NSE Intra-day chart (21 January 2019)
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Market Commentary 22 January 2019
Markets to open in red amid lackluster trade in Asian peers

 

Rally continued on Dalal Street on Monday, with Sensex and Nifty garnering around half a percent gains each. The start of day was cautious but soon markets gained momentum, aided by 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. Adding more optimism on the street, central bank Governor Shaktikanta Das said that the Reserve Bank of India (RBI) will make all efforts to maintain financial stability and to facilitate enabling conditions for sustainable and robust growth. Some comfort also came 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. The trade remained positive for the whole day, amid RBI's report showing that the forex reserves continued its upward march and increased by $1.267 billion to $397.351 billion in the week to January 11, 2019, aided by a rise in core currency assets and value of gold. Traders were seen taking note of a private report stating that Indian billionaires saw their fortunes swell by Rs 2,200 crore a day last year, with the top 1% of the country's richest getting richer by 39% as against just 3% increase in wealth for the bottom-half of the population. However, some gains got trimmed in the last leg of the trade, amid India Ratings and Research's latest report stating that the cumulative fiscal deficit of Indian states is expected to rise following the announcement of farm support packages ahead of national elections due by May. The aggregate budget deficit of Indian states is estimated to increase to 3.2% of gross domestic product (GDP) in the next financial year beginning April, compared with 2.8% estimated for the current year. Finally, the BSE Sensex gained 192.35 points or 0.53% to 36,578.96, while the CNX Nifty was up by 54.90 points or 0.50% to 10,961.85.

 

The US markets remain closed on Monday in honor of Martin Luther King Jr. Day.

 

Extending fall for the second day, Indian rupee depreciated against dollar on Monday, on increased demand for the greenback from importers amid rising crude prices. Traders remained cautious with India Ratings and Research's latest report stating that the cumulative fiscal deficit of Indian states is expected to rise following the announcement of farm support packages ahead of national elections due by May. The aggregate budget deficit of Indian states is estimated to increase to 3.2 percent of gross domestic product (GDP) in the next financial year beginning April, compared with 2.8 percent estimated for the current year. However, local currency gave up most of its intraday session losses, as traders found some support with RBI's report showing that the forex reserves continued its upward march and increased by $1.267 billion to $397.351 billion in the week to January 11, 2019, aided by a rise in core currency assets and value of gold. On the global front, dollar held near a two-week high on Monday, shrugging off concerns about weakening global growth and data showing China's economy slowed sharply in 2018. Finally, the rupee ended at 71.28, 9 paise weaker from its previous close of 71.19 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 1763.27 crore against gross selling of Rs 3691.70 crore, while in the debt segment, the gross purchase was of Rs 2060.87 crore with gross sales of Rs 960.12 crore. Besides, In the hybrid segment, the gross selling was of Rs 0.09 crore against no buying.

 

The US markets remain closed on Monday in observance of the Martin Luther King Jr. holiday, providing a pause after a bullish tilt on Wall Street to start 2019. Asian markets were trading in red on Tuesday amid signs of pessimism about world growth, while sterling dithered as the latest plan for Brexit appeared to come and go with no progress. Indian markets extended their gains for fifth straight session and ended higher with gains of around half a per cent each, supported by strong gains in heavyweight Reliance Industries coupled with positive global cues. Today, the start is likely to be weak amid lackluster cues from Asian peers and no leads from US markets as they were shut for a holiday on Monday. There will be some cautiousness with India Ratings' report warning that with populist decisions like farm loan waivers and other financial support schemes likely to gain significance in the run-up to the forthcoming next general elections, aggregate fiscal deficit of the states is expected to reach 3.2 per cent in FY20. It expects the states' revenue account on aggregate to clock a deficit of 0.5 per cent of Gross Domestic Product (GDP) in FY20 due to a higher growth in revenue spends than revenue receipt. However, traders may get support later in the day with the International Monetary Fund's (IMF) statement that India will further build its lead as the world's fastest-growing major economy as it picks up pace next year while the global economy is forecast to slow. India's GDP is forecast to expand 7.5% in FY20 and 7.7% in FY21, while China's growth is seen at 6.2% in both years. It added that India's economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease. Some support may also come as the Reserve Bank of India (RBI) proposed to relax norms for entry of new players in the retail payment systems with a view to give a boost to innovation and competition. The RBI has been issuing guidelines for various payment systems and grants authorisation to non-banks for setting up and operating payment systems. There will be some buzz in the sugar sector stocks with industry body Indian Sugar Mills Association (ISMA) revising downward the country's sugar output for the second time to 30.7 million tonne (MT) for the ongoing marketing year 2018-19, owing to a diversion for ethanol making. There will be some reaction in leather sector stocks with report that the Council for Leather Exports (CLE) has sought reduction of GST rate to 12 percent on footwear priced above Rs 1,000, to boost manufacturing and exports. There will be some important earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,961.85

10,902.58

11,004.28

BSE Sensex

36,578.96

36,386.81

36,736.07

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Sun Pharma

489.37

398.30

390.05

406.55

Yes Bank

373.05

191.95

188.27

198.07

Reliance Industries

220.39

1,237.70

1,204.25

1,255.55

Wipro

156.22

337.80

332.37

344.07

NTPC

109.90

143.40

141.78

145.88

 

  • Reliance Industries' group companies--Reliance Jio and Retail will launch a new e-commerce platform in the country.
  • L&T has inaugurated its Armoured Systems Complex in Gujarat. 
  • HDFC Bank has reported 20.32% rise in its net profit at Rs 5585.85 crore for Q3FY19 as compared to Rs 4642.60 crore for Q3FY18. 
  • Maruti Suzuki India has launched a program - Mobility & Automobile Innovation Lab to promote innovation in India for automobile and mobility space.
News Analysis