NSE Intra-day chart (25 March 2019)
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Market Commentary 26 March 2019
Benchmarks to make a cautious start amid mixed global cues

 

Indian equity benchmarks remained in grip of bears on Monday, with both the larger peers, Sensex and Nifty closing the trading session lower by around 0.90%, each. The start of the day was somber on account of weak global cues amid growing concerns about an impending US recession. Adding some worries on the street, Vice President of India M. Venkaiah Naidu called for a renewed focus on rural health care and cautioned that the quality of healthcare being delivered cannot be determined by the price being paid. Sentiments also remain dampened, as credit rating agency ICRA in its latest report warned that the tight liquidity has crimped credit growth for housing finance companies (HFCs) and is unlikely to improve much in FY20, even as the weak external environment will put a pressure on asset quality. It noted that HFCs are likely to register a 13-15% credit growth in FY19, which will inch up to 14-16% in FY20. Markets remained under pressure throughout the day, tracking weak global markets. Domestic sentiments also remained pessimistic with a private report stating that India's industrial production is expected to stay muted in the near term, owing to weak exports, rural distress, credit constraints and uncertainty over the election outcome. According to the report, the Index of Industrial Production (IIP) is likely to have grown by 3-3.2 per cent during February 2019. Investors paid no heed towards the Reserve Bank of India's (RBI) report showing that India's foreign exchange reserves surged by a whopping $3.602 billion to $405.638 billion in the week to March 15, driven by rise in foreign currency assets. Traders also failed to take any sense of relief with the Employees' Provident Fund Organisation (EPFO) data report that net employment generation in the formal sector touched a 17-month high of 8.96 lakh in January. The addition in January was 131% higher as compared with 3.87 lakh EPFO subscribers added in the year-ago month. Finally, the BSE Sensex lost 355.70 points or 0.93% to 37,808.91, while the CNX Nifty was down by 102.65 points or 0.90% to 11,354.25.

 

The US markets ended mostly in red on Monday  on account of lingering concerns about the outlook for the economy continued to weigh on the markets after dragging stocks sharply lower last Friday. An inversion of the yield curve contributed to economic worries, with the yield on the benchmark ten-year note falling below the yield on three-month bills. The US has thus far held up relatively well amid a global economic slowdown, although Federal Reserve Chairman Jerome Powell has warned about the negative impact slowing growth in Europe and China will have on the US Powell's comments came after the Fed revealed that it no longer expects to raise interest rates this year, which some Participates described as an effort to keep the stock markets afloat amid an expected contraction in first quarter earnings. Besides, the choppy trading on markets came as traders seemed reluctant to make more significant moves amid a quiet day on the US economic front. Reports on housing starts, consumer confidence, pending home sales, personal income and spending and new home sales are likely to attract attention in the coming days. Traders are also likely to keep an eye on the latest round of high-level trade talks between the US and China set to take place in Beijing this week. However, Dow Jones Industrial Average bucked the trend to rise as shares of Boeing Company rallied after recent losses. Boeing BA shares rose 2.3%, recouping some of the losses in the wake of the fatal crash of the company's 737 Max 8 aircraft near Ethiopia's capital, Addis Ababa that resulted in the death of 157 people. The stock is down 16% so far this month. Nasdaq lost 5.13 points or 0.07 percent to 7637.54 and S&P 500 was down by 2.35 points or 0.08 percent to 2798.36, while Dow Jones Industrial Average gained 14.51 points or 0.06 percent to 25516.83.

 

Crude oil futures ended lower on Monday on the back of persistent worries about an economic slowdown hurting energy demand. However, Brent crude ended higher, which found support from ongoing cuts among major crude producers as well as tensions in Venezuela. Meanwhile, tensions surrounding the Organization of the Petroleum Exporting Countries (OPEC) member Venezuela heated up Monday. US Secretary of State Mike Pompeo told Russian Foreign Minister Sergei Lavrov that the US will not stand idly by if Russia continues to send military personnel to Venezuela to support the regime of Nicolas Maduro. Benchmark crude oil futures for May declined 22 cents or 0.4 percent to settle at $58.82 a barrel on the New York Mercantile Exchange. However, May Brent crude added 18 cents or 0.3 percent to settle at $67.21 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended almost flat against dollar on Monday, on account of some buying in American currency by banks and importers. Traders remained wary with a private report stating that India's industrial production is expected to stay muted in the near term, owing to weak exports, rural distress, credit constraints and uncertainty over the election outcome. According to the report, the Index of Industrial Production (IIP) is likely to have grown by 3-3.2 per cent during February 2019. Rupee was weighed down also on the back of rise in global crude oil prices along with sharp losses in the local equities. On the global front, dollar edged back from a six-week low against yen on Monday, as a degree of calm returned to the market gripped by fears of a recession in the United States. Finally, the rupee ended at 68.96, 1 paise weaker from its previous close of 68.95 on Friday.

 

The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 8133.57 crore against gross selling of Rs 6697.41 crore, while in the debt segment, the gross purchase was of Rs 2972.27 crore with gross sales of Rs 2485.80 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.57 crore against gross selling of Rs 0.55 crore.

 

The US markets ended Monday's choppy trading session mostly lower, as investors wrestled to make sense of newly pessimistic outlooks for the global economy. Asian markets are trading mostly higher on Tuesday as European and North American markets stabilised in the overnight session. Indian equity markets extended their losses for second consecutive session on Monday, as Sensex and Nifty settled with cut of around a percent, following global sell-off on growing fears of US economy entering into recession. Today, the markets are likely to make a cautious start amid mixed global cues. Traders will be concerned about state-run India Meteorological Department's (IMD) statement that its study of global models shows that there is little chance of a strong El Nino in 2019. A strong El Nino could have an adverse impact on India's southwest monsoon that starts from June as almost 80 per cent of El Nino years have seen below normal rains. There will be some cautiousness with a report stating that food inflation in the country is likely to go up to 2 per cent in the financial year 2019-20 from the 0.7 per cent estimated for FY19. The report noted that the low food prices have been one of the prime factors which have aided the RBI to be more accommodatory in its rate setting recently. Traders will also be reacting to the Employees State Insurance Corporation (ESIC) data showing that job creation fell by 6.91 per cent in January to 11.23 lakh compared to 12.06 lakh in the same month last year. During September 2017 to January 2019, as many as 2.08 crore new subscribers joined the ESIC scheme. However, traders may get some support later in the day with the finance ministry's statement that the liquidity situation in the economy was comfortable, and it will improve further with the central bank's move to infuse Rs 35,000 crore through the rupee-dollar swap arrangement, announced last week. Meanwhile, markets regulator SEBI has reviewed and modified the commission as well as disclosure norms for the mutual fund industry. There will be some buzz in the telecom sector stocks with ICRA's report stating that the Reliance Jio-induced pains for the telecom sector will continue with the industry slated to report decline in revenue for the third consecutive year. However, it said there is room for a minor recovery in the upcoming fiscal year 2019-20. Also, India is considering to seek extension of the deadline set by the US for withdrawal of export benefits to domestic exporters under Generalized System of Preferences (GSP) programme.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,354.25

11,312.02

11,396.07

BSE Sensex

37,808.91

37,645.29

37,994.65

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

NTPC

315.36

135.35

133.57

137.32

IOC

236.86

164.35

157.60

168.50

Yes Bank

235.40

247.25

245.43

249.73

ONGC

226.38

158.65

152.72

162.57

SBI

168.96

294.00

292.32

295.57

 

  • L&T's construction arm -- L&T Construction has secured orders from prestigious clients across different states in India. 
  • Tata Motors is going to increase prices of its passenger vehicles range by up to Rs 25,000, starting April 2019. 
  • NTPC is all set to commence commercial operation of Unit 3 of 250 MW of Bongaigaon Thermal Power Project with effect from March 26, 2019. 
  • Bharti Airtel has slashed ISD call rates to Bangladesh and Nepal by up to 75 percent for pre-paid customers without any need for a special recharge to cut the tariff.
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