NSE Intra-day chart (18 February 2019)
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FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
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Market Commentary 19 February 2019
Markets to get a positive start on firm Asian cues

 

Bears tightened their grip on Dalal Street on Monday, as Sensex and Nifty ended with the losses of over 300 and 80 points, respectively. The markets made a slightly higher opening, as India's exports grew by 3.74 percent to $26.36 billion in January, as exports of gems and jewellery, chemicals and pharmaceuticals increased. The trade deficit narrowed to $14.73 billion in January 2019 as against $15.67 billion in the same month previous year. But, key indices soon slipped in red terrain, after the Federation of Indian Chambers of Commerce (Ficci) and the Indian Banks' Association (IBA) survey said that liquidity is expected to remain constrained till the end of March owing to factors such as higher demand for money at the end of 2018-19, the upcoming Lok Sabha elections and advance tax outflow. The survey said higher fiscal deficit too will be a factor in constraining liquidity. The survey covered areas like current liquidity and suggestions to improve it and enhance credit growth. Trading sentiments remained pessimistic till the end of the session, amid the Reserve Bank of India's (RBI) data report showing that the country's foreign exchange reserves declined by $2.119 billion to $398.122 billion in the week to February 8, due to fall in foreign currency assets. In the previous week, the reserves had surged by $2.063 billion to $ 400.24 billion. Adding more concerns, Former Reserve Bank of India Governor Y V Reddy termed the recent trend of rolling out doles for the farm sector, including the Union Budget's basic income scheme, as a 'disturbing trend' which will impact fiscal stability, growth and also Centre-state relations. Weak cues from European markets also dampened the investors' sentiments in noon deals. Further, the market participants took a note of Finance Minister Arun Jaitley's statement that India needs fewer banks and mega banks which are strong to help the needs of common man. He said economies of scale are of great help in the banking sector. Finally, the BSE Sensex fell 310.51 points or 0.87% to 35,498.44, while the CNX Nifty was down by 83.45 points or 0.78% to 10,640.95.

 

The US markets were closed on Monday on account of President's Day.

 

Extending fall for the fourth day, Indian rupee ended weaker against dollar on Monday, on continued demand for the American unit. Traders remained cautious with the Reserve Bank of India's (RBI) data report showing that the country's foreign exchange reserves declined by $2.119 billion to $398.122 billion in the week to February 8, due to fall in foreign currency assets. In the previous week, the reserves had surged by $2.063 billion to $400.24 billion. Besides, heavy losses in domestic equity markets weighed on the domestic unit. However, local currency gave up most of its intraday session losses, as traders found some support with data showing that India's exports grew by 3.74 percent to $26.36 billion in January, as exports of gems and jewellery, chemicals and pharmaceuticals increased. The trade deficit narrowed to $14.73 billion in January 2019 as against $15.67 billion in the same month previous year. On the global front, dollar was marginally weaker on Monday, as increasing expectations of a United States (US)-Sino trade deal led investors to shift away from the safety of the greenback into riskier assets. Finally, the rupee ended at 71.34, 11 paise weaker from its previous close of 71.23 on Friday.

 

The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3406.01 crore against gross selling of Rs 6075.84 crore, while in the debt segment, the gross purchase was of Rs 582.51 crore with gross sales of Rs 1242.92 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.22 crore against gross selling of Rs 0.09 crore.

 

The US markets were closed on Monday on account of President's Day holiday. Asian markets were trading mostly in green on Tuesday, supported by hopes that Sino-US trade talks were making positive progress and expectations of policy stimulus from central banks. Indian markets ended sharply lower and continued their downtrend for seventh consecutive session on Monday amid rising crude oil prices. Reducing foreign inflows due to fear of escalation of tensions at the border also impacted the sentiment. Today, the markets are likely to make positive start tracking firm cues from other Asian markets. Traders will be getting encouragement with the Reserve Bank of India's (RBI) statement that it would inject Rs 12,500 crore into the system through purchase of government securities on February 21 to increase liquidity. The purchase will be made through open market operations (OMOs). Some support will also come as the RBI in its board meeting on February 18 decided to transfer Rs 28,000 crore as interim dividend to the government for the period of July to December 2018. The interim surplus has been decided after a limited audit review and after applying the Economic Capital Framework. This is the second successive year that RBI will transfer interim surplus to the government. Meanwhile, as per a private report in a relief to budding entrepreneurs, the Central Board of Direct Taxes (CBDT) increased tax exemption limit for startups to Rs 25 crore from earlier Rs 10 crore. According to the procedure to seek an exemption, a startup should apply, with all documents, to the Department for Promotion of Industry and Internal Trade (DPIIT) and the application of the recognised startup shall then be moved to the CBDT. Besides, a state ministerial panel set up to review tax rate on lottery Monday favoured a uniform GST rate of either 18 per cent or 28 per cent -- a final call on which would be taken by the GST Council at its meeting on February 20. There will be some reaction in banking sector stocks with Finance Minister Arun Jaitley stating India needs fewer and mega banks which are strong because in every sense, from borrowing rates to optimum utilisation, the economies of scale as far as banking sector is concerned are of great help. There will be some buzz in the telecom sector stocks with report that industry body COAI has written to the Telecom Department saying financial support and subsidies should be provided to facilitate major 5G trials in India, and that permissions and fee on network equipment purchases need to be waived for the entire trial period.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,640.95

10,592.93

10,724.43

BSE Sensex

35,498.44

35,341.99

35,783.67

           

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

899.69

213.55

204.13

219.83

ITC

406.66

274.70

271.58

280.13

SBI

147.82

259.95

257.33

264.03

Vedanta

142.82

148.00

146.05

150.55

Tata Motors

135.04

162.90

160.25

164.50

 

  • L&T's construction arm -- L&T Construction has secured a mega contract for design and construction of a major airport. 
  • Dr. Reddy's Laboratories has received EIR from the USFDA for FTO VII, the company's formulations manufacturing facility at Duvvada, Visakhapatnam. 
  • Maruti Suzuki India has started practice of controlling the use of Substances of Concern for mass production vehicles. 
  • Tech Mahindra has entered into a partnership with University of Sydney to develop next-gen technologies to equip students with skills necessary for jobs of the future.
News Analysis