NSE Intra-day chart (05 February 2019)
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Market Commentary 06 February 2019
Markets to make optimistic start on positive cues from Asian peers

 

Indian equity benchmarks managed to eke out slender gains on Tuesday, with Sensex and Nifty settling above their crucial psychological levels of 36,600 and 10,900, respectively. After a cautious start, the markets traded volatile, as fiscal deficit or gap between Government's expenditure and revenue exceeded to Rs 7.01 lakh crore during April-December of the current financial year (FY19) and touched 112.4% of the full-year Budget Estimate (BE) of Rs 6.24 lakh crore on the back of lower revenue collections. Adding more anxiety among the traders, Moody's Investors Service said that fiscal slippage from the budgeted targets for the past two consecutive years and tax cuts and spending ahead of the general elections, is credit negative for India. Domestic sentiments also got hit after India's services sector activity cooled for the second straight month in January amid the weakest upturn in new work since last September. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index slipped to 52.2 in January from 53.2 in December. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - remained unchanged at 53.6 in January. However, in the second half of the session, the key indices managed to keep their heads above water, aided by S&P Global Ratings' statement that falling inflation and declining global crude oil prices have created space for the Reserve Bank of India (RBI) to cut interest rates. The RBI is scheduled to announce its sixth bi-monthly policy review for the fiscal on February 7. Some relief also came with the think tank vice chairman Rajiv Kumar's statement that the Niti Aayog is open to the idea of having a role in fund allocation to states for developmental expenditure and would discuss the matter with the 15th Finance Commission. The street reacted positively to Union Commerce Secretary Anup Wadhawan's statement that the country's exports in the current fiscal year are expected to surpass the earlier peak of $314 billion in 2013-14. The achievement comes against the backdrop of a very challenging global environment. The exports, in general, have been growing almost consistently for the last three years. Finally, the BSE Sensex gained 34.07 points or 0.09% to 36,616.81, while the CNX Nifty was up by 22.10 points or 0.20% to 10,934.35.

 

The US markets ended higher on Tuesday as investors continued to sort through corporate earnings. The continued strength on markets was partly attributed to reports of a meeting between Federal Reserve Chairman Jerome Powell and President Donald Trump on Monday, which eased concerns about relations between the central bank chief and the president. A statement from the Fed said Powell and Trump had an informal dinner to discuss recent economic developments and the outlook for growth, employment and inflation. Fed Vice Chairman Richard Clarida and Treasury Secretary Steven Mnuchin also attended the meeting. The Fed said Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook. Powell also told Trump the Fed's interest rate decisions will based solely on careful, objective and non-political analysis. Meanwhile, investors were awaiting Trump's State of the Union speech. Trump is set to deliver his State of the Union address at 9 pm Eastern time Tuesday. On the economic front, activity in the US service sector grew at a slower rate in the month of January, according to a report released by the Institute for Supply Management (ISM). The ISM said its non-manufacturing index fell to 56.7 in January from an upwardly revised 58.0 in December, although a reading above 50 still indicates growth in the service sector. With the bigger than expected decrease, the index dropped to its lowest level since a matching reading in July of last year. New order growth showed a significant slowdown compared to the previous month, with the new orders index slumping to 57.7 in January from 62.7 in December. The business activity index also fell to 59.7 in January from 61.2 in December, while the employment index rose to 57.8 from 56.6. Dow Jones Industrial Average surged 172.15 points or 0.68 percent to 25411.52, S&P 500 gained 12.83 points or 0.47 percent to 2737.70 and Nasdaq was up by 54.55 points or 0.74 percent to 7402.08.

 

Crude oil futures ended lower on Tuesday as investors weighed concerns about global energy demand against the price-supportive reports from the political crisis in Venezuela. Meanwhile, as per a report, the Organization of the Petroleum Exporting Countries (OPEC) officials said that Saudi Arabia and its Persian Gulf allies were looking to create a formal partnership with a 10-nation group led by Russia to manage the world's oil market. The officials also said those oil-producing nations would debate the proposal during the week of February 18 Vienna, with the potential for a final deal when they meet in April. Benchmark crude oil futures for March dropped 90 cents or 1.7 percent to settle $53.66 a barrel on the New York Mercantile Exchange. April Brent crude declined 53 cents or 0.9 percent to settle at $61.98 a barrel on London's Intercontinental Exchange.

 

Reversing its two-session steep fall, the rupee bounced back to end higher against the US currency on Tuesday, on persistent selling of the American currency by exporters. Sentiments turned optimistic with S&P Global Ratings' statement that falling inflation and declining global crude oil prices have created space for the Reserve Bank of India (RBI) to cut interest rates. The RBI is scheduled to announce its sixth bi-monthly policy review for the fiscal on February 7. The upbeat trend was supported by Union Commerce Secretary Anup Wadhawan's statement that the country's exports in the current fiscal year are expected to surpass the earlier peak of $314 billion in 2013-14. The achievement comes against the backdrop of a very challenging global environment. On the global front, dollar held on to recent gains against its peers on Tuesday, supported by a recovery in investor risk appetite, which helped push up US yields during the previous session. Finally, the rupee ended at 71.57, 23 paise stronger from its previous close of 71.80 on Monday.

 

The FIIs as per Tuesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3984.23 crore against gross selling of Rs 4879.38 crore, while in the debt segment, the gross purchase was of Rs 441.34 crore with gross sales of Rs 1975.99 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.03 crore against gross selling of Rs 0.86 crore.

 

The US markets ended higher on Tuesday, as stronger-than-expected earnings reports from some consumer discretionary companies. Asian markets were trading in green on Wednesday as investors waited to see if US President Donald Trump drops any hints of progress on tariffs in his State of the Union speech. Indian benchmark indices ended Tuesday's range bound session with minor gains as investors avoided big bets due to the three-day Reserve Bank of India's (RBI) Monetary Policy Committee meeting got under way. Today, Indian markets are likely to make optimistic start, mirroring positive cues from its Asian peers. Traders will be getting some encouragement with the finance ministry expecting economic growth to accelerate to 7.5% in 2019-20 from 7.2% projected for the current fiscal. There will be some support as the government expressed hope that the country's exports that are currently growing at 10% will maintain the pace this fiscal. Commerce Secretary Anup Wadhawan said trade deficit is not going to be a matter of any worry. Traders may take note of the United Nations' latest report that India is among the several countries that stand to benefit from the ongoing trade tensions between the world's top two economies - the US and China. Besides, the International Monetary Fund said that greater efforts will be needed to reduce the fiscal deficit as the interim budget envisages a slower pace of fiscal consolidation than previously planned. It added in that regard, further steps to increase GST compliance will be critical to reach budgeted revenue goals. Meanwhile, capital markets regulator SEBI has asked exchanges to step up their surveillance of intra-day trading in the wake of significant volatility in a few stocks. The stocks under the scanner include those of a troubled airline, a media conglomerate facing liquidity crunch, a finance company under lens for alleged payment defaults, a pharma major being probed for insider trading and other violations as also a mining-to-infrastructure major. There will be some buzz in the banking sector stocks with India Ratings' report that around Rs 3.5 lakh crore or 3.9% of the stressed corporate loans continue to remain unrecognised on the books of banks and nearly 40% of them may become dud assets by September 2020. Also, there will be some reaction in broadcasting industry stocks with  Crisil's report that the new tariff regime by the Telecom Regulatory Authority of India (TRAI), which came into effect on February 1, may put the control of TV viewing in the customers' hand, but is also likely to increase their monthly bill and it will benefit popular channels. There will be some important result announcements to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,934.35

10,895.13

10,965.13

BSE Sensex

36,616.81

36,499.15

36,731.15

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

444.78

176.10

172.90

181.40

Vedanta

143.53

162.60

158.40

165.65

SBI

132.91

284.65

282.77

286.77

Bharti Airtel

132.29

308.20

296.82

315.62

ICICI Bank

121.97

352.65

348.97

356.22

 

  • M&M is conducting proactive inspection of Rear Axles on its Imperio vehicles manufactured between April 2018 and June 2018. 
  • Wipro has setup the Chair for Artificial Intelligence at the Swinburne University of Technology, Melbourne, Australia. 
  • Tata Steel has kicked off the 30th Road Safety Week 2019 celebrations across all its operating units.   
  • Tech Mahindra has reported a rise of 27.55% in its net profit at Rs 1202.90 crore for Q3FY19 as compared to Rs 943.10 crore for Q3FY18.
News Analysis