NSE Intra-day chart (13 November 2018)
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Market Commentary 14 November 2018
Markets to make positive start ahead of WPI inflation data

 

Indian equity benchmarks made a smart recovery on Tuesday to end the trading session near their intraday high points. The markets open on a cautious note, as India's industrial production measured by Index of Industrial Production (IIP) grew at the slowest pace in four months at 4.5% in September 2018, with poor performance of mining sector and lower offtake of capital goods. Anxiety also came on the street with Moody's Investors Service report stating that global credit conditions will weaken in 2019 as economic growth decelerates, funding costs increase, liquidity tightens and market volatility returns. Some concerns came with the report that several ministries have flagged major concerns over ongoing negotiations for the Regional Comprehensive Economic Partnership (RECP) agreement, with cheap imports from China being the biggest fear, apart from expectations that there will only be limited gains for the country. Domestic sentiments were weak during morning deals with SBI's report that the sharp decline in the headline inflation print to 3.31% for October a year-year-low will result in a prolonged pause in the rates, but raises a big question mark on the Reserve Bank's inflation forecasting. However, the indices managed to erase all of their losses in afternoon deals, supported by firm opening of European markets coupled with easing inflation. India's retail inflation based on Consumer Price Index (CPI) softened to a one-year low of 3.31% in the month of October 2018, the back of cheaper kitchen staples, fruits and protein-rich items. Traders took encouragement with a report stating that India is pushing for liberalising norms to promote services trade with 15 other countries including China as part of a mega free trade agreement as it looks for a balanced pact with these nations.  Finally, the BSE Sensex gained 331.50 points or 0.95% to 35,144.49, while the CNX Nifty was up by 100.30 points or 0.96% to 10,582.50.

 

The US markets ended Tuesday's choppy trading session mostly lower, as a surge in optimism over trade talks with China was offset by a plunge in crude prices. Besides, traders continued to express uncertainty about the global economic outlook and the impact of an anticipated increase in interest rates. A notable drop by Boeing (BA) weighed on the Dow after a report said the aerospace giant withheld information about potential hazards associated with the automated stall-prevention system on its 737 MAX 8 and MAX 9 models. Home improvement retail giant Home Depot (HD) also closed lower despite reporting better than expected third quarter results and raising its full-year guidance. Investors shrugged off a report from the Wall Street Journal indicating high-level US-China trade talks have resumed ahead of a meeting between US President Donald Trump and Chinese President Xi Jinping later this month. The Journal said Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He spoke by telephone on Friday about a deal that would ease trade tension. Traders seemed reluctant to make more significant moves ahead of the release of closely watched reports on consumer price inflation, retail sales and industrial production in the coming days. Dow Jones Industrial Average declined 100.69 points or 0.40 percent to 25,286.49 and S&P 500 slipped 4.04 points or 0.15 percent to 2,722.18, while Nasdaq edged up by 0.01 points to 7,200.88.

 

Extending southward journey for 12th straight session, crude oil futures ended significantly lower on Tuesday, as rising output and likely fall in demand for oil due to weak outlook for global economic growth weighed on the commodity. This is the lowest front-month contract finish since November 16, 2017, and biggest one-day percentage decline in more than three years. According to a report released by the Energy Information Administration (EIA), crude oil production is expected to increase by 113,000 barrels a day in December to 7.9444 million barrels a day. Benchmark crude oil futures for December fell $4.24 or 7.1 percent to settle at $55.69 a barrel on the New York Mercantile Exchange. January Brent crude declined $4.65 or 6.6 percent to settle at $65.47 a barrel on London's Intercontinental Exchange.

 

Reversing previous session's losses, Indian rupee staged a smart recovery against dollar on Tuesday, owing to easing global crude oil prices and better-than-expected macro-economic data on the domestic front. The consumer price index (CPI) inflation eased to 3.31 percent in the month of October 2018 as compared to 3.58 percent in October 2017 on low food prices. The retail inflation number is the lowest since September 2017 when it touched 3.28 percent. Also, the prices of vegetables fell by 8.06 percent in the month of October in comparison to a 4.15 percent contraction in September. That apart, the rupee derived its strength from strong gains in the local equity markets as well as strength of other Asian currencies against dollar. On the global front, euro drifted up from a 16-month low on Tuesday as a pause in the dollar's rally prompted some investors to purchase the single currency, though concerns about Italy's budget proposals and Brexit negotiations capped some gains. Finally, the rupee ended at 72.67, 22 paise stronger from its previous close of 72.89 on Monday.

 

The FIIs as per Tuesday'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 6191.89 crore against gross selling of Rs 3798.75 crore, while in the debt segment, the gross purchase was of Rs 712.89 crore with gross sales of Rs 1334.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.02 crore against gross selling of Rs 0.09 crore.

 

The US markets ended mostly lower after a volatile session on Tuesday as traders continued to express uncertainty about the global economic outlook and the impact of an anticipated increase in interest rates. Asian markets were trading mixed after volatile session on Wall Street. Indian equity markets ended with gains of around one per cent on Tuesday on fresh fall in oil prices and heavy buying in oil & gas, capital goods, infrastructure and bank stocks amid firm global cues. Today, the start is likely to be mildly positive amid falling crude oil prices. Traders will be getting some encouragement as the Securities and Exchange Board of India (SEBI) tightened disclosure and review norms for credit rating agencies (CRAs). SEBI ordered CRAs to analyse deterioration in the liquidity conditions of an issuer, while monitoring its repayment schedules and taking into account any asset-liability mismatches. These measures will enable investors to understand underlying rating drivers better and make more informed investment decisions. Meanwhile, the Reserve Bank of India (RBI) has announced it will inject Rs 12,000 crore into the system through purchase of government securities on November 15. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of the following government securities under Open Market Operations. Besides, traders will be eyeing a macro data of wholesale price inflation for October scheduled to be release later in the day. The banking sector stocks will be in action on report that the government is of the view that the RBI should resort to Basel III norms for capital adequacy in banks rather than the present stricter guidelines which restrict the lending capacity of lenders. Agriculture sector stocks too may see some action as Agri input companies posted decent growth in revenue and net profit for the quarter ended September 2018, due to an increase in sales volume on normal monsoon rainfall and price hikes. There will be some buzz in the solar sector stocks on private report which said that India's solar capacity addition in the current financial year is expected to be 55% short of the previous year, at 4.1 GW as the industry continues to face policy and execution challenges. Also, there will be some buzz in the oil and gas stocks on report that India's fuel demand rose 4.0% in October compared with the same month last year. Besides, there will be lots of important earnings announcements to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,582.50

10,483.28

10,638.98

BSE Sensex

35,144.49

34,815.21

35,330.76

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

SBI

256.34

278.05

274.37

280.72

Tata Motors

221.90

179.50

177.57

182.22

Yes Bank

190.14

225.45

221.35

228.20

ICICI Bank

176.85

360.90

351.82

365.97

IOC

148.85

141.40

138.17

143.47

 

  • Tata Motors Group global wholesales in October 2018, including Jaguar Land Rover, were at 1,09,597 nos., higher by 6%, as compared to October 2017.
  • M&M has launched a new variant of its popular SUV Scorpio priced at Rs 13.99 lakh.
  • Tata Steel has begun the phase-II expansion of Kalinganagar plant to 8 million tons per annum capacity from 3 mtpa.
  • Reliance Industries is planning to make a fresh investment of Rs 3,000 crore in Odisha.
News Analysis