NSE Intra-day chart (04 September 2019)
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FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
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Market Commentary 05 September 2019
Markets to start on positive note on supportive global cues

 

Indian equity benchmarks managed to settle in positive terrain on Wednesday's highly volatile session. After a cautious start, indices altered between green & red terrain, amid Care Ratings' report that the ongoing economic slowdown that India is witnessing may be because of weak investment growth. Two catalysts of investment - demand and availability of funds - have witnessed weak growth in the preceding months. Adding more worries on the street, India's services sector activity expanded at a slower pace in the month of August, impacted by slower rise in new business inflows. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 52.4 in August from 53.8 in July.  However, markets staged recovery in second half of the session, on the back of firm cues from global markets. Traders took support with reports that India's central bank recommended a slew of measures for developing a secondary market for corporate loans, including easing of regulations to allow foreign portfolio investors (FPIs) to directly purchase distressed loans from banks. Further, market participants also got comfort, as SME Minister Nitin Gadkari has called a meeting of heads of banks, finance ministry officials, and CEOs of various of central PSUs on September 5 to sort out the problem of delayed payments being faced by small and medium enterprises. Finally, the BSE Sensex gained 161.83 points or 0.44% to 36,724.74, while the CNX Nifty was up by 46.75 points or 0.43% to 10,844.65.

 

The US markets ended higher on Wednesday as a survey on business conditions in the Federal Reserve's key districts showed that economic activity in nonfinancial service sectors was steady or improving even while manufacturing and agriculture were unsurprising weak spots. The strength on markets also came in amid easing tensions in Hong Kong. Hong Kong's chief executive withdrew a controversial extradition bill that sparked months of protests and as fears that the United Kingdom would leave the European Union without an exit agreement faded, after Parliament voted to require Prime Minister Boris Johnson to ask the European Union to extend the deadline for leaving beyond October 31 if a deal is not reached by then. On the economic data front, reflecting an increase in exports and a modest decrease in imports, the Commerce Department released a report showing the US trade deficit narrowed in the month of July. The Commerce Department said the trade deficit narrowed to $54.0 billion in July from a revised $55.5 billion in June. Street had expected the deficit to narrow to $53.5 billion from the $55.2 billion originally reported for the previous month. The narrower trade deficit came as the value of exports climbed by 0.6 percent to $207.4 billion in July after plunging by 1.9 percent to $206.2 billion in June. A jump in drug exports contributed to the rebound along with increases in exports of capital goods and automotive vehicles, parts, and engines. On the other hand, the report said the value of imports edged down by 0.1 percent to $261.4 billion in July after tumbling by 1.7 percent to $261.8 billion in the previous month.

 

Crude oil futures ended higher with gains of over four percent on Wednesday, as investors focused on geopolitical optimism and forecasts for shrinking US supplies ahead of closely-followed weekly inventory report. The Energy Information Administration (EIA) is expected to report a decline of 3 million barrels in domestic crude supplies for the week ended August 30. Besides, Data showing an acceleration in China's service sector growth in August aided sentiment. The private survey report said activity in China's services sector expanded at the fastest pace in three months in August. The Services Purchasing Managers' Index for the month of August came with reading of 52.1, up from 51.6 in July, despite broader economic headwinds. Benchmark crude oil futures for October surged $2.32 or 4.3 percent to settle at $56.26 a barrel on the New York Mercantile Exchange. November Brent rose $2.44 or 4.2 percent to settle at $60.70 a barrel on London's Intercontinental Exchange.

 

After yesterday's steep losses, Indian rupee gained ground against dollar and ended higher on Wednesday, on persistent selling of the American currency by exporters. Traders took support with reports that India's central bank recommended a slew of measures for developing a secondary market for corporate loans, including easing of regulations to allow foreign portfolio investors (FPIs) to directly purchase distressed loans from bank. Also, last hour recovery in local equity markets and dollar losing sheen against some other currencies overseas gave the uptrend some momentum. Traders overlooked report that India's services sector activity expanded at a slower pace in the month of August, impacted by slower rise in new business inflows. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 52.4 in August from 53.8 in July. On the global front, dollar extended its fall on Wednesday following disappointing manufacturing data, helping the euro to recover from more than two-year lows. Finally, the rupee ended at 72.12, 27 paise stronger from its previous close of 72.39 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3202.94 crore against gross selling of Rs 6365.92 crore, while in the debt segment, the gross purchase was of Rs 2531.23 crore with gross sales of Rs 691.52 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.02 crore against gross selling of Rs 11.12 crore.

 

The US markets ended higher on Wednesday following the release of the Federal Reserve's Beige Book, which said the US economy expanded at a modest pace through the end of August. Asian markets are trading in green in early deals on Thursday as apparent progress in the political crises in Britain and Hong Kong gave investor confidence a shot in the arm, with easing fears of a hard Brexit lifting the battered pound. Indian equity markets witnessed a volatile session on Wednesday but managed to end positive, lifted by financials, Telecom and metal stocks.  Today, the start is likely to be good on positive global cues and traders will be getting encouragement with report that foreign direct investment (FDI) equity inflows rose 28% in the first quarter of 2019-20 to $16.3 billion from $12.7 billion in the year-ago period. Singapore continued to be the top source of FDI at $5.3 billion, followed by Mauritius ($4.6 billion). There will also be some support on report that a top advisory body on external trade will meet next week to discuss issues related to export promotion, domestic manufacturing and competitiveness in the wake of a fall in exports of traditional, employment-generating sectors such as gems and jewellery, leather, handloom and cotton yarn and fabrics.  The commerce and industry minister chaired Board of Trade (BoT), which advises the government on foreign trade policy (FTP), will meet on September 12. It last met in June when it was merged with the Council of Trade Development and Promotion to streamline the consultation process with all stakeholders for promoting trade. However, there will be some cautiousness latter in the day on report that domestic rating agency Crisil has slashed its GDP forecast for FY20 to 6.3% from 6.9% earlier. The downward review comes days after GDP growth slowed down to a 25-quarter low of 5 percent in the June quarter which significantly is even lower than Pakistans 5.4% growth and is due to the slump in private consumption and a near stalling of manufacturing activities. There will be some reaction in Automobile related stocks on report that Auto industry body Society of Indian Automobile Manufacturers (SIAM) said the industry, which has been reeling under a prolonged slump, is staring at a difficult road ahead for the rest of the year due to transition to BS-VI emission norm from BS-VI by April 2020. It said on an average each vehicle manufacturer is spending close to Rs 1,000 crore to upgrade all of their model line-up to meet the new emission norm within a short span. The banking stocks will keep buzzing on report that the Reserve Bank of India (RBI) has made it mandatory for banks to link all new floating-rate loans for housing, auto and MSMEs to external benchmark like repo from October 1, a move aimed at ensuring faster transmission of policy rate cuts to borrowers. There will also some buzz in travel and tourism stocks with World Economic Forum (WEF) in its latest report stating that India has moved up six places to rank 34th on world travel and tourism competitiveness index, driven by rich natural and cultural resources and strong price competitiveness. India's ranking improved from 40th to 34th, the greatest improvement over 2017 among the top 25 per cent of all countries ranked in the report.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,844.65

10,774.42

10,886.82

BSE Sensex

36,724.74

36,497.42

36,864.19

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,437.42

59.45

57.70

60.75

Tata Motors

763.17

109.50

106.00

113.00

Sun Pharmaceutical

339.52

426.45

408.68

436.83

SBI

273.10

275.10

269.62

278.22

ICICI Bank

186.15

397.50

391.72

401.47

 

  • SBI has inked pact with ESIC for direct transfer of benefits electronically into bank accounts of all stakeholders.
  •  ICICI Bank has set the target for retail loan disbursement at Rs 4,900 crore in Uttar Pradesh for 2019-20, marking a growth rate of 23 per cent over the last year.
  •  NTPC has commissioned along with IOC its first EV charging station at an IOC petrol pump in Greater Noida, Uttar Pradesh.
  •  HDFC Bank has launched a 3rd Kaushal College in Gumla in the state of Jharkhand under Parivartan.
News Analysis