NSE Intra-day chart (30 January 2019)
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FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
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Market Commentary 31 January 2019
Markets to make gap-up opening on firm global cues

 

Key equity bourses settled Wednesday's session almost flat with negative bias. Start of the trading session was cheerful, as the Reserve Bank of India (RBI) said that it will inject Rs 37,500 crore into the system through the purchase of government securities in February to increase liquidity. The RBI also said it has been monitoring the evolving liquidity conditions and durable liquidity requirements of the system. In early deals, traders were seen taking encouragement with Commerce and Industry Minister Suresh Prabhu's statement that India is optimally leveraging digital technologies to offer various services for citizens and is poised to take full advantage of new generation of technological advancements. He said that digital technologies are advancing and becoming all pervasive. Some relief also came with credit rating agency, ICRA's report stating that while the number of insolvency cases are expected to pile up over the next few quarters, timely conclusion of cases within the law mandated 180-270 days can free up as much as Rs 67,000 crore to the system. However, the markets soon turned volatile to end the lackluster day in negative terrain, as anxiety spread among the investors after S&P Global Ratings warned that corporate activities which are designed to support the Indian government's budgetary coffers -- such as share buyback -- by public sector undertakings (PSUs) are credit negative for such entities. Some concern also came with a report that the United States and China launch a critical round of trade talks amid deep differences over US demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a March 2 US tariff hike. Positive opening of European markets failed to give support to the Indian markets. The market participants paid no heed towards the annual index releasing by an anti-graft watchdog that India has improved its ranking on a global corruption index in 2018, while its neighbour China lagged far behind. Finally, the BSE Sensex lost 1.25 points to 35,591.25, while the CNX Nifty was down by 0.40 points to 10,651.80.

 

The US markets settled higher on Wednesday, with the Dow Jones Industrial Average reclaiming 25,000 level for the first time in over a month, after the Fed announced its widely expected decision to leave interest rates unchanged and indicated the central bank will remain patient regarding further rate hikes. The Fed said following a two-day meeting it has decided to maintain the target range for the federal funds rate at 2.25 to 2.50 percent. The accompanying statement included some notable changes from last month, including dropping a reference to the Fed's plan for further gradual rate increases. The central bank also removed a sentence describing the risks to the economic outlook as roughly balanced. Besides, strong earnings from Boeing and Apple also boosted the markets. On the economic front, reflecting several negative factors, the National Association of Realtors (NAR) released a report unexpectedly showing a continued decrease in US pending home sales in the month of December. NAR said its pending home sales index tumbled by 2.2 percent to 99.0 in December after falling by 0.9 percent to a downwardly revised 101.2 in November. A pending home sale is one in which a contract was signed but not yet closed. Compared to the same month a year ago, pending home sales plunged by 9.8 percent, reflecting the twelfth straight month of annual decreases. Meanwhile, after reporting a substantial increase in US private sector employment in the previous month, payroll processor ADP released a report showing the pace of job growth slowed in January but still far exceeded analyst estimates. ADP said private sector employment jumped by 213,000 jobs in January after soaring by a downwardly revised 263,000 jobs in December. Dow Jones Industrial Average surged 434.90 points or 1.77 percent to 25014.86, Nasdaq rose 154.79 points or 2.20 percent to 7183.08 and S&P 500 was up by 41.05 points or 1.55 percent to 2681.05.

 

Crude oil futures ended higher on Wednesday with weekly domestic crude supplies up less than expected and US sanctions on Venezuela's state-run oil company lifting oil prices to their highest finish in over two months. The Energy Information Administration (EIA) reported that domestic crude supplies edged up by 900,000 barrels for the week ended January 25. Gasoline stockpiles fell by 2.2 million barrels last week, while distillate stockpiles were down 1.1 million barrels. Besides, trade tensions between the US and China continue to hang over energy trading, raising expectations for a slowdown in energy demand. China triggered the legal process for the World Trade Organization to hear its challenge to US tariffs imposed on $234 billion of goods. Benchmark crude oil futures for March rose 92 cents or 1.7 percent to settle $54.23 a barrel on the New York Mercantile Exchange. March Brent crude gained 33 cents or 0.5 percent to settle at $61.65 a barrel on London's Intercontinental Exchange.

 

In line with equity market, Indian rupee ended almost flat against dollar on Wednesday, amid strengthening American currency and rising crude prices. Traders remained on sidelines ahead of upcoming Union Budget. Some concern also came with report that the United States and China launch a critical round of trade talks amid deep differences over US demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a March 2 US tariff hike. However, losses remained capped as traders found some support with the annual index releasing by an anti-graft watchdog that India has improved its ranking on a global corruption index in 2018, while its neighbour China lagged far behind. On the global front, pound nursed losses on Wednesday on fresh concerns about the possibility of a no-deal Brexit, while the dollar held steady ahead of the Federal Reserve's policy decision. Finally, the rupee ended at 71.12, 1 paise weaker from its previous close of 71.11 on Tuesday.

 

The FIIs as per Wednesday'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 6129.01 crore against gross selling of Rs 6405.33 crore, while in the debt segment, the gross purchase was of Rs 1020.48 crore with gross sales of Rs 946.79 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.03 crore against no selling.

 

The US markets rose on Wednesday after the Federal Reserve said it would be patient in lifting borrowing costs further this year, reassuring investors worried about a slowing economy. Asian markets were trading mostly in green in early trade on Thursday following overnight gains on Wall Street amid easing growth concerns. Indian markets ended range-bound session almost flat with negative bias on Wednesday as late hour sell-off mainly dragged the indices below their neutral lines amid US-China trade talks. Today, the markets are likely to make gap-up opening of F&O expiry session, mirroring firm global cues after the US Federal Reserve signaled a pause in interest rate hikes. Traders will be getting encouragement with SBI Research's report that the government meeting the fiscal targets this year and for FY20, fiscal deficit is likely to be Rs 6.72 trillion or 3.2 percent of GDP, assuming a modest 11.7 percent of nominal GDP growth. It added that for FY19 the fiscal gap will be met at the budgeted 3.3 percent. There will be some support with Commerce Minister Suresh Prabhu's statement that the government will release the new e-commerce policy soon which is awaiting approval from the Department of Industrial Policy and Promotion (DIPP). Traders may take  note of a report that the GST officials are working out mechanism to prompt taxmen to initiate profiteering complaints, which could be taken up for further investigation by the Directorate General of Anti-Profiteering. Currently, only consumers file complaints against businesses for not passing on the benefits of reduction of the rates of Goods and Services Tax (GST) on various products. Meanwhile, SEBI has proposed a new set of framework for REITs and InvITs in order to provide flexibility to the issuers in terms of fund raising and increasing the access of these investment vehicles to investors. There will be some buzz in the textiles sector stocks with India Ratings' report that India's textiles sector may see higher growth following robust domestic demand and depreciating rupee value. It has maintained a stable outlook for the textile sector for 2019-20 following strong domestic demand, waning impact of the disruptions due to GST and demonetisation and rising exports aided by a weak rupee. There will be some reaction in renewable energy sector stocks with ICRA's report that renewable energy is set to witness 10,000 megawatt (Mw) in fresh capacity addition in FY20, aided by project awards from central agencies and state-owned distribution utilities. 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

10,651.80

10,606.37

10,703.72

BSE Sensex

35,591.25

35,438.01

35,797.45

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

653.12

199.50

194.53

208.23

Axis Bank

469.12

690.95

682.02

701.62

ICICI Bank

394.00

365.90

355.07

372.67

SBI

189.09

287.45

282.00

291.15

IOC

166.13

134.55

132.13

137.48

 

  • Tata Steel has restarted blast furnace at UK's largest steelworks at Port Talbot in Wales at a cost of tens of millions of pounds. 
  • Qatar Investment Authority has agreed to invest $200 million through a primary equity issuance in Airtel Africa, a subsidiary of Bharti Airtel. 
  • L&T has proposed to sell up to 30 lakh shares of L&T Technology Services, representing 2.89 per cent of its total paid up equity share capital. 
  • Bajaj Auto has reported a rise of 20.49% in its net profit at Rs 1,220.77 crore for Q3FY19 as compared to Rs 1,013.16 crore for Q3FY18.
News Analysis