NSE Intra-day chart (22 May 2019)
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Market Commentary 23 May 2019
Benchmarks to make cautious start ahead of election outcome

 

In a volatile session, Indian equities benchmarks gained ground to settle in green terrain on Wednesday, with Sensex and Nifty reclaiming their crucial psychological levels of 39,100 and 11,700, respectively. After a cautious start, the markets remained positive for the most part of the session, aided by the Organisation for Economic Co-operation and Development's (OECD) statement that the Indian economic growth will regain strength and approach 7.5% by 2020. The new income scheme for small farmers will support rural consumption. Traders were also optimistic amid United Nations' (UN) report stating that the India's economy is projected to grow at 7.1% in current financial year (FY20) on the back of strong domestic consumption and investment. It projected the economy will grow 7% in last financial year (FY19). But, key indices faced volatility during the trade, as anxiety persisted on the street ahead of final results of the 2019 Lok Sabha elections to be declared tomorrow, May 23, 2019. But, bourses managed to end higher, taking support from a private report that land and labour reforms, privatisation and export promotion would be at the top of agenda of the new government irrespective of which party or coalition takes charge after the poll results on May 23. Markets participants took a note of the Vice President of India, M. Venkaiah Naidu's statement that India has emerged as an attractive destination for global investors and asked educational institutions to maintain high standards and foster academic excellence. Observing that India was poised to become a $5 trillion economy in the next few years, Naidu said there was a need to remove economic imbalances, urban-rural divide, end gender and social discrimination and enhance the prestige of all the institutions, including the Supreme Court, CAG, CVC, EC, Parliament and State Legislatures. Finally, the BSE Sensex gained 140.41 points or 0.36% to 39,110.21, while the CNX Nifty was up by 28.80 points or 0.25% to 11,737.90.

 

The US markets ended lower on Wednesday as traders continued to worry the trade dispute between the US and China is escalating into a full-fledged trade war. A private report said Chinas is re-examining the entire bilateral economic relationship between the US and China. Chinese government advisers are highlighting the risk of sourcing critical supplies from an increasingly hostile US following the Trump administration's recent move to blacklist Chinese tech giant Huawei. Besides, there was some cautiousness also came  as Treasury Secretary Steven Mnuchin said the US has no plans to go to Beijing to resume trade negotiations. Meanwhile, stocks remained mostly lower following the release of the minutes of the latest Federal Reserve meeting, which suggested the central bank is in no rush to alter the path of interest rates. The minutes showed members agreed that a patient approach to determining future adjustments to rates would likely remain appropriate for some time. Citing an environment of moderate US economic growth and muted inflation pressures, the Fed expects to remain patient even if global economic and financial conditions continued to improve. The Fed decided to leave interest rates unchanged at the two-day meeting ended May 1, as uncertainties affecting the US and global economic outlooks had receded but inflation pressures remained muted. Dow Jones Industrial Average dropped 100.72 points or 0.39 percent to 25776.61, Nasdaq declined 34.88 points or 0.45 percent to 7750.84 and S&P 500 was down by 8.09 points or 0.28 percent to 2856.27.

 

Crude oil futures ended sharply lower on Wednesday as US crude supplies posted a second straight weekly climb. The Energy Information Administration (EIA) reported that US crude supplies rose by 4.7 million barrels for the week ended May 17, marking a second weekly climb in a row. Analysts polled by S&P Global Platts expected a fall of 2 million barrels, on average. Data from the American Petroleum Institute on Tuesday had shown an increase of 2.4 million barrels. Total domestic crude production was estimated at 12.2 million barrels a day last week, up 100,000 barrels from the previous week. The EIA data also revealed that gasoline inventories climbed by 3.7 million barrels, while distillate stockpiles edged up by 800,000 barrels last week. Benchmark crude oil futures for July plunged $1.71 or 2.7 percent to settle at $61.42 a barrel on the New York Mercantile Exchange. July Brent crude dropped $1.19 or 1.7 percent to settle at $70.99 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally higher against dollar on Wednesday, as bankers and exporters took to selling of American currency. Sentiments were positive with the Organisation for Economic Co-operation and Development (OECD) in its Economic Outlook stating that India's economic growth will regain strength and approach 7.5% by 2020 buoyed by rural consumption and subdued inflation. Moreover, positive gains in the domestic equities too supported the domestic unit. However, gains remain capped as cautiousness remained in markets ahead of final results of the 2019 Lok Sabha elections to be declared on May 23. On the global front, dollar hovered near a four-week high on Wednesday, supported by higher US yields after the US eased trade restrictions on Chinese telecommunications equipment maker Huawei Technologies. Finally, the rupee ended at 69.66, 5 paise stronger from its previous close of 69.71 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 7068.71 crore against gross selling of Rs 5508.28 crore, while in the debt segment, the gross purchase was of Rs 634.00 crore with gross sales of Rs 430.26 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.41 crore against gross selling of Rs 1.07 crore.

 

The US markets settled in red territory on Wednesday amid report that the White House was prepared to target more Chinese technology firms in its trade wrangling with Beijing. Asian markets are trading mostly lower on Thursday as investors worried about the ongoing trade tensions between the United States and China. Indian markets ended volatile session in green territory on Wednesday amid mixed global cues on continued escalation in trade tensions. Today, the start of session is likely to be cautious ahead of the final results of the 2019 Lok Sabha elections amid weak cues from Asian peers. Counting of votes begins and final results are likely to be declared late in day. Exit polls suggest that Prime Minister Narendra Modi-led coalition government is likely to come back to power for second term, with comfortable majority. Traders will also be concerned about a private report stating that the value of merger and acquisition deals announced in April stood at $735 million (over Rs 5,100 crore), a decline of 96% from $19,142 million in the year-ago period. However, some respite may come later in the day with report that the finance ministry has prepared 100-day agenda for the new government with an aim to push the economy which has slipped to 6.6% in the third quarter of 2018-19, as the Lok Sabha election process coming to an end. Among other things, the agenda is likely to focus on increasing private investment, employment generation and giving relief to the farm sector. Besides, the agenda also include improving direct and indirect tax collection. Simplification of tax procedure especially with regards to the goods and services tax is also on the cards. There will be some buzz in the non-banking financial companies (NBFCs) stocks with report that the Finance Ministry may ask the Reserve Bank of India (RBI) to put a strong regulatory framework around NBFCs accessing non-bank public deposits, like pension and provident fund, as these are savings of the salaried class and must be kept away from avoidable risks like infrastructure NBFCs. Besides, Fitch Ratings' report stated that the debt crisis in IL&FS has adversely impacted growth of the NBFC sector in India and might lead to its consolidation. There will be lots of earnings reaction based on the performance of the companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,737.90

11,685.27

11,787.67

BSE Sensex

39,110.21

38,926.36

39,271.57

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

586.70

137.55

134.95

140.70

SBI

320.02

341.10

335.57

344.62

Tata Motors

258.46

179.10

175.80

181.40

IndusInd Bank

185.79

1,518.90

1,421.85

1,576.40

ICICI Bank

153.71

405.35

401.80

408.65

 

  • Vedanta has been declared as the preferred bidder for two copper mines in Maharashtra. 
  • Tech Mahindra has received defence order worth Rs 300 crore to enable digital transformation for the Indian Navy. 
  • Tata Motors' wholly owned subsidiary -- JLR has launched the latest version of petrol variant of Range Rover Sport in the country, priced at Rs 86.71 lakh. 
  • Maruti Suzuki India has added over 200 new workshops in 2018-19 to its nationwide network.
News Analysis