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NSE Intra-day chart (03 December 2019)
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Market Commentary 04 December 2019
Benchmarks to get a negative start amid weakness in global markets

                                                                                              

Indian equity bourses closed Tuesday's trading session with losses. The markets made a negative start of the day, as ICRA said that India Inc delivered an expectedly weak performance during the second quarter of the current financial year, reeling under the impact of continued weakness in consumer sentiments and a general slowdown in the economy. Adding some worries, a private report stated that with the government trying to revive a stuttering economy, the 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. Weak trade persisted during the whole day, after Fitch Ratings' report showed that Indian banks need an additional $7 billion (Rs 50,000 crore) equity by 2020-21 to support loan growth and cover for bad loans, adding that a slowing economy could exacerbate asset-quality tension for a sector grappling with weak recoveries and ageing provisions. The street overlooked Finance Minister Nirmala Sitharaman's statement that corporate tax reduction is aimed at attracting fresh investment and generating jobs, and said that green shoots are already visible with several foreign as well as domestic firms showing interest to invest. Finally, the BSE Sensex lost 126.72 points or 0.31% to 40,675.45, while the CNX Nifty was down by 54.00 points or 0.45% to 11,994.20.

 

The US markets ended lower for the third straight session on Tuesday after President Donald Trump said it may take until after the 2020 US elections to complete a trade deal with China, while trade tensions escalated on other fronts, including Brazil, Argentina and France. He said he had no deadline when it comes to concluding the two-year-old US-China trade talks. Trump claimed a potential trade deal is only dependent on whether he wants to sign it, because the US is doing very well and China is having by far the worst year that they have had in 57 years. The comments from the president added to rising trade concerns after his administration threatened to impose duties of up to 100 percent on $2.4 billion in French imports, including champagne and handbags. The threat comes after the administration concluded France's new digital services tax discriminates against US companies such as Google, Apple, Facebook, and Amazon.

 

Crude oil futures ended marginally lower on Tuesday after President Donald Trump suggested that he might prefer to wait until after the 2020 elections to strike a trade deal with China. He added they want to make a deal now, and we will see whether or not the deal's going to be right; it's got to be right. Trump claimed a potential trade deal is only dependent on whether he wants to sign it, because the US is doing very well and China is having by far the worst year that they have had in 57 years. Benchmark crude oil futures for January gained 14 cents or 0.3 percent to settle at $56.10 a barrel on the New York Mercantile Exchange. However, January Brent declined 10 cents or 0.2 percent to settle at $60.82 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended unchanged compared to its previous close, as investors remained cautious ahead of the Reserve Bank of India's bi-monthly monetary policy meeting starting today, while the decision will be out on December 5. Some concern also came as Crisil sharply cut India's Gross domestic product (GDP) growth forecast to 5.1% for the current financial year (FY20) from an earlier estimate of 6.3%. However, traders took some support with Finance Minister Nirmala Sitharaman's statement that the government is open to further reforms for making India a more attractive investment destination. She also said the government has taken various steps, including reduction of corporate tax. On the global front, euro and Japanese yen on Tuesday largely held gains made against the dollar this week after disappointing manufacturing data and signs of new fronts in US President Donald Trump's trade war rattled greenback investors.  Finally, the rupee ended unchanged from its previous close of 71.66 on Monday.

 

The FIIs as per Tuesday'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 7726.56 crore against gross selling of Rs 9174.27 crore, while in the debt segment, the gross purchase was of Rs 2137.56 crore with gross sales of Rs 2108.10 crore. Besides, in the hybrid segment, the gross buying was of Rs 80.05 crore against gross selling of Rs 48.95 crore.

 

The US markets ended in red on Tuesday after President Trump suggested the trade war with China could continue well into next year. Asian markets are trading lower on Wednesday after US President Donald Trump said a trade deal with China might have to wait until after the 2020 presidential election, dashing market hopes for a quick preliminary agreement. Indian markets ended choppy session in red territory on Tuesday weighed down by selling pressure amid fresh concerns of global trade tensions. Today, the markets are likely to make a pessimistic start amid weakness in Asian peers. Investors will be eyeing Services PMI data to be out later in the day. Traders will be concerned with a private report that corporation tax collection contracted by 1% in April-November 2019 compared with the same period last year, amid a slowing economy, even as the impact of the corporation tax rate cuts, announced in September, is yet to reflect in the numbers. There will be some cautiousness with a private report stating that it reduced India's GDP growth estimate to 5.3% from 6% amid a rash of similar actions, especially after the September quarter growth slowed to a 26-quarter low of 4.5%. However, some respite may come later in the day with Economic Affairs Secretary Atanu Chakraborty's statement that global rating agency S&P has reaffirmed sovereign rating of India with a stable outlook.  S&P has reaffirmed sovereign rating of India at BBB- with a stable outlook and it said that India's economy continues to achieve impressive long-term growth rates despite a recent deceleration. Some support may also come with Finance Minister Nirmala Sitharaman's statement that the government is open to further reforms aimed at making India a more attractive destination for investors. Traders may take note of a report that the GST Council is likely to discuss the revenue position in its upcoming meeting amid states demanding release of pending GST compensation. Meanwhile, the government has assured the Rajya Sabha that the merger of 10 public sector banks will not lead to any job losses and employees' interest will be protected. There will be some buzz in the telecom stocks with industry body COAI's statement that telecom operators have proposed sector regulator Trai to fix a minimum price for mobile internet as no company on its own is in a position to decide on it due to fierce competition in the market. However, private telecom operators want call rates to continue to remain unregulated. Power stocks will be in focus with report that power generation in the country fell by over 12% to 98,887 million units (MU) during October 2019, mainly due to reduction in demand for agricultural activities and cooling requirements in commercial sector.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,994.20

11,944.20

12,056.40

BSE Sensex

40,675.45

40,524.65

40,855.64

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

2,971.42

59.50

57.25

63.50

Bharti Infratel

369.19

248.45

233.82

266.37

Zee Entertainment Enterprises

280.26

279.90

267.67

295.57

SBIN

264.82

336.25

332.08

341.68

Bharti Airtel

238.72

459.10

447.88

467.68

 

  • Axis Bank has launched wealth management product aimed at the growing numbers of the ultra-rich. 
  • Walmart India in collaboration with HDFC Bank has launched a co-branded credit card exclusively for members of its Best Price Modern Wholesale B2B Cash & Carry stores, offering free credit up to 50 days. 
  • Maruti Suzuki India is going to increase price across various models in January 2020. 
  • Sun Pharmaceutical Industries has received partial relief from a US court in a litigation alleging delay by the company in launching three generic drugs in the American market.
News Analysis