NSE Intra-day chart (06 February 2019)
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Market Commentary 07 February 2019
Markets to make a cautious start ahead of RBI policy decision

 

Indian equity benchmarks ended Wednesday's trading session near their intraday high points. The start of day was positive, with the finance ministry expecting economic growth to accelerate to 7.5% in 2019-20 from 7.2% projected for the current fiscal. Domestic sentiments also got cheer, after the UN Conference on Trade and Development (UNCTAD) latest report said 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. As per the report, US and China's tariffs will divert trade to other countries, with this India is likely to see rise of 3.5% in exports, while the European Union will be the biggest winner. Adding some optimism among traders, the Minister of Petroleum and Natural Gas & Skill Development and Entrepreneurship Dharmendra Pradhan said that India has emerged as a bright spot in the global economy in the recent years. He also added that with strong economy and supportive policy environment, the Government remains committed to inclusive, holistic and sustainable high economic growth. Rally continued on the street in the second half of the session, amid report that Commerce Ministry met Export Promotion Councils to discuss various issues being faced by exporters and examine ways by which India's merchandise exports may reach $ 325 billion by March 2019. Positivity remained among the investors with a report stating that the income tax e-returns filed for the April-January period has grown by over 37 percent compared with the corresponding period in FY18. While over 6.3 crore taxpayers filed returns in the first ten months of the fiscal, the government is expecting 7.6 crore returns to be filed by the end of FY19 compared with 6.9 crore in FY18. Traders overlooked the International Monetary Fund's (IMF) statement 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. The market participants also paid no heed towards a private report stating that the Indian rupee is set to underperform against the dollar again this year, weighed down by uncertainty ahead of a national election in May, but is unlikely to retest life-time lows. Finally, the BSE Sensex gained 358.42 points or 0.98% to 36,975.23, while the CNX Nifty was up by 128.10 points or 1.17% to 11,062.45.

 

After gaining in last few session, the US markets ended marginally lower on Wednesday on account of profit booking.  Further, some cautiousness also prevailed in the markets after President Donald Trump's State of the Union address offered few details on his economic agenda. However, the president insisted China commit to real, structural economic reforms before a trade deal can be reached. In his speech to the nation, Trump said he had great respect for Chinese President Xi Jinping, adding that the two leaders are working on a new trade deal, while insisting that any agreement include real, structural change to end unfair trade practices, reduce our chronic trade deficit and protect American jobs. Meanwhile, Treasury Secretary Steven Mnuchin said that he and US trade representative Robert Lighthizer would travel to Beijing next week to continue negotiations over the continuing trade dispute, as the administration-imposed March 1 deadline for a deal approaches, after which the president has threatened to expand tariffs on Chinese imports. On the economic front, a government shutdown-delayed report released by the Commerce Department showed the US trade deficit narrowed by much more than anticipated in the month of November. The Commerce Department said the trade deficit narrowed to $49.3 billion in November from a revised $55.7 billion in October. The much narrower than expected deficit largely reflected a steep drop in the value of imports, which plunged by 2.9 percent to $259.2 billion in November after rising by 0.4 percent to $266.9 billion in October. The report said the value of exports also fell by 0.6 percent to $209.9 billion in November after edging down by 0.1 percent to $211.2 billion in October. Notable decreases in exports of industrial supplies and materials, gem diamonds, and drugs were partly offset by a jump in exports of civilian aircraft. Dow Jones Industrial Average declined 21.22 points or 0.08 percent to 25390.30, S&P 500 dropped 6.09 points or 0.22 percent to 2731.61 and Nasdaq was down by 26.80 points or 0.36 percent to 7375.28.

 

Crude oil futures ended higher on Wednesday after weekly US government data revealed smaller-than-expected increases in domestic crude and gasoline supplies. The Energy Information Administration (EIA) reported that domestic crude supplies rose by 1.3 million barrels for the week ended February 1. That was smaller than the 3.7 million-barrel rise expected by S&P Global Platts. American Petroleum Institute data showed an increase of 2.5 million barrels. According to report, gasoline stockpiles edged up by 500,000 barrels last week, while distillate stockpiles were down 2.3 million barrels. However, concerns surrounding a potential slowdown in global energy demand limited the gain for prices. Benchmark crude oil futures for March gained 35 cents or 0.7 percent to settle $54.01 a barrel on the New York Mercantile Exchange. April Brent crude rose 71 cents or 1.2 percent to settle at $62.69 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally higher against dollar on Wednesday, as bankers and exporters took to selling of American currency. Market participants took some support with the finance ministry expecting economic growth to accelerate to 7.5% in 2019-20 from 7.2% projected for the current fiscal. However, local unit cut most of the early gains, as anxiety remained among the traders with a private report stating that the Indian rupee is set to underperform against the dollar again this year, weighed down by uncertainty ahead of a national election in May, but is unlikely to retest life-time lows. On the global front, dollar settled near a two-week high versus its rivals on Wednesday as US President Donald Trump's State of the Union speech failed to surprise currency traders with markets more focused on the near-term outlook for monetary policy. Finally, the rupee ended at 71.56, 1 paise stronger from its previous close of 71.57 on Tuesday.

 

The FIIs as per Wednesday'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 3358.23 crore against gross selling of Rs 2643.48 crore, while in the debt segment, the gross purchase was of Rs 44.63 crore with gross sales of Rs 907.62 crore. Besides, in the hybrid segment, the gross selling was of Rs 1.78 crore against no buying.

 

The US markets ended lower on Wednesday as investors weighed corporate earnings against persistent concerns over trade and another government shutdown. Asian markets were trading mostly in green on Thursday as regional investors began to return from their Lunar New Year break, though Tokyo edged lower after a negative lead from Wall Street. Extending gains for fifth straight session, Indian markets ended near intraday high levels on Wednesday, as investors' sentiment was buoyed by a slew of upbeat quarterly results. Today, the markets are likely to make a cautious start ahead of the Reserve Bank of India's (RBI) monetary policy decision amid mixed global cues. The RBI is likely change its monetary policy stance to neutral from calibrated tightening at its Monetary Policy Committee meeting outcome. However, traders may take some support later in the day with Moody's Investors Service's statement that the direct cash transfer programme for farmers and tax relief steps for the middle-class will give a fiscal stimulus of about 0.45 percent of GDP, and support growth through increased consumption, though at a fiscal cost. Some support may also come with a report that the government has allowed export of bio-fuels from special economic zones (SEZs) and export-oriented units (EoUs) with certain conditions, according to a notice of the directorate general of foreign trade. In August 2018, the government imposed restrictions on export of bio-fuels for non-fuel purposes. Besides, the government has decided to raise additional Rs 36,000 crore through dated securities to fund its expenses during the current financial year. Meanwhile, the union cabinet approved a Bill to set up a unified authority for regulating all financial services in international financial services centers (IFSCs) in the country. There will be some buzz in the power sector stocks with report that the government gave its nod to a proposal for setting up 12,000 MW grid-connected solar photovoltaic (PV) power projects with an estimated viability gap funding of Rs 8,580 crore. Also, there will be some reaction in broadcasting sector stocks with report that rubbishing claims that the new broadcast tariff regime would increase bill amounts of cable TV and DTH subscribers, the Telecom Regulatory Authority of India (Trai) said the new framework may actually decrease TV bills. 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

11,062.45

10,992.57

11,102.47

BSE Sensex

36,975.23

36,768.99

37,093.36

           

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

453.91

176.45

173.32

179.27

ZEEL

251.13

388.00

370.67

401.67

ICICI Bank

153.96

359.30

354.37

363.07

Tech Mahindra

148.61

811.35

785.40

825.90

Vedanta

131.41

163.75

159.33

166.58

 

  • HCL Technologies has partnered with Harris Geospatial Solutions Inc. to provide an Al driven, remote sensing data analytics system for its utilities customers. 
  • NTPC has inked an agreement with HDFC Bank for Rs 2,500 crore loan to part finance capital expenditure. 
  • Maruti Suzuki India has reported 15.60% rise in its production to 183,064 vehicles in January 2019, as compared to 158,396 vehicles in January 2018. 
  • HPCL has reported a fall of 87.30% in its net profit at Rs 247.55 crore for Q3FY19 as compared to Rs 1,949.69 crore for Q3FY18.
News Analysis