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NSE Intra-day chart (30 November 2018)
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Market Commentary 03 December 2018
Markets to make optimistic start on firm global cues

 

Indian equity benchmarks ended flat on Friday ahead of key economic growth (GDP) data to be release later in the day. The markets made an optimistic start, aided by economic policy think-tank the National Council of Applied Economic Research's (NCAER) report stating that Indian economy is projected to grow at 7-7.4 per cent in the current fiscal. It added that the real agriculture Gross Value Added (GVA) is envisaged to grow at 3 per cent and real industry GVA at 7 per cent in 2018-19. As per the report, the forecast for Gross Value Added (GVA) at basic prices is 7.0-7.4 per cent. These forecasts at constant (2011-12) prices are based on NCAER's annual GDP macro model. Sentiments were also upbeat during first half of the session, with a private report that Prime Minister Narendra Modi has plans to unveil a long-awaited industrial policy soon to boost domestic manufacturing and accelerate economic growth before federal polls next year. However, the key indices turned volatile during the second half of the session, amid private report stating that India's Gross Domestic Product (GDP) growth is expected to slow down to 7.4% in the July-September quarter of the current financial year, down by 0.8 percentage points from the previous quarter. Weak opening in European markets also dented the domestic sentiments. But, at the end of the day, the markets managed to keep their heads above neutral lines, as some relief spread among the market participants with Chairman of the Economic Advisory Council to Prime Minister (EAC-PM) Bibek Debroy's statement that the government is looking to reform tax structures such that there is no deviation from fiscal consolidation. Some support also came with a survey report that India's small and medium businesses are using their advantages such as size, agility and innovation as their top three strategies for driving revenue growth in 2018. Finally, the BSE Sensex rose 23.89 points or 0.07% to 36,194.30, while the CNX Nifty was up by 18.05 points or 0.17% to 10,876.75.

 

After a day of halt, the US markets again gained the momentum and ended higher on Friday, with Dow Jones adding around 200 points, on the outlook for trade ahead of a meeting between the American and Chinese presidents. Sentiments also remained optimistic after upbeat comments from a US trade official who suggested that some sort of a trade deal is possible during a meeting between President Donald Trump and Chinese leader Xi Jinping at the G-20 summit in Argentina. Investors are hopeful that the US-China trade negotiations will be resolved in a similar way as the US-China-Mexico pact, which was agreed to only after the president issued a series of tough statements, and engaged in significant brinkmanship, before finally compromising on a deal at the 11th hour. On the economic front, MNI Indicators released a report unexpectedly showing a substantial acceleration in the pace of growth in Chicago-area business activity in the month of November. MNI Indicators said its Chicago business barometer jumped 8 points to 66.4 in November after falling to 58.4 in October, with a reading above 50 indicating growth in business activity. The survey is often seen as a bellwether for the broader US economy. Street had expected the index to edge down to 58.0. The unexpected jump reflected increases across all five of the barometer'a subcomponents, with resurgent orders, solid output and higher unfinished orders the month's key drivers. Dow Jones Industrial Average surged 199.62 points or 0.79 percent to 25,538.46, S&P 500 jumped 22.41 points or 0.82 percent to 2,760.17 and Nasdaq was up by 57.45 points or 0.79 percent to 7,330.54.

 

Crude oil futures settled lower on Friday as traders worried over a possible glut in global supplies. Traders also remained cautious as demand growth worries resurfaced after China reported its weakest factory growth in more than two years. However, oil prices pared most of their early losses as speculation has grown over a potential production cut by major oil producers, ahead of next week's final meeting of the year for the Organization of the Petroleum Exporting Countries (OPEC). According to reports, Russia, the second largest producer of crude oil, is likely to agree on a production cut in the upcoming OPEC and non-OPEC producers meet. Benchmark crude oil futures for January slipped 52 cents or 1 percent to settle $50.93 a barrel on the New York Mercantile Exchange. January Brent crude fell 80 cents or 1.3 percent to settle at $58.71 a barrel on London's Intercontinental Exchange.

 

Rising for the fourth straight day, Indian rupee ended stronger against dollar on Friday, owing to dollar sale by exporters and banks. Traders took encouragement with economic policy think-tank the National Council of Applied Economic Research's (NCAER) report stating that Indian economy is projected to grow at 7-7.4 per cent in the current fiscal. It added that the real agriculture Gross Value Added (GVA) is envisaged to grow at 3 per cent and real industry GVA at 7 per cent in 2018-19. Traders also took note of Chairman of the Economic Advisory Council to Prime Minister (EAC-PM) Bibek Debroy's statement that the government is looking to reform tax structures such that there is no deviation from fiscal consolidation. On the global front, dollar was a tad firmer on Friday as markets nervously awaited the outcome of talks between the leaders of the world's two biggest economies this weekend which could determine whether trade tensions between them will escalate further. Finally, the rupee ended at 69.58, 27 paise stronger from its previous close of 69.85 on Thursday.

 

The FIIs as per Friday'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 8917.48 crore against gross selling of Rs 7722.15 crore, while in the debt segment, the gross purchase was of Rs 1336.25 crore with gross sales of Rs 1864.57 crore. Besides, In the hybrid segment, the gross selling was of Rs 0.65 crore against no buying.

 

The US markets ended higher on Friday ahead of a highly anticipated meeting between President Donald Trump and Chinese President Xi Jinping. Asian markets rallied in early deals on Monday after US and Chinese leaders brokered a truce in their trade conflict, a relief for the global economic outlook and a tonic for emerging markets. Indian markets pared most of their early gains and ended marginally higher on Friday as investors awaited Q2 GDP data and the outcome of the G20 summit over the weekend for directional cues. Today, the markets are likely to make positive start of the new month, following firm global cues bolstered by the report that US President Donald Trump and his Chinese counterpart Xi Jinping have agreed to a 90-day truce in the escalating trade war between the two countries. This is the relief for the global growth outlook and a positive for emerging markets. Traders will be getting some encouragement with a report that overseas investors have pumped Rs 12,260 crore into the Indian capital markets in November, making it the highest inflow in 10 months due to falling crude oil prices and sharp rupee appreciation. Investors will be eyeing manufacturing PMI data to be out later in the day. However, traders may be concerned about the Central Statistics Office's (CSO) latest report showing that India's gross domestic product (GDP) grew 7.1% in July-September, down from 8.2% in the previous quarter, as consumption demand moderated and farm sector displayed signs of weakness. The government attributed the slowdown in India's GDP growth rate to a higher base effect, higher import bill on account of oil prices and weakening of the rupee. Also, there may be negative reaction on the government data showing that India reported a fiscal deficit of Rs 6.48 lakh crore during April-October, which translates to 103.9% of its full-year target. There may be some cautiousness with report that growth of eight infrastructure sectors slowed down to 4.8% in October 2018, as compared to 5% in October 2017.  Besides, the Goods and Services (GST) collection in November dropped to Rs 97,637 crore, lower than Rs 1 lakh crore collected previous month. There will be some buzz in the food processing sector stocks with Union Cabinet minister for Food Processing Harsimrat Kaur Badal's statement that the government has planned to set up a non-banking financial company (NBFC) with an initial corpus of Rs 2,000 crore to fund food processing industries as part of its effort to boost this sector and double farmers income. There will be some reaction in steel sector stocks with a report that India's finished steel exports fell by 23.4% to 0.596 million tonnes (MT) in October 2018. The auto sector stocks will also be in action, reacting to their monthly sales numbers.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,876.75

10,833.75

10,921.10

BSE Sensex

36,194.30

36,055.11

36,361.36

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,201.53

169.80

163.05

173.95

IOC

301.22

134.60

132.70

136.20

NTPC

248.67

140.30

137.70

142.75

ONGC

236.76

140.30

137.97

143.17

ICICI Bank

218.94

355.15

350.97

362.17

 

  • TCS has launched TCS Pace, a new brand identity for its research, innovation and digital transformation services that are at the core of customers' Business 4.0 journeys. 
  • Tata Motors' wholly owned subsidiary -- JLR -- has made investment in WeTrip, a London-based digital platform for holiday planning and booking. 
  • Bajaj Finance has raised Rs 788.40 crore through Non-Convertibles Debentures. 
  • SBI has given approval for the sale of 4% stake in SBI General Insurance for Rs 482 crore to two alternative investment funds.
News Analysis