thermal Power Station has generated record 37,538.97 million units in 2018-19. 
  • Maruti Suzuki India has reported 20.9% fall in its production to 136,201 vehicles in March 2019, as compared to 172,195 vehicles in March 2018.
News Analysis