Indian equity markets showed a
volte-face on Tuesday as what started on a promising note ended as a dismal
show. The optimism in local markets petered out completely by the end of trade
and the indices even drifted in to the negative territory despite getting off
to a gap-up opening. Marketmen were optimistic for most part of the morning
session as World Bank in its report said that Indian economy will claw back to
7.2 percent growth this financial year and rise further to 7.5 percent in
2018-19. It also said that timely and smooth implementation of the GST could
prove to a significant benefit to economic activity. However, sentiments got
spooked in early afternoon trades following the sell-off in European markets as
British Prime Minister May called a snap election for June 8, 2017. The shock
announcement comes nearly one month after the UK triggered Article 50 to leave
the European Union. Besides, profit booking in Realty and Metal counters
exerted downside pressure on the frontline indices and dragged them even below
to the psychological 9,150 (Nifty) and 29,400 (Sensex) levels. Sentiments
weakened further after Indian Meteorological Department (IMD) released its
prediction for this year's monsoon and said that monsoon rainfall may be 96% of
the normal with an error margin of 5% on either side. IMD also said that there
is more than 50% chance of El-Nino developing from August. Monsoon predictions
are considered to be vital for Indian economy as agriculture still largely is
dependent on the weather phenomenon. Finally, the BSE Sensex decreased 94.56
points or 0.32% to 29319.10, while the CNX Nifty was down by 34.15 points or
0.37% to 9,105.15.
The US markets closed lower on
Tuesday, as a spate of tepid corporate earnings weighed on the broader market.
A decline in shares of Goldman Sachs Group shaved more than 70 points off the
Dow industrials after the investment bank's first-quarter results missed
expectations. The overall tone of the latest batch of corporate reports was
generally lackluster. Meanwhile, tensions between the US and North Korea remain
elevated with both countries exchanging threats. On the economy front,
manufacturing output lost momentum in March, dragged down by weakness in the
auto sector. Factory output fell 0.4%, the first decline since last August, and
the drag would have lowered overall March industrial production if it wasn't
for utilities output. A steep 3% decline in the production of autos and auto
parts accounted for the drop in manufacturing. It's a reading consistent with
the slower pace of auto sales. The decline was not all autos, however, as
manufacturing ex-motor vehicles was down 0.2% in March. For the first quarter
as a whole, factory output is up at a 2.7% annual rate, despite the drop in
March. The Dow Jones Industrial Average lost 113.64 points or 0.55 percent to
20,523.28, the Nasdaq dropped 7.32 points or 0.12 percent to 5,849.47, while
S&P 500 ended lower by 6.82 points or 0.29 percent to 2,342.19.
Crude oil futures extended their
fall on Tuesday despite expectations that U.S. stockpiles dropped last week. US
crude oil inventories are expected to have fallen by 1.5 MMbbls from April
7-14, 2017. Traders also overlooked the note from IMF which boosted the demand
outlook. It said that global economic growth is strengthening, thanks to a
long-awaited cyclical recovery in investment, manufacturing, and trade, though
downside risks remain. Meanwhile, the EIA's monthly Drilling Productivity
report showed U.S. shale production was set to rise to 5.19 million barrels a
day in May. Benchmark crude oil futures for May delivery ended lower by $0.24 or
0.5 percent to $52.41on the New York Mercantile Exchange. In London, Brent
crude for May delivery ended down by $0.11 at $54.76 on the ICE.
Indian
rupee extended its weakness for the second consecutive day on Tuesday, due to
fresh demand for the American currency from banks and importers. Sentiments
remained dampened with India Meteorological Department's (IMD) statement that
monsoon rainfall may be 96% of the normal with an error margin of 5% on either
side. Besides, weakness in domestic equities markets and capital outflows in
small lots also weighed on the rupee. On the global front, dollar steadied
against yen on Tuesday, with worries that U.S. currency manipulation complaints
could touch Japan offset by U.S. Treasury Secretary Steven Mnuchin's favoring
of a strong dollar in the long term. Finally, the rupee ended at 64.63, 11
paise weaker from its previous close of 64.52 on Monday.
The
FIIs as per Tuesday'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
1960.91 crore against gross selling of Rs 2028.18 crore, while in the debt
segment, the gross purchase was of Rs 1898.45 crore with gross sales of Rs
418.41 crore.
The US markets despite coming off
the day's low ended in red in the last session. The negative sentiment was
generated in reaction to quarterly results from Goldman Sachs, as the financial
giant reported weaker than expected first quarter earnings. The Asian markets
made mostly a lower start tailing the decline in the US markets. Uncertainty
coupled with weaker-than expected results have pushed some investors away from
riskier assets. The Japanese market too was marginally in red despite weakness
in yen. The Indian markets losing their pace in the final hours, posted loss of
over a quarter percent in the last session, as investors remained worried about
North Korea's nuclear intentions. Today, the start is likely to remain cautious
on weak global cues and traders will also be concerned about IMF trimming
India's annual growth forecast by 0.4 percentage points to 7.2 percent for
2017, citing the temporary negative consumption shock induced by cash shortages
and payment disruptions from the recent demonetization move. Also, there will
be negative reaction on not only the IT sector but the whole market after the
country's largest software services exporter, Tata Consultancy Services (TCS)
missed estimates on both the profit and revenue front with negative growth in
the BFSI and retail segments. The company's net profit for the Q4 fell 2.5%
sequentially to Rs 6,608 crore, while revenues declined 0.3% to Rs 29,642
crore. It's for the second consecutive quarter that it has underperformed
Infosys. Traders may however get some support with good monsoon expectation, as
the Indian Meteorological Department (IMD) has said that the country would
receive 'normal' monsoon this year, with a fair distribution of rainfall across
major parts of country. Banking stocks will be under pressure, as the Reserve
Bank of India (RBI) has released a series of guidelines with a view to tighten
norms concerning recognition of and provisioning for bad assets at banks.
Support and Resistance: NSE (Nifty) and BSE
(Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
9105.15
|
9061.10
|
9183.55
|
BSE Sensex
|
29319.10
|
29169.92
|
29584.73
|
Nifty Top volumes
Stock
|
Volume
(in Lacs)
|
Previous close (Rs)
|
Support
(Rs)
|
Resistance (Rs)
|
Hindalco
|
223.44
|
183.80
|
181.22
|
188.37
|
ICICI Bank
|
173.36
|
283.40
|
280.10
|
289.15
|
SBI
|
134.55
|
290.30
|
286.83
|
295.33
|
Bank of Baroda
|
110.00
|
176.05
|
173.70
|
180.05
|
Adani Ports
|
93.15
|
319.35
|
313.25
|
330.35
|
NTPC has brought down its cost of electricity generation by an average 39.5 paise. It does not include taxes and cess primarily imposed to finance protection of environment.
IndusInd Bank has launched IndusForex.com, a one-stop portal for all foreign exchange needs of Indian consumers.
Tata Consultancy Services has received its shareholders approval for Rs 16,000 crore share buyback plan.
Mahindra & Mahindra's North American Technical Center is working on a new-generation Scorpio that is expected to hit the roads in 2020.