Indian equity benchmarks halted
three days rally on Wednesday, with Sensex and Nifty losing more than half a
percent each. After a weak start, key indices remained lackluster during the
whole day, affected with the Department for Promotion of Industry and Internal
Trade's (DPIIT) latest data report showing that foreign direct investment (FDI)
in India declined for the first time in the last six years in 2018-19, falling
by 1% to $44.37 billion as compared to $44.85 billion recorded in 2017-18.
Traders were seen taking a note of a private report that the Reserve Bank of
India is expected to cut key policy rates by 25 bps in the upcoming monetary
policy meeting amid subdued domestic industrial activity and slowdown in trade
on the global front. Markets saw further fall in the late hours of trade, amid
weak cues from global markets. Profit booking in recent gainers, also weighed
on trading sentiments. The street paid no heed towards a report stating that
India has moved up one place to rank as the world's 43rd most competitive
economy on the back of its robust economic growth, a large labour force and its
huge market size. Markets participants also overlooked another report
indicating that India can attract FDI to a ratio of 1.5 percent to 2 percent of
its GDP by further improving on ease of doing business and building
infrastructure. It also said that the country is in favourable position to
attract foreign firms planning to relocate their manufacturing bases due to
trade tension between the US and China. Finally, the BSE Sensex slipped 247.68
points or 0.62% to 39,502.05, while the CNX Nifty was down by 67.65 points or
0.57% to 11,861.10.
Extending their previous
session's losses, the US markets ended lower with cut of over half percent on
Wednesday amid fresh concerns over US-China trade negotiations. Reports
suggested that China is considering restricting the export of rare earth
minerals, which are crucial for the US technology industry. The latest
developments on the trade front have added fuel to investor fears that the dispute
between the US and China could escalate into a full-fledged trade war. Trade
war worries have increased the appeal of safe havens such as US treasuries,
resulting in a sharp decline in bond yields. The slump in bond yields has in
turn added to concerns that the US could be headed for a recession or at least
a notable slowdown in the pace of economic growth. Treasuries saw further
upside on the day, driving the yield on the benchmark ten-year note down to its
lowest level since September of 2017. However, overall trading activity was
somewhat subdued as a lack of major US economic data kept some traders on the
sidelines. Traders may have been looking ahead to the release of reports on
first quarter GDP, pending home sales and personal income and spending in the
coming days. Dow Jones Industrial Average dropped 221.36 points or 0.87 percent
to 25126.41, Nasdaq declined 60.04 points or 0.79 percent to 7547.31and S&P
500 was down by 19.37 points or 0.69 percent to 2783.02.
Crude oil futures settled lower
on Wednesday as prolonged trade talks between the US and China have caused a
broad risk-off across financial markets, including equities and certainly crude
oil, where downward revisions to global economic growth this year are likely to
lower global oil demand growth as well. However, persistent tension in the
Middle East with the Trump administration's John Bolton making fresh statement
toward Iran raises supply concerns that are generally supportive to prices.
Weekly data on US petroleum supplies are delayed this week due to Monday's
holiday. The Energy Information Administration's report is due Thursday.
Benchmark crude oil futures for July dropped 33 cents or 0.6 percent to settle
at $58.81 a barrel on the New York Mercantile Exchange. July Brent crude
declined 66 cents or 0.9 percent to settle at $69.45 a barrel on London's
Intercontinental Exchange.
Indian rupee continued to slip for the second consecutive
session against the US dollar on Wednesday on increased demand for the
greenback from importers and banks. Traders remain concerned about the
Department for Promotion of Industry and Internal Trade's (DPIIT) latest data
showing that foreign direct investment (FDI) in India declined for the first
time in the last six years in 2018-19, falling by 1 per cent to $44.37 billion
as compared to $44.85 billion in 2017-18. Besides, strength in dollar against
some major rival currencies and heavy selling in domestic equities also kept
pressure on the Indian rupee. On the global front, Japanese yen firmed to a
two-week high versus the dollar on Wednesday as concerns of a further
escalation in the trade conflict between the United States and China prompted
investors to rush to perceived safe-haven assets. Finally, the rupee ended at
69.83, 14 paise weaker from its previous close of 69.69 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 23453.44 crore against gross selling of Rs 18782.65 crore,
while in the debt segment, the gross purchase was of Rs 2413.37 crore with
gross sales of Rs 1441.40 crore. Besides, in the hybrid segment, the gross
buying was of Rs 4.26 crore against gross selling of Rs 3.15 crore.
The US markets declined on
Wednesday as worries about slowing economic growth spurred coupled with trade
tensions between the China-US. Asian markets are trading mostly lower on
Thursday as rhetoric from Beijing and Washington over trade matters kept alive
investor concerns about the tariff war's impact on global economic growth.
Indian markets snapped three-day gaining streak on Wednesday and ended lower
with losses of over half a percent on account fresh foreign fund outflow and
rising worries over political disarray in Europe. Today, the start of the
F&O series expiry session is likely to be cautious tailing the weakness in
global markets amid concerns that the US and China dispute could escalate into
a full-fledged trade war. On the domestic front, investors will keep an eye on
new government formation and ministry allocation as Narendra Modi is set to
take oath as the prime minister of India for the second term. Traders will also
be looking ahead for the Q4 GDP data to be released on May 31, while there are
expectations that numbers are likely to be weak. Market participants may take
note a private report that the Reserve Bank of India (RBI) may leave repo rate
unchanged next week due to uncertainty over oil prices, monsoon, weak
transmission of monetary policy and on expected pick-up in inflation. It added
that the central bank will also evaluate the implications of policies of the
new government for growth and inflation. Meanwhile, the Department for
Promotion of Industry and Internal Trade (DPIIT) has proposed to formulate a
national retail policy to support growth of domestic trade. A national retail
policy will be formulated to support development of the sector that would
benefit 65 million small traders. There will be some buzz in the Non-banking
financial companies (NBFCs) stocks with report that the RBI has extended
minimum holding period requirement for NBFCs to raise funds via loan
securitisation to help the sector overcome liquidity shortage. NBFCs have been
permitted to securitise loans of over five-year maturity after holding them for
six months on their books. Earlier, they were supposed to hold it for at least
a year. There will be some reaction in aviation industry related stocks with
global airlines' grouping the International Air Transport Association's (IATA)
statement that India's domestic air traffic registered first negative growth
rate in more than five years in April, mainly due to the demise of Jet Airways.
After a sustained period of very strong growth, Revenue Passenger Kilometres
(RPKs) in the domestic India market are 0.5% lower than their year-ago level.
There will be earnings reaction based on the performance of the companies.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,861.10
|
11,821.30
|
11,916.40
|
BSE Sensex
|
39,502.05
|
39,359.06
|
39,706.49
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
490.01
|
151.70
|
149.57
|
154.92
|
SBI
|
283.70
|
348.65
|
344.20
|
356.05
|
Sun Pharma
|
280.86
|
423.80
|
408.97
|
433.22
|
ICICI Bank
|
221.32
|
423.30
|
420.12
|
428.47
|
Tata motors
|
152.22
|
176.35
|
174.47
|
179.12
|
NTPC is eyeing to produce 310 billion units of power and 10.4 million tonne of coal, and spend Rs 20,000 crore on capital expenditure in FY20.
SBI has held customer meet in Delhi on May 28, 2019, to understand the issues and grievances of its account holders.
Tech Mahindra and Strands have entered into strategic partnership to provide an integrated suite of secure and customized digital banking solution to financial institutions globally.
TCS has signed a new strategic partnership with Scandinavia's leading airline, SAS, the flag-carrier of Sweden, Norway and Denmark.