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NSE Intra-day chart (30 August 2018)
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Market Commentary 31 August 2018
Markets to make slightly negative start amid weak global cues


 

Indian equity markets truly depicted the choppiness of F&O expiry session on Thursday with key gauges ending the session with marginal cut. After making a cautious start, markets traded in a very tight band tad below their neutral lines throughout the session, as traders remain concerned with a report that foreign investors have pulled out $280 million from the Indian markets so far this year, while domestic institutional investors (DIIs) continue to invest more aggressively and have put in a staggering $10 billion. The sentiments weighed down with Credit rating agency Moody's Investors Service report highlighting that there are risks of India breaching the 3.3% fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures. Adding to the pessimism, the Reserve Bank of India (RBI) reiterated concerns over rising inflationary pressures this fiscal year due to global and domestic pressures and called for continuous vigil to keep them at bay. Sentiments remained subdued as rupee crashed to a new record low of 70.82 against the dollar and crude oil extends gains due to fall in US crude inventories and expected supply disruptions from Iran and Venezuela. However, losses remained capped as traders took some solace with RBI's latest annual report showing that it expects India's economic growth rate to accelerate to 7.4% in the current financial year (FY19) on pick up in industrial activity and good monsoon. Some comfort came with the government's statement that demonetisation of high-value currency notes in November 2016 achieved the objectives quite substantially even as the RBI  reported most of the demonetised currency was back with the banks. Traders took note with Finance Minister Arun Jaitley's statement that India is expected to surpass Britain next year to become world's fifth largest economy. Meanwhile, Union minister for road transport and highways, Nitin Gadkari said that India needs foreign investment, especially in infrastructural development, to arrest free fall of Indian rupee that has hurt the economy. Finally, the BSE Sensex slipped 32.83 points or 0.08% to 38,690.10, while the CNX Nifty was down by 15.10 points or 0.13% to 11,676.80.

 

Snapping their four-day winning streak, the US markets ended lower on Thursday with the Dow falling back below 26,000 mark, on a report that President Donald Trump intends to move ahead with plans to impose tariffs on $200 billion in Chinese imports as early as next week. Trump intends to impose the tariffs after a public comment period ends next Thursday, September 6. Trade-related news has played a central role in the market recently amid worries that heightened tensions between US and its major trading partners could not only hamper US economic growth but derail the global economy at large. Further, uncertainty about trade talks between the US and Canada also weighed on the markets ahead of a Friday deadline to reach a deal. On the economic front, the Labor Department released a report showing a modest uptick in initial jobless claims in the week ended August 25. The report said initial jobless claims crept up to 213,000, an increase of 3,000 from the previous week's unrevised level of 210,000. Meanwhile, a separate report released by the Commerce Department showed personal income and spending both increased in line with economist estimates in the month of July. The Commerce Department said personal income rose by 0.3% in July after climbing by 0.4% in June. The increase in income matched expectations. The report also said personal spending climbed by 0.4% in July, matching the increase in the previous month as well as street estimates. Dow Jones Industrial Average dropped 137.65 points or 0.53 percent to 25986.92, the S&P 500 declined 12.91 points or 0.44 percent to 2901.13 and Nasdaq was down by 21.32 points or 0.26 percent to 8088.36.

 

Extending their previous session gains, Crude oil futures ended higher and marked their highest levels in August on Thursday, buoyed by two consecutive weekly declines in US crude supplies and ongoing concerns over tighter global inventories tied to US sanctions on Iran. Besides, potential disruptions to global crude supplies, including US sanctions on Iran that take effect in early November, have been at the center of the recent rally in WTI and Brent oil. Benchmark crude oil futures for October rose 74 cents or 1.1 percent to settle at $70.25 a barrel on the New York Mercantile Exchange. October Brent crude gained 63 cents or 0.8 percent at $77.77 a barrel on London's Intercontinental Exchange.

 

Continuing its record closing low for second straight day, Indian rupee ended weaker against the Greenback on Thursday, following fresh demand for the US currency from banks and importers to meet the month end dollar demand. Sentiments weakened with Credit rating agency Moody's Investors Service report highlighting that there are risks of India breaching the 3.3% fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures. Adding to the pessimism, the Reserve Bank of India (RBI) reiterated concerns over rising inflationary pressures this fiscal year due to global and domestic pressures and called for continuous vigil to keep them at bay. On the global front, the dollar fell for a fifth consecutive day on Thursday as easing concerns over trade conflicts fuelled appetite for riskier currencies though thin month-end markets checked losses. Finally, the rupee ended at 70.73, 16 paise weaker from its previous close of 70.57 on Wednesday.

 

The FIIs as per Thursday'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 3617.03 crore against gross selling of Rs 5020.60 crore, while in the debt segment, the gross purchase was of Rs 1080.28 crore with gross sales of Rs 806.07 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.04 crore against gross selling of Rs 1.78 crore.

 

The US markets declined on Thursday on new concerns that the US-Chinese trade dispute will intensify. Asian markets were trading in red on Friday as President Donald Trump's plans to impose new tariffs on China and renewed turmoil in emerging markets weighed on investor sentiment. The Indian markets fell for the second consecutive session on Thursday as investors fretted over plunging rupee and rising crude oil prices, while August futures and options (F&O) expiry further added to market volatility. Today, the start of the new F&O series is likely to be flat-to-negative amid weak global cues. Investors will be eyeing the first quarter Gross Domestic Product (GDP) numbers to be announced later in the day. There will be some cautiousness with Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta's statement that exporters are facing uncertainty due to a continuous depreciation of the domestic currency as they are not able to negotiate properly prices of goods in the global markets. However, traders may get some encouragement later in the trade with Finance Minister Arun Jaitley's statement that India is likely to surpass the UK to become the world's fifth largest economy next year on growing consumption and strong economic activity. Also, there will be some support with a private report that the economic growth is expected to rise to 7.6% in the April-June quarter of 2018-19 from a sub-6% figure in the year-ago period mainly due to a low-base effect. There will be some buzz in the cement sector stocks with ICRA's report that despite pick-up in cement demand in Q1 FY19, higher coal, pet coke prices and freight costs in the near-term are likely to put pressure on the profitability margins and debt metrics of the cement companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,676.80

11,644.73

11,703.83

BSE Sensex

38,690.10

38,574.93

38,812.16

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

281.57

361.75

356.83

367.83

ITC

249.73

319.85

315.37

322.47

Vedanta

241.37

230.00

227.08

231.98

ICICI Bank

223.49

344.35

339.55

347.30

SBI

199.36

308.60

306.23

310.73

 

  • Reliance Industries will invest in telecom, organic farming and hospitality sectors in Uttarakhand. 
  • Bharti Airtel's shareholders have approved the proposed merger between the company and Tata Teleservices as part of ongoing proceedings at the NCLT. 
  • Tata Motors' wholly owned subsidiary -- JLR has recorded 83% growth in the overall domestic market and over 50% in Rajasthan during 2017-18. 
  • Yes Bank has entered into partnership with the Government of Rajasthan to launch Bhamashah Wallet for the state of Rajasthan.
News Analysis