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NSE Intra-day chart (19 March 2019)
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Market Commentary 20 March 2019
Markets to make a pessimistic start amid mixed cues from global market

 

Extending their winning streak to seventh straight session, Indian equity benchmarks closed the trading session with strong gains on Tuesday. The start of the day was positive, aided by reports that the net direct tax collection figure has crossed the Rs 10 lakh crore mark as on March 16, helped by the fourth and final installment of tax payment. The entire advance tax data from across the country has not come yet. The net direct tax collection during April-January of this fiscal stood at Rs 7.89 lakh crore as against Rs 12 lakh crore targeted for the entire fiscal of 2018-19. However, the trade remained thin for the most part of the session, ahead of the outcome of the 34th GST Council meeting. Traders were cautious with Niti Aayog CEO Amitabh Kant's statement that India cannot achieve 9-10% Gross Domestic Product (GDP) growth without revolution in the farm sector. He said there is a need to boost investment in the agriculture sector as well as to introduce new technology and market reforms. However, key indices gained momentum in the last hours of the trade, aided by firm cues from European markets. The market participants got comfort with reports that an RBI-appointed panel sought suggestions from the public on long-term solutions for economic and financial sustainability of MSME sector, including ways to improve credit rating mechanism to help them raise funds at competitive rates. Adding optimism among the investors, ICRA, domestic rating agency, in its latest report said that the information technology (IT) services sector is likely to register a growth of 7-9% in next financial year (FY20) mainly on account of demand for digital solutions. It mentioned that the earlier small-scale proof of concept digital projects has started evolving into enterprise level larger implementations coupled with improvement in discretionary spend supporting future growth. Finally, the BSE Sensex rose 268.40 points or 0.70% to 38,363.47, while the CNX Nifty was up by 70.20 points or 0.61% to 11,532.40.

 

The US markets ended mostly lower on Tuesday, on reports that US negotiators are concerned that China is pushing back against American demands. Chinese officials are reportedly indicating that the US has not made sufficient assurances that President Donald Trump's administration will lift tariffs on Chinese goods in exchange for Beijing agreeing to changes in their intellectual property regulations. Besides, investors were also on standby for the Fed's policy decision on Wednesday. No changes in rates are expected, but market participants will focus on remarks by Chairman Jerome Powell at his news conference and policy makers' forecasts of future rate moves. On the economic front, with a drop in orders for non-durable goods partly offsetting an increase in orders for durable goods, the Commerce Department released a report showing new orders for US manufactured goods edged only slightly higher in the month of January. The Commerce Department said factory orders inched up by 0.1% in January, matching the 0.1% uptick in December. Street had expected orders to rise by 0.3%. The modest increase in factory orders came as durable goods orders rose by 0.3% in January after jumping by 1.3% in December. Orders for transportation equipment showed a substantial increase, surging up by 1.2% in January after soaring by 3.2% in the previous month. Dow Jones Industrial Average dropped 26.72 points or 0.10 percent to 25887.38 and S&P 500 was down by 0.37 points or 0.01 percent to 2832.57, while Nasdaq gained 9.47 points or 0.12 percent to 7723.95.

 

Crude oil futures ended marginally lower on Tuesday. However, Brent crude settled higher with major global producers outside the US expected to continue to keep a lid on output. Oil prices have risen by over 25% since the start of 2019 as output cuts by Organization of the Petroleum Exporting Countries (OPEC) and its allies and involuntary cuts by Iran and Venezuela have prompted fears about supply. Besides, weekly US petroleum supply data will be released on Wednesday by the Energy Information Administration (EIA). Benchmark crude oil futures for April declined 6 cents or 0.1 percent to settle at $59.03 a barrel on the New York Mercantile Exchange. However, May Brent crude gained 7 cents or 0.1 percent to settle at $67.61 a barrel on London's Intercontinental Exchange.

 

Snapping six day of gaining streak, Indian rupee ended weaker on Tuesday as traders turned cautious with Niti Aayog CEO Amitabh Kant's statement that India cannot achieve 9-10% Gross Domestic Product (GDP) growth without revolution in the farm sector. He said there is a need to boost investment in the agriculture sector as well as to introduce new technology and market reforms. However, the downside remain capped with traders taking solace with reports that the net direct tax collection figure has crossed the Rs 10 lakh crore mark as on March 16, helped by the fourth and final installment of tax payment. The entire advance tax data from across the country has not come yet. The net direct tax collection during April-January of this fiscal stood at Rs 7.89 lakh crore as against Rs 12 lakh crore targeted for the entire fiscal of 2018-19. Finally, the rupee ended at 68.96, 43 paise weaker from its previous close of 68.53 on Monday.

 

The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 6445.56 crore against gross selling of Rs 3943.35 crore, while in the debt segment, the gross purchase was of Rs 1332.03 crore with gross sales of Rs 402.02 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.13 crore against gross selling of Rs 0.04 crore.

 

The US markets ended mixed on Tuesday, as investors hoped for a more accommodative policy stance at the end of the Federal Reserve's two-day meeting on March 20. Asian markets are trading mixed on Wednesday following a series of conflicting reports on US-China trade that surfaced overnight. Indian markets settled higher with notable gains on Tuesday to extend their northward journey for seventh straight session, on account of late hour buying amid continuous foreign fund inflow. Today, the markets are likely to make pessimistic start tracking mixed cues from global market. Investors will be eyeing outcome of the US Federal Reserve's tow-day meeting, it is expected that Feb will stick to a dovish stance and unveil a plan to stop cutting bond holdings later this year. On the domestic front, trading volume may be thin ahead of holiday on March 21 on account of Holi. There will be some cautiousness with a report that Indian mutual funds and insurance firms, which scooped up shares while foreign institutional investors (FIIs) stayed away, turned net sellers of Rs 10,247.9 crore in March, even as FIIs returned to Indian markets. Some concerns may also come with a report that there is a 70% chance of El Nino climate cycle forming towards the second half of this year, a forecast that does not augur well for the monsoon season in India. However, traders may take note of Reserve Bank of India (RBI) governor Shakthikanta Das' statement that the market response to the unconventional liquidity tool of dollar swap auction worth $5 billion has been received quite well. Meanwhile, economists raised concerns over a sharp slowdown in the Indian economy and pitched for a monetary policy boost to support growth at a meeting with the RBI chief on March 19. RBI governor Shaktikanta Das met more than a dozen economists to get their views on the economy ahead of the Monetary Policy Committee (MPC) decision due on April 4. Most economists expect the six-member MPC to cut the repo rate by 25 basis points for the second time in a row next month to 6.00 percent, a level last seen in August 2017. There will be some buzz in the real estate sector stocks as the all-powerful Goods and Services Tax (GST) Council approved a transition plan for the implementation of new tax structure for housing units. It has decided that builders can pick between paying 12% for non-affordable houses with ITC benefits or 5% without the tax rebates for under-construction houses. Likewise, for affordable housing projects, builders can choose between 8% with tax rebates or 1% without it. The new rates, without ITC benefits, will apply for all projects that begin construction only after April 1.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,532.40

11,474.48

11,567.08

BSE Sensex

38,363.47

38,162.45

38,480.28

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

IOC

304.04

162.70

160.97

165.22

SBI

272.19

303.05

299.27

306.72

NTPC

259.51

134.90

131.10

138.00

Yes Bank

214.48

248.80

245.70

251.20

ONGC

182.90

157.00

153.47

161.87

 

  • Larsen & Toubro has entered into a definitive Share Purchase Agreement with V G Siddhartha and his related entities to acquire 20.32% stake in Mindtree. 
  • Dr. Reddy's Laboratories has launched B2B customer service portal XCEED to increase the operational efficiency. 
  • Tata Motors' wholly owned subsidiary -- Jaguar Land Rover is going to hike prices of select models by up to 4 per cent with effect from April 1.
  • HCL Technologies has entered into a shared services arrangement with Xerox Corporation.
News Analysis