NSE Intra-day chart (23 April 2019)
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Market Commentary 24 April 2019
Markets likely to make a cautious start on Wednesday

 

Indian equities gave up their all gains to end Tuesday's session in red terrain, with Sensex and Nifty breaching their crucial psychological levels of 38,600 and 11,600, respectively. After a positive start, markets managed to keep their heads above water for the most part of the session, taking support from a private report stating that sales of Indian junk bonds have made a big comeback in 2019, almost tripling to hit a five-year high, boosted by a risk-on rally prompted by a dovish US Federal Reserve that has given the Asia market a record start to the year. Indian companies have sold $3.7 billion in high-yield, or junk-rated, bonds so far this year, an increase of 187% from 2018. Investors were encouraged as the Reserve Bank of India (RBI) is set to inject long-term liquidity worth $5 billion into the banking system through dollar-rupee buy-sell swap for a tenure of three years, the second such auction within a month. The RBI's dollar-rupee swap auction would help absorb dollar inflows that could make the rupee stronger. However, in the last leg of the trade, key indices lost their ground, following weak European markets. Trading sentiments got hit, as the Employees State Insurance Corporation (ESIC) in its latest payroll data showed that job creation declined by 1.73% in February 2019 to 15.03 lakh compared to 15.30 lakh in the same month last year. Market participants also got cautious with a private report stating that the India Volatility Index shot up to a three-year high of 24.05 on April 22, amid rising uncertainty over the new government formation and soaring crude oil prices. The India VIX, the fear gauge for domestic equities, rose 5.76 per cent to settle at 24.05, after an intra-day high of 24.56. Meanwhile, PHD Chamber of Commerce and Industry (PHDCCI) Delegation has discussed concerns of the Chamber related to the growth of the economy, exports, liquidity , Micro, Small and Medium Enterprises (MSMEs), NBFCs, Affordable Housing and Real Estate sector with Reserve Bank of India (RBI) Governor. Finally, the BSE Sensex slipped 80.30 points or 0.21% to 38,564.88, while the CNX Nifty was down by 18.50 points or 0.16% to 11,575.95.

 

The US markets ended higher on Tuesday as investors cheered the latest batch of solid corporate earnings, including those from blue-chip Coca-Cola and social-media brands such as Twitter Inc. United Technologies and Coca-Cola both moved notably higher on the day after reporting better than expected first quarter results. Shares of Twitter (TWTR) also saw significant strength after the social media giant reported better than expected first quarter earnings, revenue, and user growth. Toy maker Hasbro (HAS) also moved sharply higher after unexpectedly turning a profit in the first quarter on better than expected revenues. Besides, positive sentiment was also generated by a Commerce Department report showing new home sales in the US unexpectedly jumped to their highest level in well over a year in the month of March. The Commerce Department said new home sales surged up by 4.5% to an annual rate of 692,000 in March after soaring by 5.9% to a revised rate of 662,000 in February. The continued increase surprised participants, who had expected new home sales to drop by 2.5% to a rate of 650,000 from the 667,000 originally reported for the previous month. With the unexpected spike, new home sales reached their highest annual rate since hitting 712,000 in November of 2017. The report also showed new home sales in March were up by 3.0% compared to the same month a year ago, reflecting a notable turnaround from the revised 0.2% annual drop in February. The unexpected monthly increase in new home sales was partly due to strength in the Midwest, where new home sales skyrocketed by 17.6% to a rate of 87,000. New home sales in the West and South also jumped by 6.7% and 3.6%, respectively, while new home sales in the Northeast plunged by 22.2%. Dow Jones Industrial Average surged 145.34 points or 0.55 percent to 26656.39, Nasdaq gained 105.56 points or 1.32 percent to 8120.82 and S&P 500 was up by 25.71 points or 0.88 percent to 2933.68.

 

Crude oil future settled higher on Tuesday as traders reacted to tougher action against Iran's oil market from the US. Crude's latest rise extends Monday's rally on the heels the US decision to end waivers for countries importing Iranian oil, as part of a bid by the Trump administration to push Iran's exports to zero. The current waivers expire on May 2. Though, the Trump administration has said that other OPEC members such as Saudi Arabia and UAE will ensure adequate oil supplies, but those countries are still seething from the fact that Trump granted waivers to Iranian oil buyers in the first place, after they both raised output to replace oil from sanctions that never really happened. They lost billions and are not happy. So they will not raise output pre-emptively. Benchmark crude oil futures for June surged 75 cents or 1.1 percent to settle at $66.30 a barrel on the New York Mercantile Exchange. June Brent crude gained 47 cents or 0.6 percent to settle at $74.51 a barrel on London's Intercontinental Exchange.

 

Indian rupee pared all of its initial losses and ended marginally higher against dollar on Tuesday, owing to dollar sale by exporters and banks. Traders took some support as the Reserve Bank of India (RBI) is set to inject long-term liquidity worth $5 billion into the banking system through dollar-rupee buy-sell swap for a tenure of three years, the second such auction within a month. The RBI's dollar-rupee swap auction would help absorb dollar inflows that could make the rupee stronger. However, late hour sell-off in domestic equity market along with dollar's strength against major global currencies capped the gains. On the global front, dollar held near three-week highs on Tuesday as a drop in market volatility ramped up demand for riskier assets, with higher U.S. bond yields also offering some support. Finally, the rupee ended at 69.62, 5 paise stronger from its previous close of 69.67 on Monday.

 

The FIIs as per Tuesday'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 2660.04 crore against gross selling of Rs 2552.13 crore, while in the debt segment, the gross purchase was of Rs 110.72 crore with gross sales of Rs 347.25 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.47 crore against gross selling of Rs 2.14 crore.

 

The US markets rallied on Tuesday, as upbeat results from Coca-Cola, Twitter and a host of industrial companies allayed investor concerns about slowing profits. Asian markets are trading mostly in red on Wednesday, despite gains on Wall Street. Indian markets wiped out all of their early gains and ended Tuesday's trading session in red territory for third straight day, mainly on the back of late hour sell-off amid higher crude oil prices. Today, the markets are likely to make a cautious start amid lackluster cues from Asian peers. There will be cautiousness with Care Ratings' report warming that a possible increase in fuel prices due to the US sanctions on Iranian crude exports can have adverse impacts on the current account deficit (CAD), the rupee and inflation. It said a 10 percent spike in crude prices can result in a 0.40 percent widening of the CAD, which can consequently play out into a 3-4 percent depreciation in the rupee and also push up inflation by 0.24 percent. However, some respite may come in with the Reserve Bank of India's (RBI) statement that it will buy government securities worth Rs 25,000 crore next month through two auctions of Rs 12,500 crore each. Based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward, RBI has decided to conduct purchase of government securities under (OMOs). Besides, the RBI on Tuesday conducted its second successful dollar swap auction of $5 billion, receiving bids worth $18.65 billion, or more than three times what was on offer. Unlike the last time, RBI accepted bids from a small number of bidders. Meanwhile, markets regulator SEBI has reduced the minimum subscription requirement as well as defined trading lots for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). REITs have to offer their units in lots worth at least Rs 50,000 in initial and follow on public offers. There will be some buzz in the micro finance industry stocks with ICRA's report that the micro finance industry is on the path of recovery and is likely to see a growth of 20-22 per cent in 2019-20 despite last year's liquidity squeeze. It added that as of December 31, 2018, the overall micro loan market size (including SHG Bank linkage programme) was Rs 2.37-lakh crore. There will be some reaction in power sector stocks with rating agency ICRA stating that it has estimated 7-7.5 GW solar power capacity addition during the current financial year, which includes 1 GW of rooftop solar.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,575.95

11,545.18

11,626.33

BSE Sensex

38,564.88

38,444.56

38,758.91

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

432.33

232.70

227.25

241.40

Tata Motors

189.75

231.65

229.32

234.92

SBI

173.24

305.25

301.98

311.13

Indiabulls Housing Finance

142.76

744.20

721.92

767.57

Bharti Airtel

114.13

316.50

312.00

323.20

 

  • Reliance Industries' telecom arm -- Jio has been emerged as the fastest mobile network in terms of download speed during March. 
  • Kotak Mahindra Bank has become the first lender to go live with both debit card and net banking- based electronic mandates on NPCI's e-Mandate API platform. 
  • SBI has launched SBI green car loan scheme which provide a discounted loan for buyers of electric vehicles pricing 20 basis points lower than its existing auto loans. 
  • Maruti Suzuki's Alto has become the best-selling passenger vehicle model in India in 2018-19, leading the pack of the auto major's models that grabbed seven places in the top 10 list.
News Analysis