NSE Intra-day chart (16 April 2019)
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Market Commentary 18 April 2019
Benchmarks to make a cautious start amid subdued global cues

 

Rally continued on Dalal Street on Tuesday, with Sensex and Nifty settling at fresh record closing high levels. After a fabulous start, key indices remained under grip of bulls throughout the session, as the India Meteorological Department (IMD) in Long Range Forecast for 2019 southwest monsoon rainfall stated that the country is likely to have near normal monsoon this year with a well distributed rainfall which could be beneficial for the agriculture sector. Adding enthusiasm among traders, India's merchandise exports rose to a five-month high of 11.02 percent in March 2019 as compared to same period of last year, on account of higher growth mainly in pharma, chemicals and engineering sectors. Market participants also took encouragement with a private report stating that the Reserve Bank of India will cut its key policy rates by another 25 basis points, after Governor Shaktikanta Das' weekend speech focusing on ways to revive growth. Markets remained strong during second half of the session, buoyed with Finance Minister Arun Jaitley's statement that fast economic growth and rapid urbanisation would slash the number of people in extreme poverty by 2021 and it will completely be ended in the decade after that. The Minister also said the number of people who live in poverty will drop to below 15% in the next three years and to a negligible level in the 10 years after that. The street was also positive with a report that the government's war on Non-Performing Assets could give a boost of 60 basis points to India's GDP in FY20. The measures taken by the Modi government including recovery of bad loans and bank recapitalisation will reduce costs for lenders. Meanwhile, the government is targeting public procurement worth Rs 50,000 crore through the commerce ministry's online marketplace--Government e-Marketplace (GeM)--during the current financial year (2019-20). In FY19, GeM touched Rs 17,325 crore mark in terms of value of transactions as compared to Rs 5,885 crore in the previous financial year and Rs 422 crore in 2016-17. Finally, the BSE Sensex gained 369.80 points or 0.95% to 39,275.64, while the CNX Nifty was up by 96.80 points or 0.83% to 11,787.15.

 

The US markets ended marginally lower on Wednesday as traders digested a mixed batch of earnings reports from big-name companies such as PepsiCo, Morgan Stanley, Netflix and IBM Corp. PepsiCo and Morgan Stanley posted notable gains after reporting quarterly results that exceeded street estimates on both the top and bottom lines. The lackluster performance continued as the Federal Reserve's Beige Book said US economic activity expanded at a slight-to-moderate pace in March and early April. A compilation of anecdotal evidence on economic conditions in the twelve Fed districts, the Beige Book said most districts reported that growth continued at a similar pace as the previous report, while a few districts reported some strengthening. The Beige Book showed reports from the Fed districts indicated generally positive economic conditions in various sectors but noted some caveats. Meanwhile, after reporting sharp increases in US wholesale inventories in the two previous months, the Commerce Department released a report showing inventories rose by less than expected in the month of February. The Commerce Department said wholesale inventories edged up by 0.2% in February after surging up by 1.2% in January. Inventories of durable goods inched up by 0.1%, as notable increases in inventories of furniture and machinery were offset by steep drops in inventories of computer equipment, lumber, and metals. Besides, a report released by the Commerce Department showed the US trade deficit unexpectedly narrowed in the month of February amid a jump in the value of exports. The Commerce Department said the trade deficit narrowed to $49.4 billion in February from $51.1 billion in January, while Street had expected the deficit to widen to $53.5 billion.  Dow Jones Industrial Average declined 3.12 points or 0.01 percent to 26449.54, Nasdaq lost 4.14 points or 0.05 percent to 7996.08 and S&P 500 was down by 6.61 points or 0.23 percent to 2900.45.

 

Crude oil futures ended lower on Wednesday, pressured by uncertainty surrounding global crude production, despite data from a US government report that revealed the first weekly decline in US crude stocks in a month. The Energy Information Administration (EIA) reported that US crude supplies fell by 1.4 million barrels for the week ended April 12. Analysts polled by S&P Global Platts expected a rise of 1.8 million barrels, following three consecutive weeks of increases, but the American Petroleum Institute on Tuesday had reported a larger decrease of 3.1 million barrels. The EIA data also showed inventory declines of 1.2 million barrels for gasoline and 400,000 barrels for distillates last week. Benchmark crude oil futures for May declined 29 cents or 0.5 percent to settle at $63.76 a barrel on the New York Mercantile Exchange. June Brent crude lost 10 cents or 0.1 percent to settle at $ 71.62 a barrel on London's Intercontinental Exchange.

 

Indian rupee continued to slide against the American currency for the third day on Tuesday, on increased demand for the greenback from importers and banks. Investors failed to get solace with the Meteorological Department stating that India is likely to receive average monsoon rains this year. The forecast raised expectations of higher farm income. Traders even overlooked the government data showing that India's exports grew by 11% to $32.55 billion in March on account of higher growth in sectors including pharma, chemicals and engineering. Imports rose by 1.44% to $43.44 billion during the month. However, trade deficit narrows to $10.89 billion as compared to $13.51 billion in the same month last year. On the global front, dollar edged up against a basket of its key rivals on Tuesday with investors erring on the side of caution as they looked for more concrete signs of stabilisation in the global economy. Finally, the rupee ended at 69.60, 17 paise weaker from its previous close of 69.42 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 4130.91 crore against gross selling of Rs 3745.07 crore, while in the debt segment, the gross purchase was of Rs 999.05 crore with gross sales of Rs 1008.57 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.07 crore against gross selling of Rs 5.24 crore.

 

The US markets ended marginally lower on Wednesday as the health-care sector slumped on concerns over potential adverse impact from future policy changes. Asian markets are trading mostly lower on Thursday after a negative performance on Wall Street, with caution ahead of business surveys in Europe and Japan, and the Good Friday and Easter holidays keeping investors on the sidelines. Continuing their winning streak for fourth straight session, Indian markets settled at record highs on Tuesday, with gains of around a percent each, on strong global cues and domestic macro data. Indian financial markets remained closed on Wednesday on account of Mahavir Jayanti. Today, the start of the session is likely to be cautious amid subdued global cues. Investors are looking ahead to the second phase of polling for 2019 Lok Sabha elections starts on April 18. Some cautiousness will come with Niti Aayog CEO Amitabh Kant's statement that India has been growing at more than 7 per cent rate and this could not have been achieved without adequate job creation. Kant said that India needs to accelerate its growth rate from 7 per cent to 10 per cent. However, some respite may come later in the day with report that investments through participatory notes in domestic capital market rose to Rs 78,110 crore at the end of March, amid positive market sentiments. As per the latest Sebi data, the total value of P-note investments in Indian markets -- equity, debt, and derivatives -- stood at Rs 78,110 crore till March-end. Some support may also come with report that the issuances of government-fully serviced bonds (GoI-FSBs) rose to Rs 64,192 crore in the year ended March 2019 as compared to Rs 15,095 crore during the last fiscal. These borrowings are estimated to have accounted for 0.34 percent of GDP for FY19 as compared to 0.09 percent of GDP for FY18. Meanwhile, the commerce ministry has laid down a procedure for import of a few varieties of pulses for the current fiscal and has invited applications from millers. According to the ministry's foreign trade arm DGFT, millers and refiners of these pulses need licence for imports. There will be some buzz in the FMCG sector stocks with a report that the fast-moving consumer goods industry is likely to grow at a slower pace of 11-12 percent in 2019, almost 2 percentage points lower than in 2018, primarily driven by the steeply falling rural demand due to the lingering farm distress. There will be some reaction in steel industry stocks with the World Steel Association report that steel demand in India is expected to grow above 7 per cent in the current as well as next year. It added that in 2020, the demand is projected to grow 1 per cent to 1,752 MT. 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

11,787.15

11,742.15

11,821.55

BSE Sensex

39,275.64

39,088.19

39,413.72

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Coal India

713.16

251.60

247.53

256.18

Tata Motors

416.54

230.50

226.07

234.52

ICICI Bank

244.88

407.00

400.20

411.10

Wipro 

203.67

280.90

275.45

288.90

Yes Bank

163.69

266.45

264.57

268.77

 

  • Dr. Reddys Laboratories has received the EIR from USFDA, for the company's Formulations Manufacturing Plant - 3 at Bachupally, Hyderabad. 
  • RIL's telecom arm -- Jio has approached the DoT for in-flight connectivity licence, that allows service providers to offer connectivity and data services to Indian and foreign airlines. 
  • Maruti Suzuki India's premium sedan Ciaz has emerged as the best seller in its segment for the third consecutive year. 
  • Bharti Airtel TV app has created a special Election 2019 section, to bring all the election action and updates from across India to its users.
News Analysis