NSE Intra-day chart (11 October 2019)
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Market Commentary 14 October 2019
Markets to get a cautious start amid weak IIP data

 

Indian equity bourses bounced back in green terrain on Friday after yesterday's drubbing, with Sensex & Nifty closing higher by over 0.60% each. The start of the day was firm, aided with Union Finance Minister Nirmala Sitharaman's statement that the government is giving sector-specific solutions to fight the slowdown in economic growth. Hinting at other measures like steps to improve exports, easing credit, making more money available by early repayments to vendors and front-loading of banks recapitalisation, Sitharaman said the government has been working on sector-specific measures. But, volatility hit markets in noon deals, as Ind-Ra slashed India's GDP growth forecast for FY20 to 6.1% for the second time in two months. Despite some volatility, key benchmarks managed to trade in green, taking support with an EEPC India's analysis report showing that India's engineering exports to China have gone up by an annualised 58 per cent in August, 2019, bucking the trend of drop in overall exports to the world market. Some support also came with reports that the government set up a high-level committee of officers to look into revenue shortfall being faced by the states and suggest measures for augmenting collections. Separately, India jumped two levels to 7th position in the Brand Finance Nation ranking of 2019 despite the reduction in the overall economic growth due to slowdown in the manufacturing and construction sectors. Finally, the BSE Sensex gained 246.68 points or 0.65% to 38,127.08, while the CNX Nifty was up by 70.50 points or 0.63% to 11,305.05.

 

The US markets ended higher with gains of over one percent on Friday as traders expressed continued optimism about US-China trade talks, with President Donald Trump announcing that the two economic superpowers have reached a very substantial phase one deal. Trump said the deal includes up to $40 to $50 billion in Chinese purchases of US agricultural products as well as Chinese concessions on intellectual property and financial services. In exchange for the concessions by China, the US has agreed to hold off on an increase in tariffs originally scheduled for next week. Trump said the agreement will take about three weeks to write and would likely be signed by both sides by the Asia-Pacific Economic Cooperation summit in Chile in November. On the economic front, a report released by the Labor Department showed an unexpected increase in US import prices in the month of September, although the report also showed an unexpected decrease in export prices. The Labor Department said import prices rose by 0.2 percent in September after dipping by a revised 0.2 percent in August. Meanwhile, the report said export prices slipped by 0.2 percent in September after sliding by 0.6 percent in August. Export prices had also been expected to come in unchanged. Besides, with consumers anticipating larger income gains and lower inflation during the year ahead, the University of Michigan released preliminary data unexpectedly showing a continued improvement in US consumer sentiment in the month of October. The report said the consumer sentiment index climbed to 96.0 in October after rising to 93.2 in September. The continued increase surprised participants, who had expected the index to drop to 92.0. The consumer sentiment index continued to recover after plummeting to a nearly three-year low of 89.8 in August. Dow Jones Industrial Average rose 319.92 points or 1.21 percent to 26816.59, Nasdaq gained 106.27 points or 1.34 percent to 8057.04 and S&P 500 was up by 32.14 points or 1.09 percent to 2970.27.

 

Extending previous session's gains, crude oil futures ended higher with gains of over two percent on Friday on supply concerns after an Iranian oil tanker exploded in the Red Sea after being hit by missiles launched from the Saudi Arabian port of Jeddah. Besides, oil prices also got support after reports that the US and China has reached an agreement to ease trade tensions that includes the elimination of at least some planned tariffs. Meanwhile, the International Energy Agency (EIA) in a monthly report has said it expects global demand growth of 1 million barrels a day in 2019 and 1.2 million barrels a day, in the following year. IEA attributed the downgrades of roughly 100,000-a-barrel-a-day from previous estimates for demand that has shaped up to be the weakest since 2016, following evidence of a slowdown in several major consuming regions and countries, including Europe, India, Japan, Korea and the US. Benchmark crude oil futures for November surged $1.15 or 2.2 percent to settle at $54.70 a barrel on the New York Mercantile Exchange. December Brent rose $1.41 or 2.4 percent to settle at $60.51 a barrel on London's Intercontinental Exchange.

 

Indian rupee pared most of its early gains but still ended marginally higher against dollar on Friday, driven by weakening of the greenback in overseas markets. Traders found some solace with Union Finance Minister Nirmala Sitharaman's statement that the government is giving sector-specific solutions to fight the slowdown in economic growth. But most of the gains were trimmed as anxiety remained among the traders with India Ratings and Research (Ind-Ra) slashing the country's gross domestic product (GDP) forecast for current fiscal year (FY20) to 6.1% for the second time in two months. Traders were also looking forward to the index of industrial production (IIP) data for August scheduled to be announced after the market hours. On the global front, Pound rose against the Dollar for a second consecutive session Friday after British and Irish Prime Ministers said they can see a path toward a long elusive Brexit deal, prompting Deutsche Bank to walk away from a bet against Sterling, which is also benefiting from hopes of a deal between the U.S. and China. Finally, the rupee ended at 71.02, 5 paise stronger from its previous close of 71.07 on Thursday.

 

The FIIs as per Friday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4823.78 crore against gross selling of Rs 4903.60 crore, while in the debt segment, the gross purchase was of Rs 665.88 crore with gross sales of Rs 1460.14 crore. Besides In the hybrid segment, the gross buying was of Rs 6.00 crore against gross selling of Rs 7.88 crore.

 

The US markets ended higher on Friday after President Donald Trump said China and the US reached the first phase of a substantial trade deal that delays tariff hikes that were set to kick in next week. Asian markets are trading in green on Monday as sentiment improved following last week's high-level trade negotiations between the US and China. Indian markets ended with modest gains on Friday led by gains in IT, metal and auto stocks, amid positive global cues. Today, the start of new week is likely to be cautious amid weak industrial growth data and economic growth concerns. The National Statistical Office (NSO) data showed that India's factory output shrank by 1.1% in August, recording the poorest performance in seven years due to a sharp decline in production of capital goods and consumer durable. Industrial production growth for the first time in more than two years has treaded into negative territory. Besides, the World Bank slashed its growth forecast for India's current fiscal year to 6%, down from 7.5%, warning that the severe slowdown could further weaken the country's stuttering financial sector. Market participants will be looking ahead to the wholesale price (WPI) and consumer price (CPI) inflation prints for September to be released later in the day. Traders will be concerned with report that foreign portfolio investors withdrew over Rs 6,200 crore from Indian capital markets in the first two weeks of October, as global recession fears and trade war concerns weighed on sentiments. Also, there will be some cautiousness as the International Monetary Fund looks at India as a country that recognizes the need for an environmentally sustainable development strategy as the global community gears up for a decisive fight against climate change. However, some support may come later in the day with firm global cues. Investors may take note of report that the country's foreign exchange reserves surged by $4.24 billion to touch a record high of $437.83 billion in the week to October 4. Meanwhile, Finance Minister Nirmala Sitharaman will hold a review meeting with CEOs of public sector banks (PSBs) to discuss various issues, including progress on credit offtake, as part of efforts to prop up the economy. Banking stocks will be in focus with the Reserve Bank of India's (RBI) data showing that for the first time this fiscal, bank credit growth slowed to single-digit, printing in at a low 8.79 percent at Rs 97.71 lakh crore in the fortnight to September 27. There will be some buzz in the insurance stocks with report that life insurance companies saw a 35.1 percent year-on-year growth in new premium collections, to Rs 1.26 lakh crore in the April to September (H1FY20) period. Also, there will be some reaction in fertilisers stocks as leading fertiliser cooperative IFFCO reduced the retail prices of its complex fertilisers, including Di-Ammonium Phosphate (DAP), by up to Rs 50 per bag, amid easing raw materials and manufactured fertilisers prices globally. There will be some earnings announcements also to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,305.05

11,208.67

11,382.17

BSE Sensex

38,127.08

37,794.82

38,402.38

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

3,394.79

39.60

37.07

42.07

SBI

432.72

254.55

250.23

260.13

Tata Motors

410.28

121.30

118.30

123.25

ITC

250.72

243.95

241.30

246.40

Infosys

206.36

814.80

786.33

833.53

 

  • Tata Steel's crude steel production has increased by 4.65 per cent to 4.5 MT in Q2FY20 as against 4.3 MT in the corresponding quarter last fiscal. 
  • IOC and ONGC have signed Crude Oil Sales Agreement for North East on October 1, 2019 at New Delhi. 
  • Infosys has reported a fall of 1.78% in its consolidated net profit at Rs 4037 crore for Q2FY20 as compared to Rs 4110 crore for Q2FY19.  
  • HDFC and Arvind SmartSpaces have set up a Rs 250 crore fund to develop affordable and mid-income housing projects.
News Analysis