NSE Intra-day chart (05 March 2018)
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Market Commentary 06 March 2018
Markets likely to make positive start on firm global cues

                                                                     

Monday turned-out to be a disappointing day of trade for Indian equity benchmarks, where frontline gauges lost around a percentage point to end below their crucial 33,800 (Sensex) and 10,400 (Nifty) levels. After making a pessimistic start, domestic gauges traded in red terrain throughout the day, as traders remained concerned with US President Donald Trump's statement that he would impose tariffs on imports of steel and aluminium products, in a move he said would protect US industry. Sentiments remained dampened with report that activity in India's service industries contracted in February for the first time since November as rising price pressures led to a decline in new businesses orders. The seasonally adjusted Nikkei India Services Business Activity Index fell from 51.7 in January to 47.8 in February, its lowest level since August. Adding to the pessimism, foreign investors have pulled out more than Rs 11,000 crore from Indian stocks in February 2018 amid better opportunities in other emerging markets. This is the largest outflow in five months. However, the total inflow by foreign portfolio investors (FPIs) in the Indian equity markets stood at Rs 13,781 crore in January 2018. Traders failed to get any sense of relief with Finance Minister Arun Jaitley's statement that India would retain its position of fastest growing economy in the coming decades, like China did in the last three decades. He said, the way the situation in the world is changing there is a great opportunity that has come in the way of India. Market participants also overlooked report that the BJP expanded its foothold in northeast with its stunning victory in Tripura polls and improved performance in Meghalaya and Nagaland elections, boosting its prospects for 2019 Lok Sabha polls. Finally, the BSE Sensex tumbled 300.16 points or 0.88% to 33,746.78, while the CNX Nifty was down by 99.50 points or 0.95% to 10358.85.

 

The US markets closed higher on Monday, with the Dow Jones Industrial Average bouncing back from a four-session losing streak, as investors looked beyond the threat of a global trade war and instead focused on positive economic data. A technical rebound following a stretch of weakness for equities also helped to support broad market gains. On the economy front, growth in China's services sector pulled back in February but remained in sight of the almost six-year high recorded in January. The Caixin-Markit services purchasing managers' index dipped to 54.2 in February from 54.7 in the previous month, a 68-month high. That kept the reading well above the 50-point line separating expansion from contraction. Companies reported solid sales while hiring in the services sector offset a fall in headcounts at manufacturers. The services gauge, combined with the improved 51.6 reading for the country's manufacturing sector, resulted in a composite PMI of 53.3, down from the seven-year high in January of 53.7. Separately, US services sector activity slowed slightly in February, held back by a sharp pull back in employment growth, but a surge in new orders to a twelve and a half year high pointed to underlying strength. The ISM said its non-manufacturing activity index slipped 0.4 point to a reading of 59.5 last month. The Dow Jones Industrial Average added 336.7 points or 1.37 percent to 24,874.76, the Nasdaq gained 72.839 points or 1.00 percent to 7,330.70, and the S&P 500 was up by 29.69 points or 1.10 percent to 2,720.94. 

 

Crude oil futures edged higher on Monday, amid reports that Libya is suffering supply interruptions. A major pipeline went down on March 4, the second important Libyan installation to go down in the past few weeks. Also, traders weighed comments from the International Energy Agency (IEA) on U.S. production and global demand growth. The IEA forecasted that the U.S. would become the world's top crude producer by 2023 with production hitting a record of 12.1 million barrels a day. The IEA said that rising oil production from the U.S. alone will need to cover 80% of the world's demand growth over the next two years, with U.S. output set to grow by 3.7 million barrels per day over the next five years. Benchmark crude oil futures for April delivery rose $1.32 cents or 2.2 percent at $62.57 a barrel on the New York Mercantile Exchange. May Brent crude gained $1.17 or 1.8 percent to settle at $65.54 a barrel on London's Intercontinental Exchange.

 

Indian rupee pared most of its early gains but still ended higher against the dollar on Monday, due to selling of the American currency by exporters and banks. Traders took some support with Finance Minister Arun Jaitley's statement that India would retain its position of fastest growing economy in the coming decades, like China did in the last three decades. He said, the way the situation in the world is changing there is a great opportunity that has come in the way of India. However, gains were capped as some concern came with the report that foreign investors have pulled out more than Rs 11,000 crore from Indian stocks in February 2018 amid better opportunities in other emerging markets. This is the largest outflow in five months. Besides, heavy selling in the domestic equity markets also weighed on the sentiments. On the global front, US dollar fell against yen on Monday amid continued concerns over US protectionism. Finally, the rupee ended at 65.10, 5 paise stronger from its previous close of 65.15 on Thursday.

 

The FIIs as per Monday'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 5684.01 crore against gross selling of Rs 5260.22 crore, while in the debt segment, the gross purchase was of Rs 1071.83 crore with gross sales of Rs 2190.16 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.37 crore against gross selling of Rs 3.33 crore.

 

The US markets closed higher on Monday ahead of the Labor Department's monthly employment report due to be released on Friday. Asian markets were trading mostly in green after U.S. President Donald Trump faced growing pressure from political allies to pull back from proposed steel and aluminum tariffs, easing investor worries about an imminent trade war. Indian equity markets ended lower for fourth straight session on Monday, as weak global cues overshadowed the BJP's spectacular performance in recently-held elections in three North Eastern states. Today, the markets are likely to make an optimistic start following firm global cues. Traders will be getting some support with report that the economy will grow up to 7.5 per cent in FY19, supported by domestic consumption, policy push, and synchronised global growth. In the current fiscal, GDP growth is expected to be 6.5 per cent. The Economic Survey 2018 has pegged FY19 growth at 7-7.5 per cent. Some support will also come with report that the Centre will constitute a group to suggest necessary changes in the policy for special economic zones (SEZs). Designed to facilitate exports, units in SEZs get certain fiscal and non-fiscal incentives such as no licencing required for imports and full freedom of sub-contracting, as well as direct and indirect tax benefits. Market participants may also get support with report that the Reserve Bank of India (RBI) will inject Rs 1 lakh crore short term money into the banking system ahead of the financial year-end that normally sees cash crunch.  The move is likely to keep short term rates under check benefiting borrowing companies. Stocks related to steel sector will be buzzing on report that export of steel to the US from various countries is likely to fall by 9-14 million tonne(MT) as Trump government decides to impose higher tariff on import of steel and aluminium. There will be buzz in stocks related to apparel on report that the pace of growth in country's apparel exports will depend on the industry's ability to wade through the new taxation and export incentive regime and intense global competition.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,358.85

10,312.27

10,417.07

BSE Sensex

33,746.78

33,588.70

33,969.57

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

SBI

184.85

263.50

259.83

266.08

Tata Motors

146.65

352.05

345.18

363.83

ICICI Bank

144.56

303.35

299.60

306.80

Hindalco Industries

124.25

229.60

226.53

234.33

Tata Steel

97.85

655.90

648.70

666.20

  

  • NTPC has declared Unit 1&2 of Singrauli Small Hydro Electric Power Project on commercial operation with effect from March 5, 2018. 
  • Maruti Suzuki's Alto has scaled the unique feat of 35 lakh sales in cumulative wholesales. 
  • BPCL's arm -- BPRL has received approval from the Government of Mozambique for the Golfinho-Atum Field Development Plan. 
  • Tata Motors has unveiled a special edition of its compact sedan Zest, with 1.3 litre diesel engine and 13 additional features, priced at Rs 7.53 lakh.
News Analysis