NSE Intra-day chart (25 January 2019)
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Market Commentary 28 January 2019
Markets likely to start marginally in green on Monday

 

Last hour sell-off pulled Indian equity benchmarks lower on Friday, with both the larger peers, the Sensex and the Nifty ending the session lower by over 150 and 50 points, respectively. The markets made a fabulous start of the day, aided by 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. Adding some optimism, Vice President M Venkaiah Naidu said that the country's Goods and Services Tax would usher in long term gains despite initial problems and claimed that the world would take a cue from the GST experiment. However, key indices failed to hold the momentum and ended the session in negative terrain, despite positive cues from global markets. Domestic sentiments got hit after Global rating agency Moody's said that the government policies to support the incomes of small enterprises and low-income households ahead of Lok Sabha elections will make fiscal consolidation harder. It further said that the fiscal deficit may touch 3.4 per cent of gross domestic product (GDP) for year ending March 2019, breach the target of 3.3 per cent. Adding some anxiety, United Nations head Antonio Guterres said that trade tensions impacting the world economy were essentially a political problem and warned that a fragmented response to global challenges was a recipe for disaster. The street overlooked reports 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. Finally, the BSE Sensex lost 169.56 points or 0.47% to 36,025.54, while the CNX Nifty was down by 69.25 points or 0.64% to 10,780.55.

 

The US markets ended higher on Friday as investors focused on a broadly positive picture painted by earnings season so far.  Support also came as US Treasury Secretary Steven Mnuchin reportedly said the US and China are making a lot of progress in trade talks. Mnuchin is looking forward to a meeting with Chinese Vice Premier Liu He next week, which will also include discussions on currency issues. Besides, Stocks remained firmly positive as President Donald Trump announced an agreement to end the record-setting government shutdown. Trump revealed in a speech from the White House rose garden that lawmakers will vote later today on legislation to fund the shuttered parts of the government until February 15. The bill will not include money for Trump's controversial border wall, which was the issue that led to the longest government shutdown in US history. Trump indicated that the three weeks of funding provided by the legislation will give lawmakers time to negotiate on the contentious issue of border security. Trump said Many disagree, but I really feel that, working with Democrats and Republicans, we can make a truly great and secure deal happen for everyone. With the announcement, Trump seemed to give in to Democratic demands to re-open the government before negotiating on border security. Though, if an agreement on border security is not reached by February 15, Trump suggested the government could shut down again or he could declare the situation on the border a national emergency. Dow Jones Industrial Average surged 183.96 points or 0.75 percent to 24737.20, Nasdaq gained 91.40 points or 1.29 percent to 7164.86 and S&P 500 was up by 22.43 points or 0.85 percent to 2664.76.

 

Crude oil futures ended higher on Friday supported by supply concerns tied to Venezuela. A dramatic escalation in tensions has raised fears that the US could impose sanctions on Venezuelan oil, threatening to complicate the Organization of the Petroleum Exporting Countries' (OPEC) job of balancing global oil supplies. A defiant Maduro called home all Venezuelan diplomats from the US and closed its embassy, a day after ordering all US diplomats out of the country by the weekend. However, gains remain capped on account of hefty weekly rise in US crude supplies. The Energy Information Administration (EIA) reported that domestic crude supplies climbed by 8 million barrels for the week ended January 18, a two-month high. That was contrary to expectations for a fall of 600,000 barrels. Benchmark crude oil futures for March gained 56 cents or 1.1 percent to settle $53.69 a barrel on the New York Mercantile Exchange, while March Brent crude rose 55 cents or 0.9 percent to settle at $61.64 a barrel on London's Intercontinental Exchange.

 

Erasing all of the initial gains, Indian rupee ended weaker against dollar on Friday, due to fresh demand for the American currency from banks and importers. Traders remained concerned after Global rating agency Moody's said that the government policies to support the incomes of small enterprises and low-income households ahead of Lok Sabha elections will make fiscal consolidation harder. It further said that the fiscal deficit may touch 3.4 per cent of gross domestic product (GDP) for year ending March 2019, breach the target of 3.3 per cent. However, losses remained capped with FIEO stating that the tariff war between the US and China is benefitting India as its exports to the neighboring 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 neighboring country. On the global front, euro was down in the forex markets as trading got underway on Friday following a warning from the European Central Bank. Finally, the rupee ended at 71.17, 10 paise weaker from its previous close of 71.07 on Thursday.

 

The FIIs as per Friday's data were net sellers in equity segment, while they were net buyers in debt segment In equity segment, the gross buying was of Rs 4032.25 crore against gross selling of Rs 4226.96 crore, while in the debt segment, the gross purchase was of Rs 1083.60 crore with gross sales of Rs 533.52 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.61 crore against no selling.

 

The US markets ended in green on Friday, as mostly positive earnings results and a report that the Federal Reserve will maintain a larger portfolio of Treasury securities helped boost investor sentiment. Asian markets are trading higher on Monday as Wall Street rallied after a deal was announced to reopen the US government following a prolonged shutdown that had shaken investor sentiment. Indian equity markets wiped out early gains to end notably lower on Friday as weak third quarter earnings overshadowed positive cues from global markets. Today, the start of the new week is likely to be marginally in green tacking positive global cues. Traders will be getting encouragement with the Economic Advisory Council to the Prime Minister's (EAC-PM) statement that India's economic growth is expected to remain in the range 7-7.5 per cent in the next few years. The council observed that the growth rate can be easily increased by 1 per cent by addressing structural problems through reforms. Some support will also come with Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra's statement that the government will exceed the direct tax target of Rs 11.5 trillion in the financial year 2018-19. Traders may take note of Union Commerce and Industry Minister Suresh Prabhu stating that new policies of the government will ensure the doubling of exports, currently pegged at $321 billion, in a few years. He said the policy focuses on five key elements, namely agriculture, horticulture, plantation, fisheries and meat. Meanwhile, the Union cabinet is likely to approve a package for farmers to boost their income and address distress in the farm sector, the move will come ahead of the general elections. However, there may be some cautiousness with Moody's Investors Service's statement that the steps announced by the government to aid MSMEs and the measures being planned to support farmers will increase the risk of fiscal slippage and push deficit to 3.4 per cent of GDP in the current financial year. The government budgeted the fiscal deficit for the current financial year at 3.3 per cent of the gross domestic product (GDP). Besides, foreign investors have pulled out close to Rs 6,000 crore so far from the Indian stock markets in January and experts believe this trend will continue in the coming months as well. There will be some buzz in the banking sector stocks with report that the government has empowered PSU banks to request lookout circulars (LOCs) against wilful defaulters and fraudsters. The Home Ministry has also authorised the Serious Fraud Investigation Office (SFIO), a statutory corporate fraud investigation agency, to request LOCs if it feels the suspect may escape from India.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,780.55

10,714.10

10,889.35

BSE Sensex

36,025.54

35,827.63

36,348.96

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,834.26

219.60

210.07

237.07

ZEEL

742.61

318.40

258.02

409.07

ICICI Bank

229.78

357.20

352.95

363.05

Tata Motors

121.37

173.25

170.50

177.45

Bharti Infratel

118.29

279.75

268.42

286.77

 

  • Eicher Motors' two-wheeler division -- Royal Enfield has signed a MoU with the Government of Tamil Nadu. 
  • Coal India has supplied 389.63 MT of coal to the power sector in the current financial year till up to January 22, 2019, registering a rise of 8% over the previous year. 
  • L&T has reported a rise of 37.02% in its net profit at Rs 2,041.62 crore for Q3FY19 as compared to Rs 1,489.98 crore for Q3FY18. 
  • Maruti Suzuki India has reported a fall of 17.22% in its net profit at Rs 1489.30 crore for Q3FY19 as compared to Rs 1799.00 crore for Q3FY18.
News Analysis