NSE Intra-day chart (18 January 2019)
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Market Commentary 21 January 2019
Markets to open slightly in green amid positive global cues

 

The Indian equity benchmarks saw volatility on the last trading day of the week but managed to end in green terrain with minor gains. The markets made a slightly higher opening, buoyed by India Ratings and Research's (Ind-Ra) latest report that India's Gross Domestic Product (GDP) growth is likely to grow a tad higher at 7.5% in 2019-20 (FY20) on account of steady improvement in major sectors -- industry and services. Traders were seen reacting positively towards reports that India Inc has urged the Reserve Bank of India (RBI) to cut its benchmark interest rate and lower the cash reserve ratio (CRR) to boost growth. It suggested various measures to ease tight liquidity situation and reduce high cost of credit in the light of consistently falling inflation. But soon, the key indices turned volatile to swing between gains & losses, on the back of cautiousness on the street ahead of corporate earnings results. Traders took note of RBI official's statement that with the country's GDP size increasing in quantitative terms, there could be need for more currency in the economy. However, in the last leg of the trade, the markets erased all of their losses to end flat with positive bias, tracking positive global markets. Domestic sentiments got relief came with a private report that eighteen micro finance non-banking financial companies (NBFC-MFIs) have pooled assets worth a combined Rs 835 crore for securitisation, to tide over a liquidity problem in the sector. Adding some comfort, Prime Minister Narendra Modi said that his government has helped create crores of employment opportunities across sectors in the past four-and-a-half years. Separately, Prime Minister also said that India is aiming at being in the list of top 50 countries in ease of doing business by next year. The market participants also took support with Agriculture Minister Radha Mohan Singh's statement indicating announcement of major measures in the coming weeks to address farm distress across the country, a move that will come ahead of Lok Sabha elections. Finally, the BSE Sensex gained 12.53 points or 0.03% to 36,386.61, while the CNX Nifty was up by 1.75 points or 0.02% to 10,906.95.

 

Extending gains for fourth straight session, the US markets ended sharply higher on Friday, with gains of over a percent each, as traders continued to express optimism about trade talks between the US and China. Adding to the optimism, a private report stated that China has offered to go on a six-year buying spree to ramp up imports from the US. As per the report, China would seek to reduce its trade surplus with the US by increasing annual goods imports by a combined value of more than $1 trillion. Besides, the Wall Street Journal report said the US is weighing easing tariffs in an effort to calm markets and give China an incentive to make deeper concessions. According to the Journal, Treasury Secretary Steven Mnuchin proposed the idea of lifting some or all tariffs in a series of strategy meetings. Investors overlooked a report from the University of Michigan showing a substantial deterioration in US consumer sentiment in the month of January. The preliminary report said the consumer sentiment index plummeted to 90.7 in January from the final December reading of 98.3. Meanwhile, a separate report from the Federal Reserve showed industrial production increased by slightly more than expected in December, as jumps in manufacturing and mining output more than offset a sharp pullback in utilities output. The Fed said industrial production rose by 0.3% in December after climbing by a downwardly revised 0.4%in November. Dow Jones Industrial Average jumped 336.25 points or 1.38 percent to 24706.35, Nasdaq surged 72.76 points or 1.03 percent to 7157.23 and S&P 500 was up by 34.75 points or 1.32 percent to 2670.71.

 

Crude oil futures ended near 2-month high on Friday, supported by  a report from the Organization of the Petroleum Exporting Countries (OPEC) members that showed the biggest monthly drop in crude production in nearly two years in December and on optimism about the US and China moving closer to a trade deal. The OPEC report said collective output from OPEC members fell by 751,000 barrels a day last month, to 31.58 million as part of the agreement reached at the meeting on December 7 in Vienna. Meanwhile, OPEC expects 2019 global oil demand to slow to 1.29 barrels per day from 1.5 million in 2018 due to economic slowdown. Benchmark crude oil futures for February gained $1.73 or 3.3 percent to settle $53.80 a barrel on the New York Mercantile Exchange. March Brent crude rose $1.52 or 2.5 percent to settle at $62.70 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended weaker against the US dollar on Friday, on the back of consistent demand for the greenback from state-run banks and importers. Investors failed to get solace with India Ratings and Research's report that the country's economy is likely to grow a tad higher at 7.5 per cent in 2019-20 on account of steady improvement in major sectors -- industry and services. It further said Gross Domestic Product (GDP) growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors. Besides, stronger dollar sentiment overseas along with lackluster trade in the equity markets predominantly pressurized the local unit. On the global front, dollar was firm against the yen on Friday as growing optimism on progress in Sino-US trade talks supported broader appetite for risk. Finally, the rupee ended at 71.19, 16 paise weaker from its previous close of 71.03 on Thursday.

 

The FIIs as per Friday'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 4386.14 crore against gross selling of Rs 3494.39 crore, while in the debt segment, the gross purchase was of Rs 728.67 crore with gross sales of Rs 1012.47 crore. Besides, in the hybrid segment, the gross selling was of Rs 0.95 crore against no buying.

 

The US markets extended their gains for fourth session and settled higher on Friday as investors cheered potential progress in trade negotiations between China and the US. Asian markets were trading mostly in green on Monday as investors demonstrated continued confidence that trade tensions ultimately will subside and policy makers will refrain from growth-damaging monetary tightening. Indian markets ended lackluster session almost flat with positive bias on Friday as higher oil prices and a weakening rupee offset positive cues from global markets. Today, the start of the new week is likely to be slightly in green tracking positive global cues amid developments in the US-China trade relations. Traders will be getting some encouragement with Union Commerce and Civil Aviation Minister Suresh Prabhu's statement that India has the potential to be a $5 trillion economy in the next 7-8 years. Prabhu said his department had prepared a road map to make this possible by focusing on manufacturing, service sector and agriculture. Traders may take note of central bank Governor Shaktikanta Das on Friday said the Reserve Bank of India (RBI) will make all efforts to maintain financial stability and to facilitate enabling conditions for sustainable and robust growth. Also, there will be some support with a private report that India is likely to surpass the United Kingdom in the world's largest economy rankings in 2019. The report projects real GDP growth of 1.6% for the UK, 1.7% for France and 7.6% for India in 2019. Besides, RBI's latest data showed that the forex reserves continued its upward march and increased by $1.267 billion to $397.351 billion in the week to January 11, aided by a rise in core currency assets and value of gold. The overall kitty had swelled by $2.68 billion to $396.084 billion in the previous reporting week. Meanwhile, Exporters body FIEO has sought immediate intervention of the government and RBI to resolve issues related to payment mechanism for Iran and flow of credit to push shipments. However, there may be some cautiousness with Care Ratings' report that the Centre is unlikely to meet its disinvestment target of Rs 80,000 crore this year, resulting in overshooting the fiscal deficit target. The report said owing to a shortfall in disinvestment realisations as well in indirect tax collections under the GST regime, the fiscal deficit will come in at 3.5% as against the targeted 3.3%. There will be some buzz in the banking sector stocks with RBI Governor Shaktikanta Das' statement that efforts are being made to strengthen corporate governance in the public sector banks to effectively check incidence of financial frauds. There will be some reaction among the coal sector stocks with a report that coal imports in India saw a surge of 6.7% to 171.81 million tonne (MT) in the April-December period of the ongoing financial year. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,906.95

10,863.37

10,939.37

BSE Sensex

36,386.61

36,246.63

36,498.28

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Sun Pharma

829.06

390.75

365.93

419.83

Yes Bank

418.58

198.60

195.52

202.37

Reliance Industries

256.84

1,184.35

1,149.77

1,204.42

Bharti Airtel

147.44

311.15

299.48

327.63

ICICI Bank

122.12

372.00

369.43

375.48

 

  • M&M will launch its new compact sports utility vehicle model XUV300 on February 14, 2019 in India. 
  • Reliance Industries has reported a rise of 8.82% in its net profit at Rs 10251 crore for Q3FY19 as compared to Rs 9420 crore for Q3FY18. 
  • HUL is looking forward for the merger of GSKCH India through an-all equity deal to complete in six-nine months due to pending clearances from various authorities. 
  • Tata Steel has awarded a significant contract to Metso to deliver a large-scale iron ore pellet plant and related engineering services to the company. 
News Analysis