NSE Intra-day chart (02 November 2018)
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Market Commentary 05 November 2018
Markets to make pessimistic start on weak global cues


 

The Indian equities staged strong pullback to end the last trading day of the week with smart gains, aided by positive cues from global markets. After a fabulous start, the markets continued gaining momentum, buoyed by Finance Minister Arun Jaitley's statement that India can crack into top 50 if it improves on time taken for registering real estate, starting business and enforcement of contracts. Buying got boost also because of a private report that India's equity market capitalisation would grow at a compound annual rate of 12% to reach $6 trillion by 2028. Domestic sentiments were positive with the Finance Ministry's statement that Goods and Services Tax (GST) collections in October 2018 crossed the Rs 1 lakh crore mark, after a gap of 5 months, on the back of festive demand, anti-evasion measures. Adding some comfort, Labour Minister Santosh Kumar Gangwar said that as many as 10 million employees were added afresh to avail the benefits of Employees' State Insurance Corporation (ESIC) schemes and more than 10 million people came under the fold of the EPFO. However, in the last leg of the trade, the key indices pared some of their gains to settle the session off day's high points.  Trading sentiments got affected as leading stock exchange BSE will delist as many as nine companies from Monday as trading in their shares remained suspended for over 6 months. The market participants also got worried, as the US revoked duty-free concessions on import of at least 50 Indian products, mostly from handloom and agriculture sectors, reflecting the Trump administration's tough stand on trade-related issues with New Delhi. Traders took note of industry body, the Confederation of Indian Industry's (CII) statement that the country needs to focus on areas like registering property and enforcing contracts to get even better ranking in the World Bank's ease of doing business index in the coming years. Separately, Department of Industrial Policy & Promotion Secretary Ramesh Abhishek said that India hopes to rise up the World Bank's Ease of Doing Business index further next year by improving its performance in categories such as paying taxes and insolvency recovery. Finally, the BSE Sensex surged 579.68 points or 1.68% to 35,011.65, while the CNX Nifty was up by 172.55 points or 1.66% to 10,553.00.

 

The US markets ended lower on Friday, after moving notably higher over the past few sessions, amid confusion over prospects for a near-term resolution to the protracted US-China trade spat. Further, the downturn on markets was led by Apple (AAPL), with the tech giant tumbling by 6.6% to a nearly three-month closing low. The steep drop by Apple came after the company reported fiscal fourth quarter earnings and revenues that exceeded estimates but weaker than expected iPhone shipments. Apple also forecast fiscal first quarter revenues of $89 to $93 billion, with the midpoint below the consensus estimate of $93 billion. On the economic front, according to a report released by the Commerce Department, new orders for US manufactured goods increased by more than expected in the month of September. The Commerce Department said factory orders climbed by 0.7% in September after spiking by an upwardly revised 2.6% in August. Street had expected factory orders to rise by 0.5% compared to the 2.3% jump originally reported for the previous month. Besides, with the value of imports rising by more than the value of exports, the Commerce Department released a report showing the US trade deficit widened more than expected in the month of September. The report said the trade deficit widened to $54.0 billion in September from a revised $53.3 billion in August. Street had expected the trade deficit to widen to $53.6 billion. Meanwhile, a closely watched report released by the Labor Department showed employment in the US jumped by much more than anticipated in the month of October. Dow Jones Industrial Average dropped 109.91 points or 0.43 percent to 25270.83, Nasdaq declined 77.06 points or 1.04 percent to 7356.99 and S&P 500 was down by 17.31 points or 0.63 percent to 2723.06.

 

Crude oil futures closed lower on Friday, suffering from a fourth straight weekly loss, pressured by US plans to issue waivers on Iranian oil sanctions and growing global crude production. Secretary of State Michael Pompeo said the government expects to issue some temporary allotments to eight jurisdictions, but added that negotiations are still ongoing. Benchmark crude oil futures for December declined 55 cents or 0.9 percent to settle at $63.14 a barrel on the New York Mercantile Exchange. January Brent crude dropped 6 cents or less than 0.1 per cent to settle at $72.83 a barrel on London's Intercontinental Exchange.

 

Continuing strong recovery momentum for the second straight day, Indian rupee ended considerably stronger against dollar on Friday, on account of selling of American currency by banks and exporters amid softening crude oil prices. Traders took encouragement with finance minister Arun Jaitely's statement that India's target of being among the top 50 countries in World Bank's Ease of Doing Business Rankings looks plausible. Investors also took note of report stating that monthly goods and services tax (GST) collections breached the Rs 1-lakh-crore mark for the second time since its launch in July last year for September, giving the Centre some hope that the wide revenue gap against its budget target could be narrowed in the second half of the fiscal. The rise was also supported by the US unit's weakness against some currencies overseas along with strong gains in the local equity markets. On the global front, dollar steadied on Friday ahead of the closely watched US jobs report, after pulling back from 16-month highs in the previous session as investors cautiously moved back into riskier assets. Finally, the rupee ended at 72.45, Re 1 stronger from its previous close of 73.45 on Thursday.

 

The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 6931.64 crore against gross selling of Rs 5991.03 crore, while in the debt segment, the gross purchase was of Rs 767.24 crore with gross sales of Rs 197.09 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.46 crore against gross selling of Rs 0.05 crore.

 

The US markets ended lower on Friday amid contradictory accounts of expectations for a near-term resolution to a protracted US-China trade clash coupled with steep drop by Apple. Asian markets were trading in red on Monday, amid concern over whether trade tensions with China can be mended. Indian markets rallied on Friday, with Sensex settling near one-month high, tracking firm Asian markets over signs of easing trade tensions between the US and China, coupled with strong rupee amid fresh flow of foreign funds. Today, the markets are likely to make negative start of the holiday truncated week following weak global cues. Investors will be eyeing Services PMI data for the month of October to be out later in the day. Traders will be concerned about a private report stating that overseas investors pulled out a massive Rs 38,900 crore (over $5 billion) from the capital markets in October, the steepest outflow in nearly two years, on rising crude oil prices, depreciating rupee and worsening current account deficit. With this, the total outflow from the capital markets (equity and debt together) has reached over Rs 1 lakh crore so far this year. Also, there will be some cautiousness with an another private report saying with global crude prices remaining elevated, the rupee is likely to be under pressure, and may touch the 76 levels against the US currency over the next three months. However, some support may come with a report that consumer sentiment in India increased marginally in October as consumers remained upbeat about spending conditions despite turmoil in currency markets. Traders may take note of NITI Aayog's chief executive officer Amitabh Kant's statement that the country would be adding an additional $700 billion to its economy if its share of the women workforce increases to 48% from the present 24%. Meanwhile, about 75 lakh new tax filers have been added to the income tax payers list in the country this fiscal till now. The target for the taxman is to add 1.25 crore fresh tax filers by the end of the 2018-19 financial year that ends in March next year. There will be some buzz in banking sector stocks with report that the Finance Ministry is likely to finalise the second round of capital infusion for public sector banks (PSBs) towards the end of this month taking into account the latest quarter's performance. There will be some important earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,553.00

10,471.48

10,620.73

BSE Sensex

35,011.65

34,710.90

35,251.30

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

516.87

209.10

205.87

214.12

Coal India

381.31

261.55

258.80

264.40

Tata Motors

294.25

190.30

183.52

194.47

SBI

277.60

285.35

281.43

291.03

ICICI Bank

267.14

354.45

351.50

357.60

 

  • Hero MotoCorp has sold 734,668 units of motorcycles and scooters in October 2018, a growth of 16.4% over the corresponding month of the previous fiscal when the Company had sold 631,105 units. 
  • ICICI Bank has launched an instant digital credit facility to enable customers to buy small ticket items immediately in a completely digital and paperless manner. 
  • Bajaj Auto has registered a rise of 32% in total sales to 506,699 units in October 2018 against 382,464 units in October 2017. 
  • Coal India has reported provisional coal production of 49.77 MT in October 2018, as against 46.15 MT reported during corresponding month of previous year.
News Analysis