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NSE Intra-day chart (02 December 2019)
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Market Commentary 03 December 2019
Markets to open marginally in red amid weak global cues

 

Indian equity bourses settled the volatile day near their neutral lines on Monday. The start of the day was positive, as Goods and Services Tax collection witnessed an impressive recovery with a positive growth of 6% to Rs 1.03 lakh crore in November 2019 over November 2018 collection. Some support also came with Finance minister Nirmala Sitharaman's statement that several significant steps in structural reforms have been taken in the past few months and responses/interventions addressing the needs of the economy will continue, indicating more relief measures could be on the anvil if so needed. But, indices failed to hold early gains & turned volatile, even though India's manufacturing activity made a marginal improvement, surging to 51.2 in November from 50.6 in October. Sentiments got hampered, after rating agency CRISIL sharply cut its growth forecast for the current financial year to 5.1 per cent from an earlier estimate of 6.3 per cent. The street also remained worried, amid a private report stating that India's economic growth is expected to remain subdued in near future as the slowdown has deepened and is likely to remain extended for a longer duration than previously anticipated. Finally, the BSE Sensex gained 8.36 points or 0.02% to 40,802.17, while the CNX Nifty was down by 7.85 points or 0.07% to 12,048.20.

 

The US markets ended lower on Monday after US manufacturing data showed a contraction in November and fresh trade jitters put investors on the defensive. The Institute for Supply Management (ISM) released a report showing manufacturing activity contracted for the fourth straight month in November. The ISM said its purchasing managers index edged down to 48.1 in November from 48.3 in October, with a reading below 50 indicating a contraction in manufacturing activity. Street had expected the index to inch up to 49.2. The unexpected dip by the headline index was partly due to faster rate of contraction in new orders, as the new orders index slid to 47.2 in November from 49.1 in October. The employment index also fell to 46.6 in November from 47.7 in October, indicating employment in the manufacturing sector contracted at a faster rate. On the inflation front, the prices index climbed to 46.7 in November from 45.5 in October, but a reading below 50 still indicates a drop in prices. Besides, a report released by the Commerce Department showed an unexpected decrease in US construction spending in the month of October. The Commerce Department said construction spending fell by 0.8 percent to an annual rate of $1.291 trillion in October after slipping by 0.3 percent to a revised $1.302 trillion in September. Street had expected construction spending to climb by 0.4 percent compared to the 0.5 percent increase originally reported for the previous month. The unexpected drop in construction spending was partly due to a decrease in spending on private construction, which tumbled by 1.0 percent to a rate of $956.3 billion in October.

 

Crude oil futures ended higher on Monday on reports Saudi Arabia wants the Organization of the Petroleum Exporting Countries (OPEC) to deepen oil production cuts in order to anchor oil prices before Saudi Aramco's initial public offering. The deal reportedly to be discussed by OPEC and other oil producers at a meeting this week would add about 400,000 barrels per day to existing cuts of 1.2 million barrels per day. Besides, oil prices also got support from upbeat Chinese manufacturing data, which helped alleviate concerns about the impact of the ongoing US-China trade dispute. Benchmark crude oil futures for January rose 79 cents or 1.4 percent to settle at $55.96 a barrel on the New York Mercantile Exchange. January Brent gained 43 cents or 0.7 percent to settle at $60.92 a barrel on London's Intercontinental Exchange.

 

Snapping two day falling streak, Indian rupee ended marginally higher against dollar on Monday on selling of dollars by banks and exporters. Traders took some support with Finance minister Nirmala Sitharaman's statement that several significant steps in structural reforms have been taken in the past few months and responses/interventions addressing the needs of the economy will continue, indicating more relief measures could be on the anvil if so needed. However, gains remain capped as anxiety remained among the traders with data showing that the Gross Domestic Product (GDP) growth for the second quarter (July-September) of the financial year 2019-20 dropped to 4.5%, the weakest pace in more than six years, due to weak consumer demand, slowing factory activities and negative impacts of the prolonged monsoon. On the global front, British pound edged lower against the dollar on Monday as polls showed a tightening UK election race, while an unexpected rebound in Chinese manufacturing supported risk appetite. Finally, the rupee ended at 71.66, 8 paise stronger from its previous close of 71.74 on Friday.

 

The FIIs as per Monday'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 5929.62 crore against gross selling of Rs 6680.77 crore, while in the debt segment, the gross purchase was of Rs 1264.68 crore with gross sales of Rs 1073.71 crore. Besides, in the hybrid segment, the gross buying was of Rs 98.46 crore against gross selling of Rs 90.72 crore.

 

The US markets ended lower on Monday, hit by a downbeat report on the manufacturing sector and a fresh flare-up in trade tensions. Asian markets are trading mostly in red on Tuesday after US President Donald Trump stunned markets with tariffs against Brazil and Argentina, recharging fears about global trade tensions. Indian markets ended almost flat after a volatile session on Monday amid weak economic numbers, lower than expected auto sales and profit booking. Today, the start of session is likely to be flat-to-negative tracking weakness in global markets. Investors will be eyeing the Reserve Bank of India's (RBI) fifth monetary policy meet of the financial year 2019-20 (FY20) that begins today, while the decision will be out on December 5. There are expectation that RBI may cut repo rate by another 25 bps (basis points) to spur economic growth after official data showed India's gross domestic product (GDP) collapsed to 4.5% in the July-September quarter, the first time it's been below 5% since 2013. There will be some cautiousness with a private report indicating that with the government trying to revive a stuttering economy, the Goods and Services Tax (GST) mop-up for November is expected to provide some respite, but it added that an improvement in GST collections may not be a solution to all the worries of the government. However, some support may come later in the day with Finance Minister Nirmala Sitharaman's statement that gross direct tax collection increased by 5% till November, and she allayed fears of corporate tax reduction impacting revenue collection. Traders may take note of Commerce and Industry Minister Piyush Goyal's statement that the value of India's overall exports rose about 8% to $538.07 billion during 2018-19. Besides, the government aims to increase the country's export of merchandise and services to $900 billion in 2019-20 and raise India's share in world exports (goods and services) to 3.5%. Telecom stocks will be in focus as the proposed tariff hike plan will come into effect from today. The Cellular Operators Association of India (COAI) said that the Indian telecom industry has taken first step towards improving its financial health by hiking tariffs for the first time since 2016 - a much needed move for the telcos to cover adjusted gross revenue (AGR) dues within 90 days. There will be some reaction in reality stocks with a private report that loans worth $14 billion (about Rs 1,000 crore) provided to real estate firms by banks, NBFCs and housing finance companies (HFCs) are under severe stress and facing issues of debt servicing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,048.20

12,002.22

12,115.67

BSE Sensex

40,802.17

40,641.87

41,028.23

 

                                                             Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

3,617.56

64.05

61.63

67.88

Bharti Airtel

557.36

458.60

447.23

477.78

ZEEL

340.43

292.80

282.33

305.13

Bharti Infratel

263.11

265.50

251.80

287.85

SBI

206.49

338.50

335.02

343.17

 

  • Reliance Industries' telecom arm -- Jio is all set to introduce New All-In-One plans with unlimited voice and data. 
  • M&M has reported auto sales performance for November 2019 which stood at 41,235 vehicles, compared to 45,101 vehicles during November 2018, registering a fall of 9%. 
  • Axis Bank is offering free door-step delivery of FASTags and anytime-anywhere recharge, with FASTag all set to become mandatory on all national highway toll plazas from December 1, 2019. 
  • Tata Motors has reported domestic sales of 38,057 units for November 2019, as compared to 50,470 units for November 2018, posting a decline of 25%.
News Analysis