Bulls made comeback on Dalal
Street on Tuesday, with both the larger peers ending the trading session with
strong gains of around 1.30% each. After a fabulous start, the key indices
remained firm throughout the session, as India's retail inflation based on
Consumer Price Index (CPI) continued its easing trend for third straight month
in December mainly on account of sliding prices of fruits, vegetables and fuel.
CPI softened to an 18-month low of 2.19% in December 2018 as compared to 2.33%
in November and 5.21% in December 2017. The inflation has remained below the
RBI's medium-term target of 4% for the fifth straight month and it fell to its lowest
level since June 2017 of 1.46%. Investors remained encouraged amid reports that
the government is considering credit guarantee for term loans of up to Rs 100
crore as well as interest subsidy on loans up to Rs 1,000 crore for electronic
manufacturing companies under the new policy in works. Some comfort also came
with another report that India is likely be a larger economy than the US by
2030, while China will top the list and Indonesia will figure among the top
five. India will likely be the main mover, with its trend growth accelerating
to 7.8% by 2020s, partly due to ongoing reforms, including introduction of GST
and the Insolvency and Bankruptcy Code (IBC). The markets managed to hold their
rally with a report that the total of investments during 2018 by private equity
(PE) and venture capital (VC) companies was $35.1 billion (nearly Rs 2.5
trillion), surpassing the previous high of $26.1 billion (Rs 1.8 trillion) in
2017 by 35 per cent. The report further said that start-ups rebounded in 2018,
attracting $6.4 billion (Rs 45,000 crore) or 83 per cent higher than in 2017.
Trading sentiments were also got boost after UN report showed that India's
creative goods exports nearly tripled from $7.4 billion in 2005 to $20.2
billion in 2014, making it one of the world's leading exporters of such
products in the top 10 developing economies. Adding more support, apex industry
body, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said
that the continuing deceleration in the growth of WPI and softening of global
fuel prices provide ample opportunity to MPC (monetary policy committee) to cut
down policy rate at earliest which will kick start investment and revival in
overall industrial growth. Finally, the BSE Sensex gained 464.77 points or
1.30% to 36,318.33, while the CNX Nifty was up by 149.20 points or 1.39% to
10,886.80.
The US markets ended higher on
Tuesday, with the S&P 500 and the Nasdaq settling above psychologically
important levels for the first time in a month, as a robust tech rally offset
lackluster results from major US banks, including Dow-component JPMorgan Chase
& Co. Meanwhile, fresh round of stimulus in China have also helped to calm
fears about the impact of slower Chinese growth on the global economy. An announcement
from the People's Bank of China that it would increase efforts to spur their
economy by improving credit availability for smaller companies and a pledge by
the Chinese Ministry of Finance to cut taxes and ramp up infrastructure
spending helped to buoy market sentiment. On the economic front, a report
released by the Labor Department showed a modest decrease in producer prices in
the month of December. The Labor Department said its producer price index for
final demand dipped by 0.2% in December after inching up by 0.1% in November. Excluding
food and energy prices, core producer prices edged down by 0.1% in December
after climbing by 0.3% in November. Meanwhile, a separate report released by
the Federal Reserve Bank of New York showed New York manufacturing activity
grew at its slowest pace in over a year in the month of January. The New York
Fed said its general business conditions index slumped to 3.9 in January after
tumbling to a revised 11.5 in December. A positive reading still indicates
growth. Dow Jones Industrial Average gained 155.75 points or 0.65 percent to
24065.59, Nasdaq surged 117.92 points or 1.71 percent to 7023.83 and S&P
500 was up by 27.69 points or 1.07 to 2610.30.
Snapping their two days losing
streak, crude oil futures settled higher on Tuesday as China took steps to
boost its economy a day after another round of downbeat data. The People's Bank
of China will increase efforts to spur their economy by improving credit
availability for smaller companies, cutting taxes and ramping up infrastructure
investments. Meanwhile, the US Energy Information Administration (EIA), in its
Short-term Energy Outlook report, cut its previous 2019 price forecast by 0.8%
for Brent crude to $60.52 a barrel and said it expects to see an average of
$64.76 in 2020. The EIA kept its forecast for West Texas Intermediate crude
prices at $54.19 for 2019 and expects to see an average of $60.76 in 2020. Benchmark
crude oil futures for February surged $1.60 or 3.2 percent to settle $52.11 a
barrel on the New York Mercantile Exchange. March Brent crude rose $1.65 or 2.8
percent to settle at $60.64 a barrel on London's Intercontinental Exchange.
Indian
rupee continued to slide against the American currency for the third day on
Tuesday, on increased demand for the American currency from importers and
banks. The weakness of the rupee also comes amid rise in crude oil prices.
Traders failed to get relief with data showing that India's retail inflation
hit an 18-month low, rising 2.19 percent in December as compared with 2.3
percent in November due to cheaper fuel and food items. Besides, strength in the
dollar in global markets affected the market sentiment, however good going in
local equities capped the rupee fall to some extent. On the global front, euro
fell against the US dollar on Tuesday after data showed Germany's economy
slowed in 2018, underscoring fears about a broader slump in Europe. Finally,
the rupee ended at 71.05, 13 paise weaker from its previous close of 70.92 on
Monday.
The FIIs as per Tuesday's data
were net sellers in equity and debt segments both. In equity segment, the gross
buying was of Rs 3162.16 crore against gross selling of Rs 4027.62 crore, while
in the debt segment, the gross purchase was of Rs 621.85 crore with gross sales
of Rs 812.46 crore. Besides, in the hybrid segment, the gross buying was of Rs
8.76 crore against no selling.
The US markets ended in green on
Tuesday as investors welcomed China's pledge to stimulate the country's ailing
economy coupled with the rally in technology companies stocks. Asian markets
were trading mixed on Wednesday with investors assessing Brexit options after
British lawmakers trounced Prime Minister Theresa May's deal to pull out
Britain from the European Union. Indian markets snapped three-day losing streak
and ended higher with notable gains on Tuesday on easing retail inflation and
hopes of monetary easing. Today, the markets are likely to make negative start
amid mixed cues from Asian counterparts. Traders may take note of the commerce
ministry's data showing that the country's exports grew marginally by 0.34% to
$27.93 billion in December 2018 on account of negative growth in sectors such
as engineering and gems & jewellery. Besides, imports dipped by 2.44% to
$41 billion during the last month due to lesser imports of gold, pearls,
precious and semi- precious stones. India's trade deficit narrowed to $13.08
billion in December, the lowest in 10 months, as compared with $16.7 billion in
November, due to a fall in gold imports. However, traders may take some support
with the Reserve Bank of India's (RBI) statement that it would inject Rs 10,000
crore into the system through purchase of government securities on January 17
to increase liquidity. The purchase will be made through open market operations
(OMOs). The RBI plans to inject liquidity under OMOs for Rs 50,000 crore in
January 2019. The central bank has so far injected Rs 20,000 through OMOs in
January. Meanwhile, the Fertiliser Ministry has sought additional Rs 23,000
crore from the Finance counterpart to meet the subsidy requirement for the
January-March quarter. Till December, a subsidy payment of Rs 23,283 crore was
due towards fertiliser companies and the ministry was left with about Rs 13,056
crore from the budgeted allocation. There will be some reaction in steel sector
stocks with report that the government is considering raising import duty on
iron ore, a key raw material used in steel making, with a view to protecting
the domestic industry. The low import duty of 2.5% encourages steel players to
go for import rather than utilising the local ore. There will be some buzz in
the real estate sector stocks with report that a ministerial panel headed by
Gujarat Deputy Chief Minister Nitin Patel would look into the possibility of
rationalisation of GST rate in real estate sector besides formulating a
composition scheme. The Group of Ministers (GoM) will also analyse tax rate of
GST, including issues/challenges in view of the proposal for shoring up the
real estate sector. There will be some important result announcements to keep
the markets in action.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,886.80
|
10,810.58
|
10,929.98
|
BSE Sensex
|
36,318.33
|
36,062.50
|
36,461.73
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
823.08
|
203.00
|
197.73
|
206.63
|
Infosys
|
196.71
|
726.60
|
712.53
|
735.33
|
Wipro
|
150.71
|
329.80
|
319.13
|
336.38
|
Tata Motors
|
135.37
|
185.35
|
182.47
|
187.02
|
ICICI Bank
|
129.61
|
372.75
|
370.43
|
375.23
|
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