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NSE Intra-day chart (11 September 2019)
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Market Commentary 12 September 2019
Benchmarks likely to make positive start on firm global cues

                                          

Indian equity bourses maintained their gains on Wednesday to end the session on higher note.  Key indices made a positive start of the day, aided with Finance Minister Nirmala Sitharaman's statement that the up and down in Gross Domestic Product (GDP) are part of the growth process and the government is responding to the current economic challenges to revive demand and consumption in the country. Adding some optimism, the Export-Import Bank of India (Exim Bank) forecasted India's merchandise exports to increase from $81.4 billion to $82 billion, with an expected growth rate of 0.6% from a year ago during the second quarter of 2019-20 (July-September). Firm trade persisted throughout the trading day, on the back of positive cues from the global markets.  Investors were seen taking note of a private report stating that India's high-tech sectors have the potential to attract a whopping $21 billion in investment and create millions of jobs over the next five years. However, gains remained capped, as credit rating agency, Fitch Ratings in its Asia-Pacific Sovereign Credit Overview has forecasted India's economic growth at 6.6% during the current year 2019-20 (FY20), down from 6.8% in the previous year. The agency also added that the government has only limited room to ease fiscal policy because of high debt. Finally, the BSE Sensex gained 125.37 points or 0.34% to 37,270.82, while the CNX Nifty was up by 32.65 points or 0.30% to 11,035.70.

 

The US markets ended higher on Wednesday following reports that China is granting tariff exemptions for 16 types of American-made products as a sign of goodwill ahead of the next round of trade talks. The list included varieties of animal feed such as alfalfa and fish meal, cancer drugs gefitinib and capecitabine, base oil for lubricants and lubricating grease, and some farm chemicals. The Chinese Customs Tariff Commission said the tariff suspension would take effect next Tuesday and remain in place for a year. The strength on markets also came in on optimism about new global stimulus ahead of the European Central Bank's monetary policy decision on Thursday as well as next week's Federal Reserve meeting. President Donald Trump urged the Fed to lowest interest rates to zero or less, allowing the US to refinance its debt. On the economic data front, a report released by the Labor Department showed a modest uptick in US producer prices in the month of August. The Labor Department said its producer price index for final demand inched up by 0.1 percent in August after rising by 0.2 percent in July. Street had expected prices to come in unchanged. The slight increase in producer prices came even though energy prices tumbled by 2.5 percent in August after surging up by 2.3 percent in the previous month. Gasoline prices plummeted by 6.6 percent. Food prices also showed a notable pullback during the month, slumping by 0.6 percent in August after rising by 0.2 percent in July. Besides, wholesale inventories in the US showed a modest rebound in the month of July, according to a report released by the Commerce Department. The report said wholesale inventories rose by 0.2 percent in July after edging down by a revised 0.1 percent in June. The uptick in inventories matched Street estimates. Dow Jones Industrial Average surged 227.61 points or 0.85 percent to 27137.04 Nasdaq gained 85.52 points or 1.06 percent to 8169.68 and S&P 500 was up by 21.54 points or 0.72 percent to 3000.93.

 

Crude oil futures ended lower with cut of over two and half percent on Wednesday on speculation that President Donald Trump is considering easing sanctions on Iran raised the possibility of the return of the country's crude to the world market. Oil prices also dropped on report that the Organization of the Petroleum Exporting Countries lowered its forecast for global oil-demand growth in 2019 and 2020, citing weaker-than-expected data in the first half of this year from various global demand centers and slower economic growth projections. However, the Energy Information Administration (EIA) reported that US crude supplies fell by 6.9 million barrels for the week ended September 6. Benchmark crude oil futures for October dropped $1.65 or 2.9 percent to settle at $55.75 a barrel on the New York Mercantile Exchange. November Brent declined $1.57 or 2.5 percent to settle at $60.81 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally higher against dollar on Wednesday, as bankers and exporters took to selling of American currency. Sentiments were positive with Finance Minister Nirmala Sitharaman's statement that the government is not underestimating the slow Gross Domestic Product (GDP) growth and has full focus on how it can rise in the next quarter. She also added that the government is trying to revive demand and consumption in the country. Besides, positive trend in equity market supported the rupee. However, further gains were restricted as some concern came with report that Fitch Ratings forecasted India's economic growth at 6.6% during the current year, down from 6.8% in the previous year, and said the government has only limited room to ease fiscal policy because of high debt. On the global front, Japanese yen fell on Wednesday as the rush into safe-haven assets during the summer continued to unwind on the back of rising risk appetite, while the euro paused before Thursday's European Central Bank meeting. Finally, the rupee ended at 71.66, 5 paise stronger from its previous close of 71.71 on Monday.

 

The FIIs as per Wednesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 3610.23 crore against gross selling of Rs 3312.43 crore, while in the debt segment, the gross purchase was of Rs 2234.94 crore with gross sales of Rs 1963.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 12.86 crore against gross selling of Rs 8.35 crore.

 

The US markets ended higher on Wednesday amid reports that China is granting tariff exemptions for 16 types of American-made products as a sign of goodwill ahead of the next round of trade talks. Asian markets are trading mostly in green on Thursday on hopes for a thaw in US-China trade frictions and expectations that the European Central Bank will kick off another wave of monetary easing by global central banks. Indian markets ended higher with modest gains on Wednesday led by gains in banking and auto stocks amid firm cues from other Asian markets. Today, the start of session is likely to be in green tracking firm global cues coupled with steep fall in oil prices. Investors will be eyeing the data on factory output (IIP) for July and retail inflation (CPI inflation) for August set to be release later in the day. Traders will be taking support with finance minister Nirmala Sitharaman's statement that the government will frontload infrastructure spending in a bid to give the economy a boost and announce one or two more sets of stimulus measures aimed at reviving growth in the coming quarters. Though, there may be some cautiousness with global rating agency Moody's statement that Indian non-banking financial companies (NBFCs) and housing finance companies (HFCs) are pulling back on loan against property (LAP) lending to micro, small and medium sized enterprises (MSMEs) because of the funding squeeze caused by the liquidity crisis in the country's financial sector. It added that this situation is a credit negative for the asset- backed securities. Meanwhile, oil producers cartel the Organization of the Petroleum Exporting Countries (OPEC) said that India's oil demand will rise by the fastest pace globally this year and the next even as its economic expansion has slowed down. Auto stocks will be in focus with Union minister Nitin Gadkari's statement that it is up to the finance ministry along with state governments and GST Council to decide on reduction in GST rate for automobiles and that he has already spoken to the finance minister in this regard. There will be some buzz in the banking stocks with report that the government has decided to infuse Rs 55,000 capital in Public Sector Banks (PSBs) under consolidation process in a week's time. There will be some reaction in aviation stocks with Crisil's report that low-cost airlines like SpiceJet, IndiGo and Air Asia (India) are set to see their earnings before interest, tax, depreciation, amortisation and lease rentals (EBITAR) to grow to 24-25% this fiscal compared to 15-16% in the last fiscal on the back of firmer fares and strong passengers loads.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,035.70

11,013.30

11,056.45

BSE Sensex

37,270.82

37,195.11

37,345.00

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

3,329.39

71.60

65.92

76.37

Tata Motors

965.68

134.35

128.10

137.80

SBI

210.00

285.25

280.55

287.90

ICICI Bank

174.64

394.60

392.30

397.95

Indiabulls Housing Finance

162.13

431.45

423.17

438.72

 

  • L&T's overseas subsidiary -- L&T Oman LLC has been awarded the main works contract of The Mandarin Oriental, Muscat by Eagle Hills, Muscat. 
  • Tata Motors' wholly owned subsidiary -- JLR has reported 6.7% fall in total sales at 34,176 units in August as compared with year-ago period. 
  • ONGC is planning to invest more than Rs 13,000 crore in exploring oil and gas by drilling over 220 wells across Assam in the next five years. 
  • Dr. Reddy's Laboratories has launched Fosaprepitant Injection in the US Market.
News Analysis