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NSE Intra-day chart (22 March 2017)
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Market Commentary 23 March 2017
Markets to see some recovery on positive regional cues


Wednesday's session saw Indian benchmark indices complete a hat-trick of disappointing performances and reaching the finishing line only after collapsing by over a percent. Investors remained worried about the faster growth prospect in the United States in absence of a big fiscal stimulus from President Donald Trump, political uncertainties in Europe and a possible reversal of the easy money policy by the European Central Bank. Metals, oil and auto stocks were prominent losers as the commodity rally halted on fears the US growth prospects now looks dim if Trump fails to come up with an expansionary fiscal policy. On the domestic front, sentiments got undermined by the private report that India's GDP growth is expected to slow to 6.7% in the January-March quarter of this fiscal year as overall activity is yet to bounce back to levels seen prior to demonetisation. According to the report, a pick-up in headline CPI inflation, better global conditions (exports) and narrowing interest rate differentials (with the US) have lowered the probability of a rate cut and increased the probability of a hike. Market participants remained cautious over the reports that the government wants to tighten even further the proposed Budget measure aimed at discouraging black money through restrictions on cash transactions to Rs 2 lakh from Rs 3 lakh. The government also plans to make inclusion of the Aadhaar ID mandatory in applications for permanent account number (PAN) cards. However, Investors failed to get any sense of relief with Finance Minister Arun Jaitley's statement that the government is hoping to implement the Goods and Services Tax (GST) by July 1, after the enabling Bills get Parliament nod in the current budget session. The Union Cabinet earlier this week approved four GST related bills -- The Central Goods and Services Tax Bill 2017 (The CGST Bill), The Integrated Goods and Services Tax Bill 2017 (The IGST Bill), The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill) and the Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill). Finally, the BSE Sensex decreased 317.77 points or 1.08% to 29167.68, while the CNX Nifty was down by 91.05 points or 1% to 9,030.45. 

 

The US markets closed mostly higher on Wednesday, while the Dow fell for a fifth straight session as the broader market staged a modest rebound on the back of technology stocks. The selloff came as issues with the Republicans' health-care bill prompted investors to question Trump's ability to follow through on promises of tax reforms and $1 trillion in infrastructure spending. A terrorist attack in the UK has not affected US stocks for the moment. On the economy front, sales of previously owned homes tumbled in February as the housing market remained choked by tight inventory. Existing-home sales were at a 5.48 million seasonally adjusted annual rate last month. That was down 3.7% compared with January's sales pace, which was the strongest in a decade. Sales in February were still 5.4% higher compared with a year ago, but the supply situation has worsened. Inventory was 6.4% lower than in February 2016. The median home price rose 7.7% compared with a year ago to $228,400. . At the current pace of sales, it would take 3.8 months to exhaust available homes for sale, the lowest in any February back to 1999. Sales increased in only one region in February. They rose 1.3% in the South. The Nasdaq was up 27.81 points or 0.48 percent to 5,821.64, S&P 500 gained 4.43 points or 0.19 percent to 2,348.45, while the Dow Jones Industrial Average lost 6.71 points or 0.13 percent to 20,661.30. 

 

Crude oil futures despite recovering from the steep losses ended modestly down on Wednesday, as the Energy Information Administration (EIA) reported crude oil futures jumped another 4.5 million barrels, however gasoline stockpiles continued to fall last week indicating stockpiles imminent demand. Gasoline inventories dropped 2.8 million barrels. Benchmark crude oil futures for May delivery declined by $0.20 or 0.4% to $48.04 on the New York Mercantile Exchange. In London, Brent crude for May delivery ended down by $0.31 at $50.65 on the ICE.

 

Indian rupee ended weaker against the US dollar on Wednesday due to increased demand of the greenback from the importers and the banks. The domestic currency remained weak since opening tracking the fall in global equity markets. Sentiments remained dampened with the private report that India's GDP growth is expected to slow to 6.7% in the January-March quarter of this fiscal year as overall activity is yet to bounce back to levels seen prior to demonetisation. According to the report, a pick-up in headline CPI inflation, better global conditions (exports) and narrowing interest rate differentials (with the US) have lowered the probability of a rate cut and increased the probability of a hike. On the global front, dollar hit a four-month low against safe-haven yen on Wednesday as a risk-off mood grew in markets rethinking the ‘Trumpflation trade' that had pushed the greenback to a 14-year peak and stocks to record highs. Finally, the rupee ended at 65.44, 16 paise weaker from its previous close of 65.28 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 8601.30 crore against gross selling of Rs 6983.99 crore, while in the debt segment, the gross purchase was of Rs 6250.91 crore with gross sales of Rs 1123.98 crore.

 

The US markets continued their lackluster trade in the last session and made a mixed closing after a choppy trade. Marketmen remained cautious due to uncertainty about the fate of the Republican plan to repeal and replace Obamacare. The Asian markets have made a modestly higher start. The Japanese market too has recovered following its biggest drop since Donald Trump's election, as demand for haven assets ebbed and the yen halted a seven-day rally. The Indian markets suffered sharp sell-off in the last session, with major benchmarks deposing over a percent in tandem with the selling in global markets, on uncertainty over US President's reform proposals. Today, the start is likely to be in green and some recovery can be seen amid positive regional cues. Traders will also be taking some support with Finance Minister Arun Jaitley's statement that India's GDP can grow by 7-8 percent if the global economy picks up. He also said the government was hopeful of implementing from July 1 the Goods and Service Tax (GST) to help check tax evasion. However, there will be some cautiousness too with reports that five people were killed and 40 others injured when a terrorist suspect mowed down pedestrians on a bridge and stabbed a police officer outside UK parliament complex. On sectoral front, there will be buzz from the realty sector stocks, as the government has announced a credit-linked interest subsidy (CLSS) scheme for home loans, leading to savings of more than Rs. 2 lakh, or up to Rs. 2,000 on EMIs. There will be some scrip specific actions too based on NSE announcement of adding 15 new stocks to the futures and options (F&O) segment from March 31.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9030.45

9008.87

9062.47

BSE Sensex

29167.68

29089.64

29293.57

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

IDEA

547.40

91.30

89.28

93.53

ICICI Bank

223.03

265.00

263.42

267.67

Hindalco

177.62

193.40

191.43

195.93

Axis Bank

126.84

485.45

478.83

497.23

ITC

123.96

279.85

276.35

285.60

 

  • Tata Motors has started pre-bookings for the Tata Tigor across all authorized dealership with a booking amount of Rs 5000.
  • Hindustan Unilever has commenced the commercial production at its new manufacturing unit located at Assam on March 15, 2017.
  • Hindalco Industries is planning to set up a 24 Mw solar power plant within the premises of its aluminium plant at Lapanga in Sambalpur district.
  • Bharti Airtel is all set to transfer a 21.63% stake in mobile tower arm Bharti Infratel to wholly-owned subsidiary Nettle Infrastructure Investments.
News Analysis