NSE Intra-day chart (28 January 2019)
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Market Commentary 29 January 2019
Markets to make negative start on weak global cues

 

Indian equity benchmarks joined global meltdown on Monday, with Sensex and Nifty falling more than a percent each. The start of day was slightly higher, buoyed by the Economic Advisory Council to the Prime Minister (EAC-PM's) statement that the country's economic growth is likely to remain in the range of 7-7.5 per cent in the next few years. It added that the growth rate can be easily increased by 1 per cent by addressing structural problems through reforms. Some support also came with Union Commerce and Industry Minister Suresh Prabhu's statement that new policies of the government will help to increase India's export from the current $321 billion to almost double in a few years. However, markets soon turned negative, 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). The indices continued their weak run for whole day to end the session lower, tracking weak opening of European markets. Investors got cautious with reports that 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. Sentiments were pessimistic also because of a private report stating that the economy is likely to lose steam and may clip at 6.6 percent in the first half of 2019 from 7.4 percent a year ago, on account of the global slowdown and the uncertainty about the outcome of the forthcoming general elections. Adding more concerns among the market participants, another private report showed that the government is set breach the fiscal deficit target yet again by 40 bps for 2018-19, and raise the target to 3.5 percent for next fiscal in the forthcoming budget that may be skewed towards the rural economy. Finally, the BSE Sensex lost 368.84 points or 1.02% to 35,656.70, while the CNX Nifty was down by 119.00 points or 1.10% to 10,661.55.

 

The US markets ended lower on Monday as investors confronted the latest signs that economic malaise in China is crimping corporate profits in the US. Sentiment was down after weaker-than-expected quarterly earnings and guidance from Caterpillar, as well as a big revenue forecast cut from chipmaker Nvidia, stoked fears about the Chinese economy slowing. Caterpillar shares fell 9.1 percent after the industrial giant posted weaker-than-expected earnings for the fourth quarter. The company said its sales in the Asia/Pacific region declined because of lower demand in China. Caterpillar is considered a bellwether for global trade given the company's exposure to overseas markets. The company also issued disappointing guidance. Meanwhile, Nvidia dropped 13.8 percent after slashing its fourth-quarter revenue guidance to $2.2 billion from $2.7 billion. The chipmaker said deteriorating macroeconomic conditions, particularly in China, impacted demand for its graphics processing units. Wariness seeped in the markets ahead of the Fed meeting and a huge week for earnings with 126 S&P 500 companies slated to report quarterly results. The central bank will convene a two-day meeting on Tuesday, with no change in key interest rates expected. Attention is instead likely to focus on a news conference afterward with Fed Chairman Jerome Powell for any clues on future policy. Dow Jones Industrial Average dropped 208.98 points or 0.84 percent to 24528.22, Nasdaq declined 79.18 points or 1.11 percent to 7085.69 and S&P 500 was down by 20.91 points or 0.78 percent to 2643.85.

 

Crude oil futures ended lower on Monday on account of fresh concerns over supply after data late last week showed a hefty weekly rise in the US oil-rig count, and the potential for a slowdown in energy demand from China pressured prices. Traders also continued to look to political developments in Venezuela for their potential impact on production from the South American nation. Benchmark crude oil futures for March plunged $1.70 or 3.2 percent to settle $51.99 a barrel on the New York Mercantile Exchange, while March Brent crude dropped $1.71 or 2.8 percent to settle at $59.93 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally higher against US dollar on Monday, driven by weakening of the greenback in overseas markets and easing crude prices. Traders took some support with the Economic Advisory Council to the Prime Minister's (EAC-PM) statement that the country's economic growth is likely to remain in the range of 7-7.5 per cent in the next few years. It added that the growth rate can be easily increased by 1 per cent by addressing structural problems through reforms. However, gains were limited as anxiety remained among traders 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). On the global front, dollar eased versus most of its peers on Monday as investors turned their attention to this week's Federal Reserve policy meeting, with traders wagering policymakers will signal a pause in their tightening cycle. Finally, the rupee ended at 71.10, 7 paise stronger from its previous close of 71.17 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 5154.89 crore against gross selling of Rs 4419.47 crore, while in the debt segment, the gross purchase was of Rs 1193.39 crore with gross sales of Rs 950.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.51 crore against gross selling of Rs 1.12 crore.

 

The US markets settled lower on Monday as investors confronted the latest signs that economic malaise in China is crimping corporate profits in the US. Asian markets are trading mostly in red on Tuesday on the back of fresh concerns over a slowing Chinese economy and renewed tensions between Washington and Beijing. Indian markets extended their losses for second straight session to end Monday's trading session with cut of over a percent following fresh selling in financial and automobile stocks. Today, the markets are likely to make pessimistic start mirroring weak global cues as hopes of US-China trade deal were again hit after the United States charged Chinese telecom firm Huawei with bank fraud and for conspiring to steal trade secrets. however, traders may take some support later in the day with the Reserve Bank of India's (RBI) latest data showing that Foreign direct investment (FDI) during the previous fiscal grew 18 per cent to Rs 28.25 lakh crore. As per data, FDI increased by Rs 4,33,300 crore, including revaluation of past investments, during 2017-18 to reach Rs 28,24,600 crore in March 2018 at market value. The RBI said as many as 23,065 companies responded to the latest round of the census, of which, 20,732 firms had FDI or ODI in their balance sheet in March 2018. Traders may take note of Union Steel Minister Chaudhary Birender Singh's statement that the government is formulating a draft National Scrap Policy. Currently, the country's requirement of scrap is around 8.3 million tonne (MT) and a large portion of the requirement is met through imports. Meanwhile, newly-appointed interim Finance Minister, Piyush Goyal, held a review meeting with public sector banks to deliberate on wide-ranging issues including providing easy finance to micro, small and medium enterprises (MSMEs) and home buyers. There will be some buzz in the steel sector stocks with World Steel Association's report that India has replaced Japan as world's second largest steel producing country, while China is the largest producer of crude steel accounting for more than 51 per cent of production. There will be some reaction in real estate sector stocks with report that ICRA has maintained a negative outlook for the residential real estate (RRE) segment due to high inventory, weak affordability and muted demand and a stable outlook for commercial real estate (CRE) segment. There will be some important earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,661.55

10,593.52

10,767.02

BSE Sensex

35,656.70

35,439.81

35,998.92

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ZEEL

1,213.06

373.30

334.87

396.87

Yes Bank

580.16

207.50

201.40

218.30

ICICI Bank

343.62

343.55

335.17

353.42

SBI

189.05

281.60

277.07

286.37

Adani Ports and Special Economic Zone

151.77

326.10

287.02

370.27

 

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  • ONGC is preparing a vision document for 2040 that will lay the strategic roadmap for the nation's largest oil and gas producer for the next two decades.
News Analysis