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NSE Intra-day chart (16 January 2020)
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Market Commentary 17 January 2020
Markets to open marginally in red on Friday

 

Indian equity bourses ended flat despite hitting fresh record highs on Thursday's trading session. The start of the day was firm, aided with NITI Aayog vice chairman Rajiv Kumar's statement that the government is likely to take more measures to deal with the problem of financial sector. But, in noon deals, key indices turned negative, as India's merchandise exports fell for the fifth straight month. The commerce and industry ministry data showed that exports contracted by 1.8% in December 2019 to $27.36 billion, as processed petroleum exports saw lower receipts and broad-based decline continued to plague all major foreign exchange earning sectors. Despite some volatility, markets managed to come back in green in second half of the session, after the RBI introduced new rules, in a bid to improve user convenience & increase the security of card transactions. The RBI asked the issuers to provide a facility to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions - domestic & international, at PoS / ATMs / online transactions / contactless transactions, etc. Some support also came with a report that the MSME Export Promotion Council is holding the first three-day summit for aspiring entrepreneurs in the North East from Friday to pave the way for development of entrepreneurship & businesses by women & youths of the region. Finally, the BSE Sensex rose 59.83 points or 0.14% to 41,932.56, while the CNX Nifty was up by 12.20 points or 0.10% to 12,355.50.

 

The US markets settled notably higher with gains around a percent on Thursday following the signing of a trade truce between the US and China on Wednesday and Senate approval of a new trade deal between the US, Mexico and Canada on Thursday. A batch of largely upbeat US economic data also contributed to the buying interest, with a report from the Labor Department showing an unexpected decrease in initial jobless claims in the week ended January 11. The Labor Department said initial jobless claims fell to 204,000, a decrease of 10,000 from the previous week's unrevised level of 214,000. The drop came as a surprise to street, who had expected jobless claims to inch up to 216,000. The Commerce Department also released a report showing US retail sales rose in line with street estimates in the month of December, with a sharp pullback in auto sales more than offset by strength in other areas. The report said retail sales climbed by 0.3 percent in December, matching the upwardly revised increase in November. Street had expected retail sales to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month. Excluding auto sales, retail sales increased by 0.7 percent in December after coming in unchanged in November. Ex-auto sales had been expected to climb by 0.5 percent. The Philadelphia Federal Reserve also released a report showing a substantial acceleration in the pace of growth in regional manufacturing activity in the month of January. Meanwhile, the National Association of Home Builders released a report showing a slight pullback in homebuilder confidence in January, although confidence remains at an elevated level. The report said the NAHB/Wells Fargo Housing Market Index edged down to 75 in January after jumping to 76 in December.

 

Rebounding sharply from losses in the previous session, crude oil futures ended sharply higher, with gains of over a percent, on Thursday, on the back of drop in US crude inventories and the signing of a partial US-China trade deal. The US-China trade deal and some upbeat economic data have raised hopes about an increase in near-term energy demand. Oil prices were weak early on in the session due to a report from the International Energy Agency (IEA) that said it expects oil production to outpace demand for crude from Organization of the Petroleum Exporting Countries (OPEC) despite full compliance with a pact that calls for a deep output reduction. The IEA report also said higher oil production from non-OPEC countries, including the US, and huge stockpiles will offset disruptions that might happen due to geopolitical tensions. Crude oil futures for February rose 71 cents or 1.2 percent to settle at $58.52 a barrel on the New York Mercantile Exchange. March Brent gained 62 cents or 1 percent to settle at $64.62 a barrel on London's Intercontinental Exchange.

 

Erasing all of its initial gains, Indian rupee ended marginally lower against dollar on Thursday, due to fresh demand for the American currency from banks and importers. Traders remain concerned with Former finance secretary Subhash Garg's statement that India's real fiscal deficit in FY20 is likely to be higher at 4.5-5% of GDP due to an expected shortfall in revenue, and higher spending. Some concern also came as India's merchandise exports contracted by 1.80% in December 2019 as compared to same period of last year, on account of a significant fall in shipments of plastic, gems and jewellery, leather products and chemicals. Besides, lackluster trade in local equity markets weighed on the rupee. On the global front, dollar gave a little ground to riskier Asian currencies on Thursday, as investors hoped the Sino-U.S. trade deal could herald warmer relations between the world's two biggest economies and help to revive global growth. Finally, the rupee ended at 70.93, 11 paise weaker from its previous close of 70.82 on Wednesday.

 

The FIIs as per Thursday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5657.47 crore against gross selling of Rs 5594.19 crore, while in the debt segment, the gross purchase was of Rs 653.83 crore with gross sales of Rs 1539.12 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.95 crore against gross selling of Rs 13.13 crore.

 

The US markets closed higher Thursday as investors shifted to examining corporate earnings for hints about the economy after an initial US-China trade deal was sealed amid upbeat US economic data. Asian markets are trading mostly higher on Friday following overnight gains on Wall Street. Indian markets managed to close volatile session with minor gains on Thursday, after oscillating in a range, as investors booked some profits amid weekly index options expiry on the NSE. Today, the markets are likely to get flat-to-negative start amid economic growth concerns. Traders will be cautious as United Nations World Economic Situation and Prospects (WESP) 2020 report lowered its GDP growth estimate for India to 5.7 percent in the current fiscal (from 7.6 percent forecast in WESP 2019) and lowered its forecast for the next fiscal to 6.6 percent (from 7.4 percent earlier). However, some supriot may come later in the day with government think-tank NITI Aayog member Ramesh Chand's statement that farm sector growth is likely to be higher at 3.1 per cent in the current fiscal compared with 2.9 per cent in 2018-19. Traders may take note of report that the government may increase customs duty on several products like paper, footwear, rubber items and toys in the forthcoming Budget with a view to promote Make in India and boost manufacturing growth. Meanwhile, markets watchdog SEBI has proposed a new set of norms for investment advisers, under which they will have to segregate their advisory and product distribution activities, as part of its effort to strengthen the regulatory framework. There will be some buzz in the banking stocks with the Reserve Bank of India's (RBI) data showing that Banks credit grew by 7.57 per cent to Rs 100.44 lakh crore while deposits rose by 9.77 per cent to Rs 132.10 lakh crore in the fortnight to January 2. Telecom stocks will be in focus today after the Supreme Court rejected the review petitions moved by Bharti Airtel, Vodafone Idea and Tata Teleservices against its October 2019 order on payment of dues linked to adjusted gross revenue (AGR). There will be some reaction in power stocks with ICRA's report that The government's new scheme to grant over Rs 1.1 lakh crore to state power distribution companies (discoms) is a positive measure for the power sector, given the availability of grants for infrastructure upgradation and the chance to improve the operational efficiency of the discoms. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,355.50

12,317.85

12,391.10

BSE Sensex

41,932.56

41,810.08

42,057.25

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,263.55

39.95

39.50

40.65

Tata Motors

281.18

197.55

196.10

199.80

SBI

266.54

323.30

321.47

326.02

Bharti Airtel

159.90

473.90

468.95

477.90

GAIL (India)

148.49

128.75

126.95

131.95

 

  • SBI has approved divestment of entire equity stake of 1 crore equity shares of Rs 10 each held by Bank in ECIS. 
  • Tata motor's upcoming premium hatchback -- Altroz has received the highest 5-star adult safety rating by Global NCAP, an internationally renowned safety accreditation body. 
  • Reliance Industries' telecom arm -- Reliance Jio Infocomm has submitted its application for 5G trials. 
  • IOC has issued 20,000 Unsecured, Rated, Taxable, Redeemable, NCDs (Series - XV) of Rs 10 lakh each aggregating to Rs 2,000 crore on Private Placement basis.
News Analysis