NSE Intra-day chart (21 June 2017)
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Market Commentary 22 June 2017
Markets to make a flat-to-mildly positive start


Indian equity benchmarks carried forward their southward journey for yet another session on Wednesday, as market participants waited for minutes of a June policy meet by the Reserve Bank of India (RBI) to gauge the direction of interest rates in the months ahead. Today's session largely remained characterized by choppiness as the aimless indices moved only sideways in a tight band lacking triggers for most part of the day. Sentiments remained downbeat with the inclusion of Chinese mainland stocks to the MSCI index, which could lead to hundreds of billions of dollars worth of share purchases, shrinking shares of other emerging markets, including India. Some concerns also came with CARE Ratings' latest report that the fiscal deficit estimate for 2017-18 is set to rise to 3.35% from present 3.24% of GDP, impacted by Rs 17,780 crore shortfall in non-tax revenue (NTR) target from telecom services. Besides, muted trend in other Asian markets following a renewed slump in oil prices to seven-month lows also weighed the sentiment. However, losses remained capped with the report that India's farm sector is poised for a boom as monsoon's biggest threat, the El Nino phenomenon, has been completely ruled out and heavy showers in the key agricultural regions of Punjab, Haryana and Uttar Pradesh have created the right conditions for crop planting. The widely respected Australian weather office had formally withdrawn its El Nino alert and said that outlook for the phenomenon was inactive. Meanwhile, India has witnessed a whopping 30% rise in the foreign exchange earnings from the tourism sector in the month of May, as compared to the same period in the last two years and a 19% increase in tourist footfalls. According to the Reserve Bank of India's credit data of Travel Head from Balance of Payments, foreign exchange earnings (FEEs) during the month of May 2017 were Rs 12,403 crore as compared to Rs 10,260 crore in May 2016 and Rs 9,505 crore in May 2015. Finally, the BSE Sensex declined 13.89 points or 0.04% to 31283.64, while the CNX Nifty was down by 19.90 points or 0.21% to 9,633.60.

 

The US markets closed lower on Wednesday, weighed down by losses in the energy sector as oil prices continued to slide. But the Nasdaq Composite posted moderate gains, thanks to a surge in biotechnology shares. Crude-oil futures which entered bear-market territory - pulling back 20% from a recent peak - on Tuesday, extended losses on Wednesday, settling down at $42.39 a barrel as traders looked past a decline in crude inventories to focus on a rise in domestic production. On the economy front, US home re-sales unexpectedly rose in May to the third highest monthly level in a decade and a chronic inventory shortage pushed the median home price to an all-time high. The National Association of Realtors said existing home sales increased 1.1 percent to a seasonally adjusted rate of 5.62 million units last month. The number of homes on the market rose 2.1 percent, but supply was down 8.4 percent from a year ago. The Dow Jones Industrial Average lost 57.11 points or 0.27 percent to 21,410.03, S&P 500 edged lower by 1.42 points or 0.06 percent to 2,435.61, while Nasdaq added 45.92 points or 0.74 percent to 6,233.95.

 

Crude oil futures plummeted on Wednesday to their fresh seven month low, despite government data showing a drop in U.S. oil stockpiles. The Energy Information Administration (EIA) reported that crude inventories fell 2.5 million barrels in the week to June 16, below expectations of draw of about 2.1m barrels. Gasoline inventories fell by roughly 578,000 barrels, while distillate stockpiles rose by 1.1m barrels. EIA said that surging U.S. production has offset the supply quota plan from OPEC and Russia. Output jumped to 9.35 million bpd last week, up 20,000 bpd from the previous week. Benchmark crude oil futures for July delivery ended lower by $0.98 or 2.25 percent to $42.53 on the New York Mercantile Exchange. In London, Brent crude for July delivery ended down by 2.35 percent to $44.94 on the ICE.

 

Indian rupee, after making a weak start, gave away most of its losses and concluded marginally lower against dollar on Wednesday, due to fresh demand for the American currency from banks and importers. Sentiments remained downbeat with the inclusion of Chinese mainland stocks to the MSCI index, which could lead to hundreds of billions of dollars worth of share purchases, shrinking shares of other emerging markets, including India. Some concerns also came with CARE Ratings' latest report that the fiscal deficit estimate for 2017-18 is set to rise to 3.35% from present 3.24% of GDP, impacted by Rs 17,780 crore shortfall in non-tax revenue (NTR) target from telecom services. Besides, a fragile domestic equity market too affected the rupee, but dollar's weakness against some currencies overseas kept the fall to a minimum. On the global front, dollar pulled back from one-month highs against a basket of currencies on Wednesday. Finally, the rupee ended at 64.52, 2 paise weaker from its previous close of 64.50 on Tuesday.

 

The FIIs as per Wednesday'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 4312.19 crore against gross selling of Rs 4606.90 crore, while in the debt segment, the gross purchase was of Rs 2083.27 crore with gross sales of Rs 1536.53 crore.

 

The US markets made a mixed closing in last session, as traders expressed some uncertainty about the near-term outlook for the markets following the recent record highs for the Dow and the S&P 500. The Asian markets have made mostly a positive start as the oil halted its slide. The Japanese market too was modestly up despite the yen's strength. The Indian markets, showed some valiant effort in the final hours of trade after remaining lower through the day in the last session, but could manage only a flat close with a negative bias. Today, the start is likely to be marginally in green and some recovery can be seen. However, there will be some cautiousness too with markets regulator Sebi tightening P-Note norms by levying a fee of $1,000 on each instrument and barring their issuance for speculative purposes to check any misuse for channelling of black money. Meanwhile, in order to ensure preparedness for the Goods and Services Tax (GST) roll-out from July 1, the Ministry of Electronics & Information Technology launched a dedicated webpage for facilitating taxpayers with regard to addressing issues related to IT services and electronic goods. The Union Minister of State for Energy and Coal (independent charge), Piyush Goyal, describing GST as the most revolutionary tax reform since Independence, has sought the co-operation of the trade, industry and all sections of society to make it a huge success. There will be buzz in the banking stocks, as Banks led by State Bank of India marking a significant move in the cleanup bad loans, will decide today the fate of three large defaulters-Essar Steel, Bhushan Steel and Electrosteel Steels which constitute nearly half of the loans of the top 12 defaulters identified by the Reserve Bank of India.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9633.60

9611.32

9653.17

BSE Sensex

31283.64

31206.02

31348.85

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

Hindalco

107.86

196.55

194.67

199.47

SBI

105.38

290.90

288.62

292.82

ONGC

84.12

164.80

163.28

167.38

ITC

82.80

308.95

307.10

310.90

Power Grid

77.94

205.70

204.30

207.55

  • Larsen & Toubro's construction arm -- L&T Constructions has bagged an EPC contract for the development of 50MW Solar Power PV grid connected project located at Theni and Dindigul districts in Tamil Nadu.
  • TCS will help transform the Andhra University School of Distance Education into a digital university.
  • Tata Power's Strategic Engineering Division has received an order for a pilot project from government for the supply of, Comprehensive Integrated Border Management System to Border Security Force.
  • Tata Motors' subsidiary -- Jaguar Land Rover has unveiled its new compact performance SUV, the Jaguar E-Pace.   
News Analysis