NSE Intra-day chart (19 June 2017)
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Market Commentary 20 June 2017
Markets likely to extend gains with a positive start


Indian equity indices commenced the week on an optimistic note as the benchmarks showcased an energetic performance on Monday and settled with gains of around three fourth of a percent. Investors continued to build hefty positions across the board as sentiments got a boost after Finance Minister Arun Jaitley said India will launch a new national Goods and Services Tax (GST) as planned on July 1 and gave return filing breather to India Inc for two months. Adding optimism among investors, the industry body Confederation of Indian Industry (CII) said India Inc is ready for the implementation of the GST from July 1, as the new indirect tax regime will contribute significantly towards economic growth, job creation and exports expansion. Besides, firm global cues, after French President Emmanuel Macron's party won a parliamentary majority at the weekend, too added to the optimistic sentiments.  Some support also came with the report that Net income tax collection grew at a healthy 26.2% to Rs 101,024 crore from across the country as of June 15 this fiscal from Rs 80,075 crore in the year ago period. Meanwhile, lenders such as State Bank of India gained after the central bank asked banks to start banktruptcy process against 12 large loan defaulters, raising hopes that reduction of bad debt will start to quicken. Also, Capital market regulator SEBI is again extending a helping hand to the government and the RBI in their fight against bad loans. According to the reports, Securities and Exchange Board of India is planning to ease the acquisition rules to allow investors to buy distressed assets from banks. Finally, the BSE Sensex gained 255.17 points or 0.82 % to 31311.57, while the CNX Nifty was up by 69.50 points or 0.72% to 9,657.55.

 

The US markets closed higher on Monday, with both the Dow and the S&P 500 ending at new record high, as technology shares rebounded from a recent bout of sharp weakness to lead the market higher. Investors are likely to keep tech stocks in focus this week, amid concerns the sector could start to drag down the broader market, given the Federal Reserve has indicated it will tighten policy and economic data have failed to inspire. Following a busy week packed with central bank meetings, market players will focus on a handful of Federal Reserve speakers in the week ahead, as they look for more clues on future monetary policy moves. Traders will also keep an eye out on US housing data to gauge if a recent downtick in consumer spending and inflation is translating into lower home prices and slack in sales. The Dow Jones Industrial Average added 144.71 points or 0.68 percent to 21,528.99, Nasdaq gained 87.25 points or 1.42 percent to 6,239.01, while S&P 500 edged higher by 20.31 points or 0.83 percent to 2,453.46.

 

Crude oil futures after a day of break once again declined on Monday, as the dollar strengthened on expectations the Federal Reserve will again raise interest rates in the next few months. Traders overlooked Saudi Energy Minister Khalid Al-Falih downplaying the impact of rising output from Libya, Nigeria and the United States, insisting that the oil market is expected to balance in the fourth quarter. The Saudi Energy minister's comments came ahead of data on Monday showing Libya's oil production has risen by over 50,000 bpd to 885,000 bpd after the state oil firm settled a dispute with Germany's Wintershal. Benchmark crude oil futures for July delivery ended lower by $0.58 or 1.2 percent to $44.17 on the New York Mercantile Exchange. In London, Brent crude for July delivery ended down by 0.82 percent to $46.98 on the ICE.

 

Indian rupee, after making a good start, gave away most of its gains and ended a bit stronger against dollar on Monday, on account of dollar selling by banks and exporters. Local currency got some support with Finance Minister Arun Jaitley's statement that India will launch a new national Goods and Services Tax (GST) as planned on July 1 and gave return filing breather to India Inc for two months. The rupee sentiments were also buoyed by firm equities, but the dollar's strength against other currencies overseas restricted the rupee's gains. On the global front, dollar steadied against a basket of currencies on Monday, as investors awaited comments by a top Federal Reserve official for clues on whether recent strength can be sustained. Finally, the rupee ended at 64.42, 1 paise stronger from its previous close of 64.43 on Friday.

 

The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 7994.39 crore against gross selling of Rs 8688.50 crore, while in the debt segment, the gross purchase was of Rs 2384.50 crore with gross sales of Rs 1351.01 crore.

 

The US markets surged with Dow and S&P ending at record high, as investors piled back into technology stocks. The Asian markets have made a mixed start though some of the indices extended the rally led by Japan, as technology shares continued a rebound and hawkish comments from a Federal Reserve official allayed concern about the strength of the world's largest economy. Though, traders awaited a decision on whether the MSCI index committee will include China A-shares in its Emerging Market Index. The Indian markets after showing consistency through the session picked up pace in the final hours to end at record highs in the last session. Today, the start is likely to be in green and the markets will be extending the gains in early deals. Traders will be getting some support with India, pitching for a greater engagement with BRICS (Brazil, Russia, India, China and South Africa) nations on issues the international community addressed during BRICS Foreign Ministers meeting in Beijing. Meanwhile, Revenue Secretary Hasmukh Adhia has said that traders and dealers who have not completed their registration process can continue to do their business under the GST regime from July 1 using the provisional ID, adding that the 15-digit provisional ID would work as the Goods and Services Taxpayer Identification Number (GSTIN) for the first initial few month. There will be buzz in the aviation sector on report that the domestic airlines flew 101.74 lakh passengers in May this year, registering a 17.36 per cent increase over the 86.69 lakh passengers flown during the same period in the previous year. Oil companies too will be in action on report that India has surpassed China to become the largest contributor to incremental oil consumption in 2016, accounting for 21.8 per cent of it. India's oil consumption grew 8.3 per cent to 212.7 million tonnes in 2016 compared with global growth of 1.5 per cent, making it the third-largest oil consuming nation in the world.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9657.55

9623.87

9682.27

BSE Sensex

31311.57

31195.90

31394.70

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

SBI

148.49

288.85

286.15

290.70

ICICI Bank

97.45

320.60

317.87

322.52

Tata Steel

95.94

519.55

511.17

524.27

Vedanta

88.89

241.90

238.60

244.25

Adani Ports

73.29

373.80

367.33

377.93

  • Tata Steel proposes to sell 8,36,37,697 equity shares of face value of Rs 2 each of Tata Motors to Tata Sons.
  • Larsen & Toubro's construction arm - L&T Constructions has bagged orders worth Rs 2,231 crore across various business segments.
  • Tata Motors has delivered 30 new buses to the Bengaluru Metropolitan Transport Corporation.
  • Adani Ports and Special Economic Zone's Finance Committee has approved the preliminary offering circular in relation to a proposed issuance of foreign currency denominated bonds by the company.
News Analysis