NSE Intra-day chart (24 January 2019)
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Market Commentary 25 January 2019
Markets to make positive start amid firm trade in Asian peers

 

Thursday turned out to be a volatile trading session but key Indian equity benchmarks managed to end the session in green terrain near their crucial psychological levels of 36,200 (Sensex) and 10,850 (Nifty). After a cautious start, the markets altered between green and red terrain frequently, impacted by a report that the goods and services tax (GST) collected in January (for December) is seen to be the lowest in the current fiscal. While the average collections during April-December were Rs 96,800 crore a month, the collections in January are around Rs 93,000 crore. Anxiety also spread among the investors with German Chancellor Angela Merkel's statement that countries like India and China have begun affecting the world economy much more today and that needs to be taken into account for having a relook at the global trade and financial systems. But, in the last leg of the trade, key indices held their heads above neutral lines, tracking firm cues from global markets. Traders took encouragement with Crisil Ratings' latest India Outlook FY20 report stating that India's economic growth may improve to 7.3% in the fiscal year 2019-20 (FY20), provided that there are normal rains, oil prices lower than 2018 and a stable political outcome of the general elections. It added that India is expected to clock a growth rate of 7.2 percent in the current financial year, up from 6.7 percent in 2017-18. The street got relief, amid reports that the Reserve Bank of India (RBI) will change its stance to neutral next month and cut interest rates in June at the latest. Some support came with the United Nations' World Economic Situation and Prospects (WESP) 2019 report stating that India's economy is expected to grow at 7.4 per cent during 2018-19 and improve to 7.6 per cent in the next fiscal. It added that growth continues to be underpinned by robust private consumption, a more expansionary fiscal stance and benefits from previous reforms. Finally, the BSE Sensex gained 86.63 points or 0.24% to 36,195.10, while the CNX Nifty was up by 18.30 points or 0.17% to 10,849.80.

 

The US markets ended mostly higher on Thursday after a wave of better-than-expected corporate earnings was balanced against fears around softening global economic conditions. Some support also came in on report that the Labor Department showed initial jobless claims fell to their lowest level in almost fifty years in the week ended January 19. The report said initial jobless claims slid to 199,000, a decrease of 13,000 from the previous week's revised level of 212,000. The drop surprised participants, who had expected jobless claims to rise to 220,000 from the 213,000 originally reported for the previous week. With the unexpected decrease, jobless claims fell to their lowest level since hitting 197,000 in November of 1969. However, gains remain capped, suggesting US economic growth may slow down this year, the Conference Board released a report showing a modest decrease by its index of leading US economic indicators in the month of December. The Conference Board said its leading economic index edged down by 0.1 percent in December after rising by 0.2 percent in November. The slight drop by the index matched street estimates. The modest decrease by the leading index reflected negative contributions from stock prices, the ISM New Orders Index and building permits. Nasdaq gained 47.69 points or 0.68 percent to 7073.46 and S&P 500 was up by 3.63 points or 0.14 percent to 2642.33, while Dow Jones Industrial Average declined 22.38 points or 0.09 percent to 24553.24.

 

Crude oil futures ended higher on Thursday as traders reacted to the possibility of US sanctions on Venezuelan crude amid intensifying political tensions in the South American nation. The situation in Venezuela could give support to the oil markets if sanctions are put forward, but the builds in US inventories were unexpected. The Energy Information Administration (EIA) reported that domestic crude supplies climbed by 8 million barrels for the week ended January 18. Separately, the EIA's annual energy outlook report released said US crude oil production is expected to continue to set annual records through the mid-2020s and will remain greater than 14.0 million barrels per day through 2040. Benchmark crude oil futures for March rose 51 cents or 1 percent to settle $53.13 a barrel on the New York Mercantile Exchange, while March Brent crude lost a nickel or less than 0.1 percent to settle at $61.09 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended stronger against dollar on Thursday, owing to dollar sale by exporters and banks. This was the second day of consecutive gains for the domestic currency. Sentiments remained up-beat with Crisil Ratings' report showing that India's growth rate is likely to inch up to 7.3 percent in 2019-20, provided that there are normal rains and a stable political outcome of the general elections. It added that India is expected to clock a growth rate of 7.2 percent in the current financial year, up from 6.7 percent in 2017-18. Traders also took a note of report that the Reserve Bank of India (RBI) will change its stance to neutral next month and cut interest rates in June at the latest. On the global front, US dollar pushed higher against a basket of its rivals on Thursday but gains were held in check by concerns over global growth, the US government shutdown and the ongoing US-China trade war. Finally, the rupee ended at 71.07, 26 paise stronger from its previous close of 71.33 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3850.34 crore against gross selling of Rs 4917.61 crore, while in the debt segment, the gross purchase was of Rs 330.81 crore with gross sales of Rs 598.46 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.13 crore against no selling.

 

The US markets ended mixed on Thursday following downbeat comments from Commerce Secretary Wilbur Ross that US is miles and miles from a trade deal with China coupled with the failure of congressional votes to reopen the government. Asian markets were trading in green on Friday despite fresh overnight uncertainties about US-China trade negotiations. Indian markets ended Thursday's volatile session in green territory as positive global cues helped underpin sentiment. Today, the start is likely to be in green mirroring firm trade in Asian peers. Traders will be getting some encouragement with Minister of State for Agriculture Parshottam Rupala's statement that the government will soon announce a package for farmers to boost their income, amid speculations that the Centre is considering various measures to address distress in the farm sector. There will be some support with apex exporters body, Federation of Indian Export Organisations (FIEO) stating that the tariff war between the US and China is benefitting India as its exports to the neighbouring country have increased by about 32 per cent during the June-November 2018 period to $8.46 billion. Exports to China had stood at $6.37 billion in June-November 2017. Growth in exports to China is beneficial for India as it has huge trade deficit with the neighbouring country. Traders will also be reacting to Singapore's health minister stating that India has emerged as one of the world's most-dynamic economies, developing at a great pace and keeping at the forefront of technology and social innovation. There will be some buzz in the telecom sector stocks as Telecom regulator Trai ruled out an extension of February 1 deadline for migration to the new regime for broadcasting and cable services and said it had assurances from service providers that work related to seeking consumer's choice of channels is in full swing. There will be some reaction in banking sector stocks with report that Piyush Goyal, who has been given an additional charge of the finance ministry in the absence of Arun Jaitley, is scheduled to meet chiefs of the state-owned banks on January 28 to review financial performance of the banks. Among the key issues, the meeting will take up the matter of credit flow to MSMEs, agriculture and retail sectors. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,849.80

10,810.10

10,878.05

BSE Sensex

36,195.10

36,041.76

36,303.36

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,276.04

215.40

191.27

237.27

ITC

280.26

278.90

276.72

282.22

Sun Pharma

184.46

423.00

414.07

434.97

ICICI Bank

175.21

364.80

361.53

368.28

Tata Motors

134.61

175.40

172.63

179.23

 

  • Tata Motors has launched Harrier SUV at a starting price of Rs 12.69 lakh. 
  • Maruti Suzuki India has signed a MoA with Government of Haryana to set up Japan-India Institute for Manufacturing, a model ITI, at Uncha Majra village in Gurugram district. 
  • Vedanta's parent company -- Vedanta Resources is planning to invest about $1.6 billion more in South Africa for mining minerals as it looked to deepen engagement in the African nation.  
  • Dr. Reddy's Laboratories has launched Propofol Injectable Emulsion, USP, a therapeutic equivalent generic version of Diprivan Injectable Emulsion, USP, approved by the USFDA.
News Analysis