NSE Intra-day chart (22 October 2019)
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Market Commentary 23 October 2019
Markets to open marginally in red amid weak global cues

 

Indian equity bourses broke 6-day winning rally on Tuesday's trading session, with Sensex and Nifty closing lower by 334 and 73 points, respectively. The day started on a cautious note, as Finance Minister Nirmala Sitharaman cautioned that trade wars and protectionism have generated uncertainties, which will ultimately impact the flow of capital, goods and services. Anxiety also came among investors, amid a report showing that as many as 360 infrastructure projects, each worth Rs 150 crore or more, have shown cost overruns to the tune of over Rs 3.88 lakh crore owing to delays and other reasons. Key equity benchmarks remained lackluster during the whole trading session, despite the International Monetary Fund's (IMF) statement that India's decision to reduce corporate income tax to help revive investment. Though, the agency said India should address continued fiscal consolidation and secure long-term stability of the fiscal conditions. Market participants paid no heed towards the Retirement fund body, Employment Provident Fund Organisation's (EPFO) latest Provisional Estimate of Net Payroll data report showing that India created 10,86,113 new jobs in the month of August 2019. Finally, the BSE Sensex lost 334.54 points or 0.85% to 38,963.84, while the CNX Nifty was down by 73.50 points or 0.63% to 11,588.35.

 

The US markets ended lower on Tuesday as traders digested the latest batch of earnings reports. Shares of McDonald's (MCD) came under pressure after the fast food giant reported third quarter results that missed Street estimates on both the top and bottom lines. Delivery giant UPS (UPS) also saw notable weakness after reporting third quarter earnings that beat expectations but on weaker than expected sales. Besides, some cautiousness also prevailed in the markets amid renewed uncertainty about Brexit after UK lawmakers voted to move forward with legislation related to Britain's withdrawal from the European Union but then voted against a shortened time frame to review the bill.  Members of Parliament narrowly voted against the limited time frame, which would have provided just three days to evaluate the legislation. The vote suggests lawmakers will not meet an October 31 deadline, setting the stage for another extension by the EU to avoid a no-deal Brexit. On the economic front, after reporting an unexpected jump in existing home sales in the previous month, the National Association of Realtors (NAR) released a report showing existing home sales pulled back by much more than anticipated in the month of September. NAR said existing home sales plunged by 2.2 percent to an annual rate of 5.38 million in September after jumping by 1.5 percent to an upwardly revised 5.50 million in August. Street had expected existing home sales to drop by 0.7 percent to a rate of 5.45 million from the 5.49 million originally reported for the previous month.

 

Crude oil futures ended higher on Tuesday on a report that major oil producers are likely to consider deeper production cuts when they meet in December. Members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies will consider making further reductions to crude output when they meet in December because of growing concerns about a slowdown in growth for oil demand. The report also said OPEC member Saudi Arabia wants to first lift adherence to the agreement, as Iraq and Nigeria are among the countries that have not fully complied with the reductions. Benchmark crude oil futures for November rose 85 cents or 1.6 percent to settle at $54.16 a barrel on the New York Mercantile Exchange. December Brent gained 74 cents or 1.3 percent to settle at $59.70 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended stronger against dollar on Tuesday, as optimism about US-China trade talks and easing crude oil prices enthused investors. Traders also remained optimistic with commerce and industry minister Piyush Goyal's statement that in a clear sign that India and the US are close to finding common ground on their outstanding trade issues that started looking intractable. However, dollar's strength against major global currencies overseas along with lackluster trade in the equity markets restricted the further up move. On the global front, euro was steady on Tuesday after rising to a two-month high in the previous session versus the dollar as traders waited for the British parliament to vote on the Withdrawal Agreement Bill as it will shine light on when and how Britain will exit the EU. Finally, the rupee ended at 70.94, 20 paise stronger from its previous close of 71.14 on Friday.

 

The FIIs as per Tuesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 5509.22 crore against gross selling of Rs 5401.47 crore, while in the debt segment, the gross purchase was of Rs 1144.15 crore with gross sales of Rs 824.83 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.05 crore against gross selling of Rs 0.81 crore.

 

The US markets ended lower on Tuesday after British lawmakers rejected the government's proposed timetable for passing legislation to ratify its deal to exit the European Union. Asian markets are trading in red on Wednesday following overnight losses on Wall Street. Indian markets snapped six-day gaining streak and ended lower on Tuesday, amid sharp fall in Infosys, while weak earnings from a raft of companies further dented investors' sentiment. Today, the markets are likely to make flat-to-negative start tracking weak global cues. There will be some cautiousness with report that corporate India's merger and acquisition activity in the July-September quarter witnessed a downtrend with total deal value falling by more than half over the last year, largely owing to a slump in economic activity and lack of big ticket deals. Investors will also be concerned with report that India Ratings & Research (Ind-Ra) has attributed widening of fiscal deficit in states in 2018-19 to slippage on the non-capital expenditure by them. The rating agency believed that meeting the N K Singh panel's recommended level of aggregate debt burden at 20 per cent of GDP by 2022-23 by states will be a challenge in an economic environment characterised by slow growth and weak demand. Traders may take note of a private report that as a run-up to the first supplementary demand for grants, the govt is likely to be saddled with large demands for additional expenditure from a number of departments. Though, some support may come later in the day with report that GDP growth numbers in China and India were not terrible, suggesting the slowdown should not cause excessive pessimism. Meanwhile, markets regulator SEBI came out with a framework for listing of commercial papers on stock exchanges in order to broaden investor participation in such securities. To enable listing of commercial papers (CPs) and to ensure investor protection, Sebi noted that it is important that issuers, who intend to list such securities, make appropriate disclosures at the time of listing and on a continuous basis. Banking stocks will be in focus with global rating agency Fitch's report that banks would face a capital shortfall of about $50 billion (about Rs 3.5 lakh crore) in the event of a systemic crisis in the non-banking financial company (NBFC) sector. The study estimated that the banking system's gross NPA ratio would rise to 11.6 percent by 2020-21 from 9.3 percent at 2018-19. There will be some reaction in steel stocks with Icra's report that domestic hot-rolled coil (HRC) prices, which remained much higher than the anti-dumping duty (ADD) levels throughout FY2018 and FY2019, have corrected steeply, dropping below the ADD stipulated level for the first time in the second week of October 2019. There will be lots of earnings reaction based on the performance of the companies, to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,588.35

11,536.55

11,677.25

BSE Sensex

38,963.84

38,783.64

39,285.26

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

4,074.38

51.80

49.17

55.52

Infosys

901.53

643.55

624.23

676.98

Tata Motors

535.32

131.75

129.17

134.97

ICICI Bank

349.66

451.15

439.57

460.72

SBI

275.74

270.50

267.67

274.17

 

  • Topcoder, a Wipro company, has added new data science and AI features to the Topcoder Platform. 
  • Bharti Airtel has inked a pact with AMPSolar Evolution to acquire 26 percent stake in the solar power firm for Rs 8.4 crore. 
  • HDFC has localized its website in six Indian languages, in addition to English, to help homebuyers get home loan related information more effectively. 
  • Tata Steel has cut Tarapur unit production by 15% since the past six months, amid deepening slowdown in the automotive sector.
News Analysis