NSE Intra-day chart (18 December 2018)
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FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
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Market Commentary 19 December 2018
Markets to make positive start amid fall in crude oil prices

 

The equity benchmarks staged smart recovery on Tuesday to end the session in green terrain, on account of late hour value buying. After a weak start, the markets remained in red territory for the most part of the session, impacted by former Reserve Bank of India (RBI) Governor Raghuram Rajan's statement that at a time when the world economy was growing, demonetisation slowed down India's economic growth and impacted the GDP significantly. Domestic sentiments also remained dampened with S&P Global Ratings' statement that the increasing involvement of the government in the affairs of the Reserve Bank of India (RBI) could undermine the hard-fought improvements in the banking system over the past few years. It termed the exit of Urjit Patel as credit negative. Sentiments got hit with reports that the Central Goods and Services Tax (CGST) department has detected a fraud of GST and Input Tax Credit (ITC) in the metal scrap business across Madhya Pradesh, Maharashtra and Gujarat. The fraud amount is likely to around Rs 200 crore. However, the key indices erased all of their losses to settle higher, continuing gaining rally for the sixth straight session, despite weak trend in global markets. The street got relief with Prime Minister Narendra Modi's statement that his government wants to ensure that 99 percent things attract sub-18 per cent GST slab, indicating further simplification of the GST is on the anvil. The markets participants took support with the Ministry of Commerce's latest report showing that India's Foreign Direct Investment (FDI) increased constantly to $60.97 billion in the financial year 2018 (FY18) from $45.15 billion in Financial year 2015 (FY15). Further, adding some comfort among the traders, the Export Import Bank of India (Exim Bank) said the country's export growth will surge to 7 percent for the October-December quarter. The Exim Bank estimate said merchandise exports will go up to $82.39 billion for the third quarter of the fiscal year, as against $77 billion. Meanwhile, Niti Aayog Vice Chairman Rajiv Kumar said that there is a need to identify and remove impediments that are stopping India from achieving a competitive advantage in global markets. It is time to bring the global trends to domestic market and make Indian manufacturing an exporting sector as it is an essential growth enabler. Finally, the BSE Sensex surged 77.01 points or 0.21% to 36,347.08, while the CNX Nifty was up by 20.35 points or 0.19% to 10,908.70.

 

The US markets ended higher on Tuesday on account of bargain hunting, with traders picking up stocks at reduced levels on the heels of the sharp drop seen over the two previous sessions. However, gains remained capped as traders remained on edge ahead of the Federal Reserve's monetary policy announcement on Wednesday. With the Fed widely expected to raise interest rates by a quarter point, traders are likely to closely scrutinize the central bank's accompanying statement and forecasts for clues about future rate hikes. Meanwhile, there was some cautiousness in the markets as fears that sluggish global growth will wash up on US shores continued to unsettle investors, and as uncertainty surrounding US-China trade relations. On the economic front, the Commerce Department released a report showing a substantial increase in US housing starts in November, as a spike in multi-family starts more than offset a continued drop in single-family starts. The Commerce Department said housing starts jumped by 3.2% to an annual rate of 1.256 million in November from the revised October estimate of 1.217 million. Street had expected housing starts to edge down to a rate of 1.225 million from the 1.228 million originally reported for the previous month. The report also said building permits surged up by 5.0% to an annual rate of 1.328 million in November from the revised October rate of 1.265 million. Dow Jones Industrial Average surged 82.66 points or 0.35 percent to 23675.64, Nasdaq gained 30.18 points or 0.45 percent to 6783.91 and S&P 500 was up by 0.22 points or 0.01 percent to 2546.16.

 

Crude oil futures ended lower with cut of over seven percent on Tuesday, sending benchmark crude prices to their lowest finish in nearly 16 months, as concerns over a potential global supply glut rattled the market. Losses for oil magnified after it was reported that Russia was increasing its output to 11.42 million barrels a day this month. Meanwhile, a recent US government forecast calling for further gains in domestic shale oil production and expectations for an economic slowdown fed concerns over a potential global glut in crude supplies. Benchmark crude oil futures for January plunged $3.64 or 7.3 percent to settle $46.24 a barrel on the New York Mercantile Exchange. February Brent crude dropped $3.35 or 5.6 percent to settle at $56.26 a barrel on London's Intercontinental Exchange.

 

Continuing strong recovery momentum for the second day, Indian rupee ended near three-week high against US dollar on Tuesday, on account of selling of American currency by banks and exporters amid softening crude oil prices. Traders took encouragement with the Ministry of Commerce's latest report showing that India's Foreign Direct Investment (FDI) increased constantly to $60.97 billion in the financial year 2018 (FY18) from $45.15 billion in Financial year 2015 (FY15). Investors also took note of Commerce and Industry Minister Suresh Prabhu's statement that huge investment opportunities exist in India in various sectors including construction for Turkish companies. On the global front, US dollar slid lower against a currency basket on Tuesday ahead of this week's Federal Reserve meeting while the yen remained supported amid concerns over the outlook for global growth. Finally, the rupee ended at 70.44, Rs 1.12 stronger from its previous close of 71.56 on Monday.

 

The FIIs as per Tuesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3238.59 crore against gross selling of Rs 3440.97 crore, while in the debt segment, the gross purchase was of Rs 821.80 crore with gross sales of Rs 833.72 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.11 crore against gross selling of Rs 0.18 crore.

 

The US markets ended slightly higher on Tuesday on the back of bargain hunting, with traders picking up stocks at reduced levels on the heels of the sharp drop seen over the two previous sessions. Investors also remained cautious ahead of the US Federal Reserve's monetary policy decision due later in the day. Asian markets were trading mixed on Wednesday following a volatile session on Wall Street. Indian markets wiped out all of their early losses to end Tuesday trading session in green territory for sixth straight day buoyed by gains in financials and oil marketing companies after benchmark crude prices hit a 14-month low. Besides, strong rupee also boosted investor sentiments. Today, the markets are likely to open in green tracking a sharp fall in crude oil prices, easing macro concerns. Traders will be getting encouragement with the Reserve Bank of India's (RBI) statement that it has decided to scale up the amount of liquidity infusion by Rs 10,000 crore to Rs 50,000 crore this month after a review of the evolving liquidity conditions. The RBI also announced to conduct the purchase of government securities under Open Market Operations (OMOs) for Rs 150 billion on December 20. Some support may also come with chairman designate of Central Board of Indirect Taxes and Customs P K Das saying that the next three months would see the Centre put in place changes in policy and procedures to ensure India further improves its position in the Ease of Doing Business Report-2019. Traders may take note of Niti Aayog CEO Amitabh Kant's statement that achieving double digit growth in the manufacturing sector on sustainable basis is a doable challenge, but for that the country needs to integrate with global markets. However, there will be some cautiousness with a private report that the government's note ban decision shaved off economic growth by at least 2 percentage points for the October-December quarter of 2016 in which the demonetisation move was effected. Meanwhile, India has been ranked 108th in World Economic Forum (WEF) gender gap index, same as 2017, while recording improvement in wage equality for similar work and fully closing its tertiary education gender gap for the first time. There will be some buzz in the sugar sector stocks with report that a delegation of domestic sugar industry held discussions with top representatives of all three sugar refineries of South Korea in Seoul with a view to increase shipment of the commodity. South Korea imports around 1.5 million tonnes of raw sugar annually and the Indian sugar industry is making efforts to export raw sugar from India during 2018-19 sugar season.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,908.70

10,846.73

10,943.03

BSE Sensex

36,347.08

36,137.27

36,466.13

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

357.30

179.00

176.87

181.02

IOC

200.50

144.75

143.50

145.50

Tata Motors

180.16

174.75

172.70

177.20

ICICI Bank

154.06

362.25

356.93

365.23

Sun Pharma

144.02

433.45

423.23

439.28

 

  • M&M has signed agreement with Sampo Rosenlew Oy, Finland and has agreed to subscribe to 822 Equity Shares and 192 Compulsorily Convertible Preference Shares. 
  • Bajaj Auto has launched the updated version of Platina 110 bike, priced at Rs 49,197. 
  • Tata Steel and thyssenkrupp have decided on the members of the future Management Board for the planned European steel JV between the two companies. 
  • TCS has extended its collaboration with Red Hat to build microservices-based open source solutions and frameworks that will accelerate customers' digital transformation journeys.
News Analysis