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NSE Intra-day chart (30 October 2019)
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Market Commentary 31 October 2019
Benchmarks to get an optimistic start amid positive global cues

 

Bulls continued to roar on Dalal Street on Wednesday's trading session, with Sensex and Nifty closing higher by around half a percent. The start of the day was firm, amid reports that the Department for Promotion of Industry and Internal Trade (DPIIT) has kick-started an exercise to relax India's foreign direct investment (FDI) norms. The department held an inter-ministerial meeting to discuss further opening up in sectors, especially where 100% FDI is not allowed on the automatic route. The street got comfort, after Finance Minister Nirmala Sitharaman exhorted India Inc to expand CSR reach to poor states like Jharkhand, Chattisgarh, Bihar and North East region. Indices traded with traction during whole day, aided with a report that the finance ministry & regulators are reviewing the possibility of scrapping the dividend distribution tax. It is also considering rationalisation of the long-term capital gains taxation structure by classifying three asset classes against six at present. However, traders were seen taking a note of a private report that following the surprise move to cut corporate taxes last month, speculation is high that a reduction in personal income taxes is on the cards next in India. With the all-in corporate tax rate at 25 per cent, it is likely that personal income tax rates, which are at 30 per cent plus levels, will also be lowered, surcharges notwithstanding. Finally, the BSE Sensex gained 220.03 points or 0.55% to 40,051.87, while the CNX Nifty was up by 57.25 points or 0.49% to 11,844.10.

 

The US markets ended higher on Wednesday as traders reacted positively to the Federal Reserve's monetary policy decision. The Fed announced its decision to lower interest rates for the third straight meeting. The Fed announced its widely expected decision to lower the target range for the federal funds rate by 25 basis points to 1-1/2 to 1-3/4 percent. The quarter point rate cut follows two matching moves at the Fed's meetings in September and July, which marked the first rate cuts in over a decade. The Fed's accompanying statement removed a key line indicating the central bank would continue to act as appropriate to sustain the expansion. The line was included in each of the Fed's three previous statements and was seen as pointing toward a near-term rate cut. The Fed said it would continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate. Besides, traders largely shrugged off the release of some upbeat US economic data, including the Commerce Department's first reading on third quarter GDP. The Commerce Department report showed US economic growth slowed much less than expected in the third quarter. The report said real gross domestic product increased by 1.9 percent in the third quarter after climbing by 2.0 percent in the second quarter. Street had expected GDP growth to slow to 1.7 percent. Moreover, payroll processor ADP released a separate report showing US private sector employment increased by 125,000 jobs in October compared to economist estimates for an increase of about 120,000 jobs. However, the report also showed private sector job growth in September was downwardly revised to 93,000 from the previously reported addition of 135,000 jobs.

 

Crude oil futures ended lower on Wednesday after data showed a notable jump in crude inventories in the US. The Energy Information Administration (EIA) data showed that crude stockpiles in the US increased by 5.7 million barrels in the week ended October 25, more than twice the expected jump. The EIA report also said gasoline inventories dropped by 3 million barrels in the week ended October 25. Distillates supply dropped by about 1 million barrels in the week. Besides, the American Petroleum Institute (API) had released a report that said crude inventories fell by 708,000 barrels last week. Moreover, worries about energy demand outlook amid the ongoing US-China trade dispute and slowing global economy too contributed to the drop in oil prices. Benchmark crude oil futures for December lost 48 cents or 0.9 percent to settle at $55.06 a barrel on the New York Mercantile Exchange. December Brent fell 98 cents or 1.6 percent to settle at $60.61 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally weaker against the US dollar on Wednesday, due to increased demand of the greenback from the importers and the banks. Traders failed to take support with reports that the Department for Promotion of Industry and Internal Trade (DPIIT) has kick-started an exercise to relax India's foreign direct investment (FDI) norms. The department held an inter-ministerial meeting to discuss further opening up in sectors, especially where 100% FDI is not allowed on the automatic route.  However, positive trend in equity market along with dollar losing muscle against other currencies overseas helped in restricting the slide in the Indian unit. On the global front, dollar was steady against other major currencies on Wednesday as investors braced for a rate cut by the US Federal Reserve and an advance reading of economic growth in the third quarter that could shed light on the rate outlook. Finally, the rupee ended at 70.90, 6 paise weaker from its previous close of 70.84 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 8087.86 crore against gross selling of Rs 6568.26 crore, while in the debt segment, the gross purchase was of Rs 2976.41 crore with gross sales of Rs 958.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 14.87 crore against gross selling of Rs 1.10 crore.

 

The US markets ended in green on Wednesday as investors cheered the Federal Reserve's third rate cut of the year and comments from Chairman Jerome Powell that signaled it would be a while before the central bank hikes rates. Asian markets are trading mostly higher on Thursday after the US Federal Reserve cut interest rates as expected to keep the economic expansion on track. Indian markets ended higher on Wednesday amid speculation the government may rationalize the tax structure for equities by November-end. Today, the start of the F&O series expiry session is likely to be optimistic following positive global cues coupled with fall in crude oil prices. There will be some encouragement with the Economist Intelligence Unit's report stating that India and China are projected to see accelerated economic growth in the fourth quarter of this year, bucking trends in the US and the European Union. It added that the real GDP growth of India in the December-ending quarter is expected to be the highest among G7 and BRICS nations. In the third quarter, India's real GDP growth is estimated to be 1% on a quarter-on-quarter basis and is projected to rise to 2.20% in the fourth quarter. Traders may take note of report that Commerce and industry minister Piyush Goyal has assured that startups will never be harassed and that the government is taking steps to promote them. The minister said the government has come out with clarifications that startups would not be asked any questions if they are registered with and recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). However, there may be some cautiousness with report that the government is unlikely to moderate personal income tax rates for the rich due to fiscal stress on account of lower tax realisation amid slowdown in the economy. There will be some buzz in the power stocks with ICRA's report that progress on stressed thermal power asset resolution remained slow as only 10% of affected generation capacity witnessed resolution despite several steps taken by the government and lenders. Telecom stocks will be in focus as the Telecom Regulatory Authority of India released the amended broadcasting and cable services interconnection regulations to ensure a fully-compliant audit regime. There will be some reaction in sugar stocks with report that the government's Rs 15,000-crore soft loan programme for sugar mills to set up ethanol units is moving at a very slow pace as banks have so far disbursed only about Rs 800 crore. There will be some earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,844.10

11,791.05

11,890.55

BSE Sensex

40,051.87

39,845.28

40,218.29

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

2,562.98

56.80

55.38

58.83

Tata Motors

907.60

171.90

167.08

176.18

SBI

514.69

289.90

282.43

294.18

Bharti Infratel

351.36

183.20

173.08

196.58

ITC

342.91

259.40

254.47

264.17

 

  • Wipro has launched the next generation engineering and innovation center in Richmond, Virginia, to accelerate innovation for local startups and clients. 
  • Bharti Airtel has garnered 7% year-on-year rise in revenue from India mobile services during the September 2019 quarter to Rs 10,981.4 crore, as the subscriber base stood at 279.4 million. 
  • Tech Mahindra has set up its first development center in Timisoara, Romania. 
  • Tata Sons is going to increase its shareholding in Tata Motors to 43.73 percent after the proposed Rs 6,500 crore preferential issue by the automobile manufacturer.
News Analysis