NSE Intra-day chart (18 September 2017)
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Market Commentary 19 September 2017
Markets to make a soft-to-cautious start


Bulls tightened their grip on Dalal Street on Monday with Nifty ending at record closing high of over 10,150 mark, while Sensex reclaimed 32,400 level. Markets made gap-up start and traded jubilantly throughout the session, as traders took some encouragement with foreign brokerage report that India is likely to overtake Japan and Germany to become the third largest economy in the next 10 years but needs to be consistent in reforms and focus more on the social sector. Markets continue to trade near higher levels taking support from report that the Modi government has sprung into action after the economy sent out some distress signals as GDP growth slipped to a three-year low, inflation shot up to a five-month high and current account deficit widened to a four-year peak. Adding to the optimism, Commerce and Industry minister Suresh Prabhu will soon meet the country's top industrialists individually to seek an investment commitment from each of them for the next few years. The minister will hold one on one meeting with the heads of top 30 domestic companies, followed by group meetings, next month. The market participants shrugged off the report that trade deficit in the month of August widened to $11.64 billion from $7.7 billion during the same month a year ago. India's exports rose 10.29 percent on a yearly basis to $23.81 billion in August on account of rise in shipments of engineering, petroleum, chemicals and pharmaceuticals products. Imports too increased 21.02 percent to $35.46 billion in August from $29.30 billion in the year-ago month due to rise in inward shipments of crude oil and gold. Finally, the BSE Sensex surged 151.15 points or 0.47% to 32,423.76, while the CNX Nifty was up by 67.70 points or 0.67% to 10,153.10.

 

The US markets closed higher on Monday, with the Dow notching its 40th record close of the year as investors piled into financials and materials shares. US Secretary of State Rex Tillerson said that US seeks a peaceful solution and wants to bring North Korea to the table for constructive, productive dialogue. On the economy front, builder confidence in the market for newly built single-family homes dropped in September, on worries that the recent hurricanes will make it difficult to find workers and materials. The National Association of Home Builders/Wells Fargo housing market index fell 3 points to 64, and August's reading was downwardly revised by a point. The concern is that Hurricanes Harvey and Irma did so much damage that construction workers will flock to Texas and Florida for rebuilding. Concern about the ability to find qualified workers has been a problem for some time, and the hiring rate in the construction industry, 5.3%, is well above the national average of 3.8%. The index still is in optimistic territory, given that any reading over 50 indicates good conditions. The component gauging current sales conditions fell 4 points to 70, the index charting sales expectations in the next six months also dropped 4 points, to 74, and the component measuring buyer traffic slipped 1 point to 47. The Dow Jones Industrial Average added 63.01 points or 0.28 percent to 22,331.35, the Nasdaq gained 6.17 points or 0.10 percent to 6,454.64 and the S&P 500 edged higher by 3.64 points or 0.15 percent to 2,503.87.

 

Crude oil futures managed to extend the gaining momentum to the new week and ended marginally higher on Monday, shrugging off expectations that US crude stockpiles are set to show a build for the third week in a row, following the aftermath of Hurricanes Harvey and Irma. Demand for crude oil from refiners should start picking up, but early indications show US oil stockpiles rose more than expected during this period. Meanwhile, Opec is expected to continue talks to extend its production-cut agreement beyond March 2018 in an effort to tackle rising output from Nigeria and Libya - both countries are exempt from production curbs. Benchmark crude oil futures for October delivery ended higher by 2 cents at $49.91 a barrel on the New York Mercantile Exchange. Brent crude for October delivery fell by 0.3 cent to $55.59 a barrel on the ICE.

 

Indian rupee ended marginally weaker against the American currency on Monday on increased demand for the US currency from importers amid foreign fund outflows. Sentiments remained down-beat with report that trade deficit in the month of August widened to $11.64 billion from $7.7 billion during the same month a year ago. India's exports rose 10.29% on a yearly basis to $23.81 billion in August on account of rise in shipments of engineering, petroleum, chemicals and pharmaceuticals products. Imports too increased 21.02% to $35.46 billion in August from $29.30 billion in the year-ago month due to rise in inward shipments of crude oil and gold. Besides, strength in the US dollar against some other currencies overseas too weighed on the rupee sentiment. Though, firm domestic equity market restricted the fall of rupee to some extent. On the global front, dollar hit an eight-week high against yen on Monday, supported by a rise in US Treasury yields. Finally, the rupee ended at 64.13, 5 paise weaker from its previous close of 64.08 on Friday.

 

The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 11850.73 crore against gross selling of Rs 10665.73 crore, while in the debt segment, the gross purchase was of Rs 723.08 crore with gross sales of Rs 265.35 crore.         

 

The US markets extended their rally mood and major bourses surged to fresh record highs, amid hopes the worst of the North Korea crisis is over. Traders largely overlooked the National Association of Home Builders data, showing a bigger than expected drop in homebuilder confidence, as the data was impacted by recent hurricanes. The Asian markets have made a mixed start and some indices were in green as demand for safe-haven assets waned the past two trading days and investors seemed relaxed about the prospect of the Federal Reserve beginning to unwind stimulus. The Indian markets surged in last session with Nifty closing at a fresh record high. Today, the start is likely to be flat-to-cautious on mixed global cues, traders will however be looking ahead to the U.S. Federal Reserve and Bank of Japan's meetings later this week for clues on the direction of monetary policy. On the domestic front, all eyes will be on meeting of Prime Minister Narendra Modi with Finance Minister Arun Jaitley and other top officials to take stock of the situation and the discussion for remedial measures to bolster growth. PM will analyse the economic situation with Jaitley and secretaries of the finance ministry and explore options to stimulate the economy. There will be some concern in the market on report that the Centre could be forced to cut infrastructure spending, as GST glitches have hit revenue. Lower-than-expected tax collections and sluggish growth have upset the government`s budget calculations. The oil sector stocks will keep buzzing as the Oil Minister Dharmendra Pradhan  has said that he has requested the Ministry of Finance to bring petroleum products under the ambit of Goods and Services Tax (GST) in the interest of consumers.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10153.10

10132.37

10172.77

BSE Sensex

32423.76

32353.99

32500.80

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

SBI

175.39

270.40

268.57

273.12

ICICI Bank

111.82

293.00

291.97

294.22

ITC

101.52

267.00

264.93

270.38

Bank of Baroda

90.99

145.45

143.80

148.05

Tata Motors

89.67

404.95

401.10

410.90

 

  • ITC is planning to open 40 new hotels which will add around 5,000 rooms over a period of time.
  • SBI Card, the JV between State Bank of India and GE Capital, is looking to double its credit card acquisition and improve its market share in the next two years.
  • Bharti Airtel has come up with a new free data offer for its postpaid users, after the Airtel Monsoon offer expiry.
  • Tata Motors is aiming to scale up its ranking in the overall utility vehicles market with its first compact SUV 'Nexon'.
News Analysis