NSE Intra-day chart (13 December 2018)
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Market Commentary 14 December 2018
Markets likely to make pessimistic start amid weak global cues

 

Positive macroeconomic data gave enough support to the Indian equity benchmarks on Thursday, as Sensex and Nifty settled higher over 150 and 50 points, respectively. The markets made an awesome start, after India's industrial production measured by Index of Industrial Production (IIP) surged to 11-month high of 8.1% in the month of October 2018 as against 4.5% in September 2018 and 1.8 percent in October 2017. The trade also remained strong, on the back of easing inflation data. India's retail inflation based on Consumer Price Index (CPI) cooled down to a 17-month low of 2.33% in the month of November 2018, as compared to 4.88% in the same month of previous year. The inflation softened mainly on account of decline in prices of kitchen essentials like vegetables, eggs and pulses. Meanwhile, Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta urged newly-appointed the Reserve Bank of India (RBI) Governor Shaktikanta Das to ensure smooth flow of credit to exports sector which is falling sharply on year on year basis, affecting the liquidity of exporters particularly the micro, small, and medium enterprises (MSMEs). However, in the last hours of the trading session, the markets trim some of their losses to come off their day's high points. The street got cautious with World Economic Forum (WEF) founder and executive chairman Klaus Schwab's statement that India is still in the middle class in ease of doing business and the country should work towards creating the necessary ecosystem to boost entrepreneurship. Adding some anxiety among investors, as many as 358 infrastructure projects worth Rs 150 or above, entailing a total investment of Rs 3.53 lakh crore, reported cost overruns as on August 1, 2018. But, the indices again rallied to end the day with the notable gains, with taking support from S&P Global's statement that India's rapid economic growth will be enough to offset worries about the independence of its central bank and keep its credit rating in the coveted investment grade bracket. Finally, the BSE Sensex surged 150.57 points or 0.42% to 35.929.64, while the CNX Nifty was up by 53.95 points or 0.50% to 10,791.55.

 

The US markets ended mostly in red on Thursday as investors continued to worry over the lack of clarity and progress in US-China trade talks. The perception of progress was tempered that China arrested a second Canadian national in apparent retaliation for Meng's arrest, while reports surfaced that Trump's aides were warning the president that his authority to intervene in the affair is limited. Besides, there was some cautiousness in the markets as President Donald Trump again criticized the Federal Reserve's effort to normalize monetary policy. However, the Dow Jones Industrial Average eked out gains, led by Procter & Gamble and McDonald's. On the economic front, the Labor Department released a report showing a much steeper than expected drop in initial jobless claims in the week ended December 8. The report said initial jobless claims fell to 206,000, a decrease of 27,000 from the previous week's revised level of 233,000. Street had expected jobless claims to slip to 225,000. Jobless claims pulled back further off the nearly eight-month high reached two weeks ago to hit their lowest level in almost three months. Meanwhile, a separate report from the Labor Department showed import prices plunged by much more than expected in the month of November amid a steep drop in fuel prices. The report said import prices plummeted by 1.6 percent in November after climbing by 0.5 percent in October. Street had expected import prices to slump by 0.9 percent. S&P 500 lost 0.53 points or 0.02 percent to 2650.54 and Nasdaq was down by 27.98 points or 0.39 percent to 7070.33, while Dow Jones Industrial Average gained 70.11 points or 0.29 percent to 24597.38.

 

Crude oil futures settled higher with gains of over two and half percent on Thursday after a report said that Saudi Arabia plans to cut shipments to US refiners to avoid an expansion of US stockpiles. Saudi Aramco warned US refiners to brace for a steep drop in cargoes next month. Oil prices had already been moving up as traders pored over data showing a rise in monthly Organisation of the Petroleum Exporting Countries (OPEC) output, as well as a recent report of a weekly decline in US crude supplies and production. Benchmark crude oil futures for January rose $1.43 or 2.8 percent to settle $52.58 a barrel on the New York Mercantile Exchange. February Brent crude surged $1.30 or 2.2 percent to settle at $61.45 a barrel on London's Intercontinental Exchange.

 

Indian rupee made a smart recovery against the American currency after a three-day straight fall and ended higher on Thursday, on the back of positive macro-economic data. India's industrial production measured by Index of Industrial Production (IIP) surged to 11-month high of 8.1% in the month of October 2018 as against 4.5% in September 2018 and 1.8 percent in October 2017, while India's retail inflation based on Consumer Price Index (CPI) cooled down to a 17-month low of 2.33% in the month of November 2018, as compared to 4.88% in the same month of previous year. Traders also took comfort after the new RBI governor Shaktikanta Das took charge and stressed on the need of a consultative approach to tackle pressing economic issues. Positive gains in the domestic equities coupled with dollar's weakness against some currencies overseas too supported the domestic unit. On the global front, euro rose slightly on Thursday after Italy said it would cut its budgetary spending plans in a row with the European Union, although traders were in a cautious mood ahead of the European Central Bank's monetary policy meeting. Finally, the rupee ended at 71.68, 33 paise stronger from its previous close of 72.01 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4135.15 crore against gross selling of Rs 5608.24 crore, while in the debt segment, the gross purchase was of Rs 893.84 crore with gross sales of Rs 2429.63 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.73 crore against gross selling of Rs 0.36 crore.

 

The US markets end mostly lower on Thursday as concerns about a creeping economic slowdown weighted on investor sentiments. Asian markets were trading in red on Friday as caution returned and the recent recovery in equities showed signs of losing steam. Indian markets extended their gains for third straight session on Thursday on the back of strong macro data and supportive global cues. Besides, heavy buying in capital goods, consumer durables, realty and FMCG stocks too boosted the sentiments. Today, the markets are likely to make negative start amid weak global cues on economic growth concerns. Investors will be looking ahead for cues from the Reserve Bank of India (RBI) board meeting later in the day. The central board of the RBI under new Governor Shaktikanta Das will meet on December 14 where the directors are likely to push for greater say in the decision making of the central bank. Traders will also be eyeing another macro data of wholesale price inflation for November scheduled to be release later in the day. Traders will be concerned about global credit ratings agency Moody's statement that liquidity constraints faced by some non-bank financial institutions (NBFIs) will likely tighten overall credit supply and slow India's economic growth rate to just above 7% for the fiscal 2019 and 2020. In addition, any further distress in the Indian NBFI sector will pose significant downside risks to India's growth outlook. Traders may take note of Finance Minister Arun Jaitley's statement that need to double the size of the economy in next few years. He said we are globally no longer in the high growth economic era which we saw between 2003-08; to achieve 9%, we need global tailwinds and extraordinary domestic growth story. He added that trade wars, hardening dollar and fluctuating oil create uncertainty. Meanwhile, NITI Aayog chief executive Amitabh Kant said that India's exports need to increase significantly if the country has to become a $5-trillion economy by 2025. Kant also noted that the private sector will play a major role in pushing the country's economy towards the ambitious $5-trillion target. There will be some buzz in the public sector banking stocks with report that the government is considering additional capital infusion of up to Rs 30,000 crore in public sector banks as they have been unable to raise required funds from the markets. Also, there will be some reaction in cement sector stocks with report that the Goods and Services Tax (GST) Council is likely to rationalise the 28% slab by cutting tax rates on construction items, like cement, in its meeting next week.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,791.55

10,747.83

10,836.93

BSE Sensex

35,929.64

35,784.25

36,085.30

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,089.20

174.70

166.93

187.83

SBI

240.97

289.00

285.17

293.42

ICICI Bank

191.30

349.55

346.70

353.30

IOC

175.70

137.40

136.20

138.75

Sun Pharma

168.54

422.10

416.97

428.27

 

  • M&M's subsidiary -- Mahindra Electric and SmartE have entered into partnership with plans to deploy 10,000 electric three-wheelers across the country by 2020. 
  • ITC's agri-biotech subsidiary -- TASL has entered into an agreement with the UK's James Hutton Institute to source 16 new varieties and 600 new clones of potato for trial and testing in India. 
  • Tata Motors will hike prices of its passenger vehicles across models by up to Rs 40,000 from January 1, 2019, to offset the impact of rising input costs and increase in fuel prices. 
  • TCS has released a new version of the Connected Clinical Trials platform at the recently concluded TCS ADD Vantage forum in Paris.
News Analysis