Indian equity bourses witnessed
bloodbath on Tuesday, amid concerns over soaring crude prices following drone
attacks on Saudi Arabia's oil facilities. After a negative start, indices
remained sluggish for the entire day, as the Reserve Bank of India's Governor
Shaktikanta Das said that India's current account & fiscal deficit could
take a hit if oil prices continue to rise after an attack on Saudi Arabian oil
facilities over the weekend. Some concerns also came with reports that
lose-monetary policy alone cannot arrest the deepening slump, instead government
must take demand-boosting measures, especially in rural areas, by frontloading
expenditure primarily through the national rural employment scheme. The markets
extended losses during the second half of the trading session, after credit
rating agency, India Ratings and Research (Ind-Ra) in its latest report stated
that the recent set of measures to stimulate growth announced last week would
yield only limited short-term benefits. It also said that the weakness in the
economy has largely been caused by demand-side headwinds, which have been
exacerbated by structural bottle-necks. Market participants paid no heed
towards Commerce and Industry Minister Piyush Goyal's statement that India and
the US are in continuous dialogue and working towards early resolution of trade
related issues. Finally, the BSE Sensex lost 642.22 points or 1.73% to
36,481.09, while the CNX Nifty was down by 185.90 points or 1.69% to 10,817.60.
The US markets ended higher on
Tuesday as traders looked ahead to the Federal Reserve's monetary policy
announcement on Wednesday. The Fed is widely expected to lower interest rates
by another 25 basis points, with traders likely to pay closer attention to the
accompanying statement for clues about the long-term outlook for rates. Besides,
uncertainty about the US response to the recent attacks on Saudi Arabian oil
facilities kept upside in check. President Donald Trump has indicated the US is
prepared to respond militarily but has stopped short of definitively blaming
Iran for the attacks. Trump said diplomacy has not been exhausted when it comes
to Iran and would not rule out meeting with Iranian President Hassan Rouhani on
the sidelines of the United Nations General Assembly next week. On the economic
front, the Fed released a report showing industrial production rebounded by
much more than anticipated in the month of August. The report said industrial
production climbed by 0.6 percent in August after edging down by a revised 0.1
percent in August. Street had expected industrial production to rise by 0.2
percent compared to the 0.2 percent dip originally reported for the previous
month. A separate report from the National Association of Home Builders showed
an unexpected improvement in US homebuilder confidence in the month of September.
The report said the NAHB/Wells Fargo Housing Market Index inched up to 68 in
September from an upwardly revised August reading of 67.
Crude oil futures ended lower on
Tuesday after Saudi Arabia's energy minister said the kingdom's crude
production could return to normal as soon as the end of the month, as the
nation recovers from weekend attacks on crucial processing facilities. US
President Donald Trump has said the US prepared to respond militarily but has
stopped short of definitively blaming Iran for the attacks. Yemen's Houthi
rebels have reportedly claimed responsibility for the attacks. Besides, the
Energy Information Administration's (EIA) report said crude oil production from
seven major US shale plays is forecast to climb by 74,000 barrels a day in
October to 8.843 million barrels a day. Meanwhile, traders were also looking
ahead to the weekly crude inventory data from the American Petroleum Institute
(API) and EIA. Benchmark crude oil futures for October slipped $3.56 or 5.7
percent to settle at $59.34 a barrel on the New York Mercantile Exchange.
November Brent fell $4.47 or 6.5 percent to settle at $64.55 a barrel on
London's Intercontinental Exchange.
Indian
rupee continued its downtrend for the second straight day against the US dollar
on Tuesday, due to strong demand for the American currency from importers.
Investors remain concerned with the Reserve Bank of India (RBI) Governor
Shaktikanta Das' statement that India's current account and fiscal deficit
could take a hit if oil prices continue to rise after an attack on Saudi
Arabian oil facilities over the weekend. The domestic currency was also weighed
down by dollar's strengthen against some other currencies overseas along with
sharp losses in the local equities. On the global front, dollar stood tall
against other major currencies on Tuesday as geopolitical risks encouraged
investors to flock to the relative safe-appeal of the greenback before a US
central bank policy meeting this week, where a rate cut is widely expected.
Finally, the rupee ended at 71.78, 18 paise weaker from its previous close of
71.60 on Monday.
The
FIIs as per Tuesday's data were net sellers in both equity and debt segments.
In equity segment, the gross buying was of Rs 4025.07 crore against gross
selling of Rs 4817.33 crore, while in the debt segment, the gross purchase was
of Rs 355.81 crore with gross sales of Rs 2491.62 crore. Besides, in the hybrid
segment, the gross buying was of Rs 32.57 crore against gross selling of Rs
26.45 crore.
The US markets ended in green on
Tuesday as oil prices retreated from a historic gain and investors looked ahead
to an expected cut in interest rates by the Federal Reserve. Asian markets are
trading mostly higher on Wednesday following gains on Wall Street. Indian
markets ended lower with cut of over a percent on Tuesday amid heavy selling
pressure on fears of spike in crude oil prices and weakness in the rupee
against the US dollar could hurt the economy further. Today, the markets are
likely to make optimistic start tracking positive global cues along with easing
crude oil prices. Traders will be taking encouragement with a report that the
finance ministry is working on one more booster dose to give a leg-up to the
economy that has hit over six-year low of 5 per cent. As per the report, the
blue print for the stimulus is ready that would be announced by Finance
Minister Nirmala Sitharaman in the next few days. Some support will also come
with Minister of Commerce and Industry and Railways Piyush Goyal's statement
that government is planning to launch a National Logistics Policy to reduce
trade costs. He added that all transport sectors of railways, civil aviation,
roads and shipping would work towards bringing logistics costs below 10%.
Traders may take note of Niti Aayog chief executive Amitabh Kant's statement
that structural reforms in agriculture and exports are needed to bring growth
rate back to higher levels. He also said the fundamentals of the economy are
intact which will help the government take back the economy to the higher
growth trajectory soon despite the global slowdown. There will be some buzz in
the IT services stocks with rating agency ICRA's statement that growth of IT
services companies is expected to remain in 6-8 per cent range in US dollar
terms in 2019-20, even as the profitability of these firms declined in the
first quarter on account of higher employee expenses. Also, power stocks will
be in focus as India Ratings & Research maintained a stable-to-negative
outlook on the power sector for the remaining FY20, despite an increase in
electricity demand and a rise in thermal plant load factor (PLF). There will be
some reaction in auto component industry stocks as ICRA revised its sector
outlook on auto components to negative, following a sharp and broad-based
contraction in OEM sales in the past several quarters.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,817.60
|
10,742.70
|
10,946.30
|
BSE Sensex
|
36,481.09
|
36,210.27
|
36,960.74
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in
Lacs)
|
Yes Bank
|
1,509.32
|
65.10
|
63.57
|
67.72
|
Tata Motors
|
476.53
|
122.00
|
118.73
|
127.88
|
SBI
|
215.33
|
273.95
|
269.15
|
282.60
|
ICICI Bank
|
207.93
|
400.65
|
395.33
|
408.93
|
Axis Bank
|
172.97
|
640.45
|
629.57
|
659.82
|
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