NSE Intra-day chart (24 May 2019)
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Market Commentary 27 May 2019
Benchmarks to make pessimistic start amid mixed Asian cues

 

Indian equity benchmarks settled at lifetime closing high on Friday, as investors felt assured of policy stability after a decisive mandate for the Narendra Modi-led BJP in the general elections. The markets made a firm start of the day, aided by Fitch Ratings' latest report stating that a landslide victory of the Bharatiya Janata Party (BJP) marked an easing of political uncertainty and is expected to improve business sentiment and the outlook for private investment. From a credit rating perspective, it would focus on the extent of the next government's efforts to improve India's weak fiscal finances. The street took a note of Central Board of Direct Taxes' (CBDT) latest notification that senior citizens with a taxable income of up to Rs 5 lakh can now submit in banks and post offices Form 15H to claim exemption from Tax Deducted at Source (TDS) on interest income on deposits. Earlier, the limit for seeking TDS exemption was Rs 2.5 lakh. Markets further gained traction to end the trading session with fabulous gains of over 1.50%, following firm European markets. Key indices were optimistic amid reports that major industry bodies have hailed the election verdict and said the transformation of India is on a fast track with several innovative mega missions under the leadership of Prime Minister Narendra Modi. Vikram Kirloskar, President of the Confederation of Indian Industry (CII) said that the decisive election results will propel India's growth pace to the next orbit and drive the transformation of the country. Meanwhile, Moody's Investors Service in its latest report said that its credit view on the country will depend on policies of the new government. As per the trend, BJP-led National Democratic Alliance (NDA) will form the government at the Centre for the second successive term with absolute majority. Finally, the BSE Sensex gained 623.33 points or 1.61% to 39,434.72, while the CNX Nifty was up by 187.05 points or 1.60% to 11,844.10.

 

The US markets ended higher on Friday as some traders looked to pick up stocks at reduced levels following Thursday's steep losses. Some support also came in from easing trade concerns as President Donald Trump said he remains hopeful of a US-China trade deal, noting he will meet with Chinese President Xi Jinping at the G20 summit next month. Trump said that the US could ease up on its ban against Huawei as some part of a wider trade deal with China. Meanwhile, UK Prime Minister Theresa May's decision to step down, effective June 7, after several failed attempts to negotiate an agreement for Britain to leave the European Union. Britain has until October 31 to reach a deal to leave the EU. On the economic front, after reporting a significant rebound in new orders for U.S. durable goods in the previous month, the Commerce Department released a report showing durable goods orders pulled back in the month of April. The report said durable goods orders tumbled by 2.1 percent in April after jumping by a downwardly revised 1.7 percent in March. Orders for transportation equipment led the pullback, plunging by 5.9 percent in April after surging up by 5.9 percent in March. The report said orders for non-defense aircraft and parts plummeted by 25.1 percent in April after soaring by 7.8 percent in the previous month. Excluding the steep drop in orders for transportation equipment, durable goods orders were unchanged in April following a revised 0.5 percent drop in March. Dow Jones Industrial Average surged 95.22 points or 0.37 percent to 25585.69, Nasdaq gained 8.73 points or 0.11 percent to 7637.01 and S&P 500 was up by 3.82 points or 0.14 percent to 2826.06.

 

Recouping a portion of recent losses, Crude oil futures ended higher with gains of over one percent on Friday. Oil prices found some support from gains in global stock markets. US stocks surged following reports that President Donald Trump is likely to ease up on restrictions against Huawei Technologies Inc. as part of a bigger trade deal with China. However, Commodity investors feared that tariff tensions between the US and China could intensify a deceleration of the global economy that appears to already be at hand in Europe. On Monday, there will be no regular trading for West Texas Intermediate (WTI) on Nymex, though ICE-traded Brent crude will have shortened trading hours. Benchmark crude oil futures for July rose 72 cents or 1.2 percent to settle at $58.63 a barrel on the New York Mercantile Exchange. July Brent crude gained 93 cents or 1.4 percent to settle at $68.69 a barrel on London's Intercontinental Exchange.

 

Reversing previous session's losses, Indian rupee staged a smart recovery against dollar on Friday, following dollar selling from banks and exporters. Traders took encouragement with Fitch Ratings' statement that the Bharatiya Janata Party's (BJP) apparent landslide victory is likely to improve business sentiment and outlook for private investment. It said that from a credit rating perspective, Fitch would focus on the extent of the next government's efforts to improve India's weak fiscal finances. Besides, weakness in the dollar against some other currencies overseas along with good going in the local equity markets gave the uptrend some momentum.  On the global front, US dollar declined against most of its major rivals on Thursday amid investors' growing appetite for the Japanese Yen. Finally, the rupee ended at 69.53, 49 paise stronger from its previous close of 70.02 on Thursday.

 

The FIIs as per Friday'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 8288.64 crore against gross selling of Rs 6848.78 crore, while in the debt segment, the gross purchase was of Rs 623.87 crore with gross sales of Rs 654.79 crore. Besides, in the hybrid segment, the gross buying was of Rs 59.81 crore against gross selling of Rs 48.27 crore.

 

The US markets ended higher on Friday amid easing trade concerns as President Donald Trump said he remains hopeful of a US-China trade deal. Asian markets are trading mixed on Monday as investors watched for developments from US President Donald Trump's state visit to Japan as well as results from the European parliamentary election. Indian markets ended higher on Friday, with gains of over 1.5 per cent each, as investors cheered Prime Minister Narendra Modi's landslide win in Lok Sabha election as well as a steep fall in oil prices overnight. Today, the start of the F&O series expiry week is likely to be pessimistic, tailing the mixed global cues. Market-participants will be eyeing Q4 GDP data, scheduled to be announced later in the week. There will be some cautiousness with a report that foreign investors have pulled out a net amount of Rs 4,375 crore from the Indian capital markets in May so far, driven by global and domestic factors. Also, the Reserve Bank of India's (RBI) data showed that after rising for the past few weeks, the country's foreign exchange reserves declined $2.057 billion to $417.998 billion in the week to May 17 on account of a fall in foreign currency assets. Traders will also be concerned about a report stating that the fourth quarter (January to March 2019) financial results released by 304 companies in the corporate sector show a sequential drop in revenue growth to 10.7 per cent from 20.1 per cent in the previous quarter (October to December 2018). Traders may take note of a report that the upcoming Budget in July may revise the fiscal deficit of 3.4 per cent upwards in view of the need to step up public expenditure to beat the economic slowdown while keeping in mind tax revenue are not going to grow at the required pace to match up with increased expenditure. However, traders may take some encouragement later in the day with the RBI's statement that it will inject Rs 15,000 crore into the financial system next month through purchase of government bonds via the auction route. The decision has been taken in view of the evolving liquidity situation. There will be some buzz in the banking sector stocks with report that public sector banks (PSBs) have recovered close to Rs 1.2 lakh crore from stressed assets during the financial ended March, primarily helped by resolution under the Insolvency and Bankruptcy Code (IBC). There will be some reaction in Non-Banking Financial Companies' (NBFCs) stocks with report that the RBI proposed a set of guidelines for large NBFCs to help them deal with severe liquidity problems and prevent re-occurrence of IL&FS type of debt crisis. There will be lots of earnings reaction to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,844.10

11,715.13

11,916.03

BSE Sensex

39,434.72

39,013.66

39,666.37

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

452.75

141.20

139.50

142.90

ICICI Bank

377.08

431.75

418.42

439.32

State Bank of India

357.03

355.35

346.90

360.40

Tata Motors

224.94

182.30

177.27

185.42

Zee Entertainment Enterprises

194.73

376.85

361.60

386.25

 

  • Infosys has completed the formation of a strategic partnership with ABN AMRO in the Netherlands. 
  • Cipla has signed an agreement to acquire 26% stake on a fully diluted basis in AMPSolar Power Systems. 
  • JSW Steel has reported a fall of 48.07% in its consolidated net profit at Rs 1,495 crore for Q4FY19 as compared to Rs 2,879 crore for Q4FY18. 
  • L&T has acquired over 4.5 lakh shares of Mindtree from the open market on May 23, 2019.
News Analysis