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Market Commentary | | 02 January 2024 | |
Benchmarks likely to open in red amid weak Asian cues
Markets started the New Calendar
Year on quiet note with frontline gauges ending slightly in green. Key gauges
made a negative start in absence on regional cues. Sentiments remained dampened
as the output of eight core industries slipped to a six-month low of 7.8 per
cent in November 2023 due to a decline in the output of crude oil and cement
sectors. The final growth rate of Index of Eight Core Industries for August
2023 is revised to 13.4 per cent. The cumulative growth rate of Index of Eight
Core Industries during April to November, 2023-24 is 8.6 per cent (provisional)
as compared to the corresponding period of last year. Besides, the data
released by the Controller General of Accounts showed that the central
government's fiscal deficit widened to Rs 9.07 lakh crore in April-November
from Rs 8.04 lakh crore in April-October. However, markets cut losses and
entered into green terrain as traders took support with Finance Ministry's
statement that Indian economy's GDP growth rate in 2023-24 to comfortably exceed its forecast of 6.5 percent despite the risks to growth and stability
outlook that mainly emanate from outside the country. It added that despite declining
in H1 of the current fiscal, FDI inflows to India are expected to rebound on
account of strong macroeconomic fundamentals, favourable business environment
and rising growth, in the coming months. Market exhibited strength and extended
gains in last leg of trade, led by optimism on rate cuts, easing global
inflation, and softer bond yields. But profit booking in dying hour of trade
dragged domestic indices near neutral lines as lingering concerns over Red Sea
disruptions pose short-term risks to global supply chains and freight costs.
Traders also turned anxious after a series of strong earthquakes hit the
western coast of Japan, the country issued tsunami alerts and told people to
evacuate the seaside areas. The quakes that took place off the Ishikawa coast,
including a preliminary one of 7.6 magnitude. Finally, the BSE Sensex rose
31.68 points or 0.04% to 72,271.94 and the CNX Nifty was up by 10.50 points or
0.05% to 21,741.90.
The U.S. markets were closed on
Monday on account New Year's Day holiday.
Indian rupee started the New Year
on a weak note and depreciated against the US dollar on Monday amid dollar
demand from importers coupled with lackluster trade in domestic equity markets.
Also, trading activity was muted in absence of global cues. Some cautiousness
came in as data released by the Controller General of Accounts showed that the
central government's fiscal deficit widened to Rs 9.07 lakh crore in
April-November from Rs 8.04 lakh crore in April-October. However, downside
remained capped amid foreign fund inflows. Foreign Institutional Investors
(FIIs) were net buyers in the capital markets on December 29 as they purchased
shares worth Rs 1,459.12 crore. Also, data released by the Reserve Bank showed
that the forex reserves continued to rise for the third consecutive week,
adding $4.471 billion more in the week ending December 22, taking the total to
$620.441 billion. Finally, the rupee ended at 83.22 (Provisional), weaker by 6
paise from its previous close of 83.16 on Friday.
The FIIs as per Monday's data
were net buyers in both equity and debt segments. In equity segment, the gross
buying was of Rs 10642.64 crore against gross selling of Rs 8535.00 crore,
while in the debt segment, the gross purchase was of Rs 1756.57 crore with
gross sales of Rs 390.73 crore. Besides, in the hybrid segment, the gross
buying was of Rs 3.65 crore against gross selling of Rs 97.99 crore.
The US markets remained close on
Monday on account of New Year holiday. Asian markets are trading in red on
Tuesday with official data from China over the weekend highlighting a deepening
contraction in its manufacturing sector. Markets Japan were shut due to the
tsunami warning following a massive earthquake. Indian markets started the new
year 2024 on a weak note, but recouped losses and settled into the positive
zone on Monday led by steady buying across FMCG and IT shares. Today, start of
the session is likely to be in red following weakness in Asian counterparts.
Foreign fund outflows likely to dent sentiments. Provisional data from the NSE
showed foreign institutional investors (FIIs) sold shares worth Rs 855.80 crore
on January 1. Fears over new Covid variant likely to dampen sentiments in the
markets. India logged 197 new cases of the JN.1 variant on Monday, the highest
from Kerala, while the total number of active Covid-19 infections rose to 4,394
with the detection of 636 fresh cases, according to the INSACOG (Indian
SARS-CoV-2 Genomics Consortium) data. Some cautiousness will come as a report
by Global Trade Research Initiative (GTRI) said India, despite being one of the
few developing countries self-sufficient in food, still shipped in $33 billion
of farm products in 2023 with more than half of it just accounted for by
vegetable oils. However, some respite may come later in the day as data
released by the Ministry of Finance showed that the gross Goods and Services
Tax (GST) collections in December 2023 were recorded at Rs 164,882 crore, 10.3
per cent higher than Rs Rs 149,507 crore in December 2022. Some support will
come as in order to give a push to the economy, the government relaxed norms
governing public expenditure exceeding Rs 500 crore during the fourth quarter
(January-March) of the current financial year. The relaxation is subject to
strict adherence to the Single Nodal Agency (SNA)/Central Nodal Agency (CNA)
guidelines issued by the Department of Expenditure. Meanwhile, the Ministry of
Finance said a record high of 8.18 crore Income Tax Returns (ITRs) were filed
in assessment year (AY) 2023-24 as of December 31, 2023. The number of ITRs
filed marks a 9 percent jump compared to the preceding assessment year when a
total of 7.51 crore ITRs were filed. Select banking stocks will be in limelight
as the Reserve Bank of India (RBI) said it has decided to enhance the bulk
deposit limit for scheduled primary (urban) co-operative banks, in tier 3 and 4
cities, to Rs 1 crore and above. Stocks of Oil & gas, and aviation will be
in focus as India hiked the windfall tax on crude oil while reducing the tax on
diesel and aviation turbine fuel. The government hiked the windfall tax on
petroleum crude oil to Rs 2,300 ($27.63) a ton from Rs 1,300. A tax on diesel
of Rs 0.5 per litre was eliminated, as was a Rs 1 per litre windfall tax on
aviation fuel. There will be some reaction in pharma stocks with a private
report that robust domestic demand and exports to regulated markets will likely
provide a booster dose to pharmaceutical sector revenue this fiscal despite
tepid export demand from semi-regulated markets on account of currency
volatility, low forex reserves and geopolitical risks.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
21,741.90
|
21,670.39
|
21,823.89
|
BSE
Sensex
|
72,271.94
|
72,014.81
|
72,545.49
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata
Steel
|
211.86
|
139.70
|
138.85
|
140.75
|
Tata
Motors
|
125.71
|
792.00
|
782.46
|
800.11
|
Coal
India
|
111.25
|
382.00
|
377.36
|
386.71
|
Wipro
|
101.74
|
474.80
|
467.56
|
482.76
|
ITC
|
93.46
|
465.80
|
462.31
|
469.61
|
- Power Grid Corporation of India
has received an approval for the raising of up to Rs 2,200 crore towards third
tranche of Bonds as Unsecured, Non-convertible, Non-cumulative, Redeemable,
Taxable POWERGRID Bonds - LXXV (75th) Issue.
- Eicher Motors and Volvo Group's
JV company -- VECV has posted 11.1 per cent rise in total sales at 8026 units
in December 2023 as compared to the same month last year. It had sold 7221
units in December 2022.
- Dr. Reddy's Laboratories'
wholly-owned step-down subsidiary -- Dr. Reddy's Laboratories, Inc. has
acquired 1,014,442 Preferred A-1 shares of Edity, a biotechnology company.
- Bajaj Auto has reported rise of
16% in total sales to 3,26,806 units in December 2023 as against 2,81,514 in
the same month last year.
News Analysis
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