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NSE Intra-day chart (18 April 2018)
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Market Commentary 19 April 2018
Markets likely to make positive start on firm global leads

 

Snapping nine day winning streak, Indian equity benchmarks ended the Wednesday's trade slightly in red, as traders opted to book some of their profit after nine sessions of continuous rally amid lack of any major domestic cues. Also, investors eyeing for corporate earnings to get further market direction. Markets started the session on an optimistic note and traded in fine fettle for most part of the day, as traders took some encouragement with International Monetary Fund's (IMF) statement that India's GDP growth will accelerate in the current and next fiscal years as structural reforms raise potential output. GDP is forecast to grow 7.4% in the current fiscal from 6.7% in FY18 and accelerate further in FY20 to 7.8%. Market participants also got some support with Union Minister Suresh Prabhu's statement that the government is working with the US to resolve all trade issues even as America has decided to review India's eligibility to enjoy duty-free access for certain products under a tax benefit scheme. Meanwhile, the group of ministers (GoM) on Tuesday worked out a revamped return for goods and services tax (GST) to help ease the burden on businesses. Domestic sentiments were upbeat with a report stating that India recorded the biggest rise of 73% in investment proposals into France among emerging economies in 2017, as there were 19 Indian foreign investment projects in France. However, profit booking in last leg of trade played spoil sports for the domestic markets which dragged the key indices slightly in red. Anxiety spread among the investors with a private report that India's economy will be hit hard by a combination of a global tariff war and the US Federal Reserve's monetary tightening cycle. The report noted that a tariff war will reduce exports and lead to imported inflation, which will hurt Indian purchasing power and investments. Finally, the BSE Sensex shed 63.38 points or 0.18% to 34,331.68, while the CNX Nifty was up by 22.50 points or 0.21% to 10,526.20.

 

The US markets closed mostly higher on Wednesday, while the Dow industrials ended lower as IBM's shares got walloped; however, gains in shares of energy-related firms helped the broader market post modest gains. The street showed a muted reaction to the release of the Beige Book report, which underscored that economic activity remained at a modest to moderate pace in March and early April. The Federal Reserve reported that robust business borrowing, rising consumer spending, and tight labor markets indicate the US economy remains on track for continued growth, with the risks of a global trade war the one big outlier. In its periodic Beige Book summary of contacts with businesses in its 12 regional districts, the Fed said the overall outlook among businesses remained positive, but that many were worried about the Trump administration's use of tariffs. In fact, the word tariffs appeared 36 times in report after not appearing at all in the previous Beige Book published March 7. It was referenced as a factor affecting prices or as a potential concern for the outlook in 10 of the 12 regional banks' activity summaries. Several Fed districts reported a jump in commercial and industrial lending, from a robust 17 percent year-over-year increase in St. Louis to solid growth in Atlanta and healthy demand in Cleveland. The Nasdaq gained 14.137 points or 0.19 percent to 7,295.24, the S&P 500 was up by 2.25 points or 0.08 percent to 2,708.64, while the Dow Jones Industrial Average lost 38.56 points or 0.16 percent to 24,748.07. 

 

Crude oil futures ended higher on Wednesday, hitting their highest level in three and a half years following a surprise decline in weekly U.S. crude supplies and expectations that major oil producers will remain committed to curbing production. The U.S. Energy Information Administration (EIA) said crude supplies fell by 1.1 million barrels for the week ended April 13. Traders were also looking ahead to the outcome of the joint Organization of the Petroleum Exporting Countries and non-OPEC ministerial monitoring committee meeting expected to be held later this week. Benchmark crude oil futures for May delivery surged $1.95 or 2.9 percent to settle at $68.47 a barrel on the New York Mercantile Exchange. June Brent crude gained $1.90 or 2.7 percent to settle at $73.48 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally lower against US dollar on Wednesday, due to fresh demand for the American currency from banks and importers. Traders remained concerned with a private report that India's economy will be hit hard by a combination of a global tariff war and the US Federal Reserve's monetary tightening cycle. The report noted that a tariff war will reduce exports and lead to imported inflation, which will hurt Indian purchasing power and investments. Moreover, weakness in local stocks, which snapped a nine-day winning streak, also weighed on the sentiments. However, losses were limited as traders took some support with International Monetary Fund's (IMF) statement that India's GDP growth will accelerate in the current and next fiscal years as structural reforms raise potential output. GDP is forecast to grow 7.4% in the current fiscal from 6.7% in FY18 and accelerate further in FY20 to 7.8%. On the global front, dollar rose against yen on Wednesday amid improving risk appetite as concerns over trade friction between the U.S. and China and tensions in the Middle East subsided. Finally, the rupee ended at 65.66, 2 paise weaker from its previous close of 65.64 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In the equity segment, the gross buying was of Rs 4564.92 crore against gross selling of Rs 5704.68 crore, while in the debt segment, the gross purchase was of Rs 1894.26 crore with gross sales of Rs 4871.92 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.88 crore against gross selling of Rs 2.75 crore.

           

The US markets ended mostly higher on Wednesday after the Fed said economic activity continued to expand at a modest to moderate pace across the twelve districts in March and early April. It also said the economic outlooks remains positive but noted contacts in various sectors. Asian markets were rallying with oil prices at three and a half year highs helping to boost sentiment for the region's equities. Indian equity markets fell slightly on Wednesday to snap a nine-day winning streak even as global markets remained buoyant amid easing geopolitical and trade tensions. Today, the markets are likely to make an optimistic start amid firm global cues. Traders will take some support with International Monetary Fund's (IMF) statement that the debt level is relatively high in India, but the authorities are planning to bring it down over the medium term with the right policies. In fiscal year 2017-18, India is planning to continue with the consolidation in the current fiscal year and over the medium term. However, there will be some anxiety among investors with former finance minister P Chidambaram's statement that the ghost of demonetisation has come back to haunt the government and alleged that the Rs 2,000 notes were printed only to help hoarders. In the wake of cash crunch in some parts of the country, he also said there was a possibility that people have lost confidence in the banking system due to the bank scams and they were not putting their surplus money into the banks. There will be buzz in export related stocks after Commerce and Industry Minister Suresh Prabhu exporters of taking up the issue of GST refund with the finance ministry and said he plans to call a ministerial meeting to discuss export related issues. 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

10,526.20

10,492.53

10,577.03

BSE Sensex

34,331.68

34,203.88

34,525.65

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ITC 

238.16

275.35

269.27

280.17

Hindalco 

233.23

242.80

237.65

246.35

ICICI Bank

207.55

290.05

287.73

293.63

SBI

161.42

246.45

244.53

249.13

Vedanta 

140.09

291.10

289.00

293.60

 

  • Maruti Suzuki India has attained leadership position in utility vehicles sales in the domestic market in 2017-18, with over 27.5% market share. 
  • M&M has launched the Plush New XUV500 which sets a new benchmark in the premium SUV segment with a bold new design, plush, luxurious interiors and higher power and torque. 
  • Hero MotoCorp has set a new benchmark in the two-wheeler market by launching an e-commerce portal to retail Hero Genuine Parts and Accessories. 
  • Vedanta has received NCLT's approval to acquire Electrosteel Steels.
News Analysis