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NSE Intra-day chart (04 January 2022)
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Market Commentary 05 January 2022
Benchmarks likely to get weak start amid mixed global cues

 

Indian equity benchmarks traded buoyantly and ended higher for the third consecutive day on Tuesday, taking positive cues from global markets. After making positive start, key gauges turned volatile as traders got anxious with the Centre for Monitoring Indian Economy (CMIE) in its latest data has showed that the unemployment rate in the country touched a four-month high of 7.91 percent in December 2021. The unemployment rate had stood at 7 percent in November, the highest since August which was at 8.3 percent. But, markets soon gained traction, taking support from government data showing that India's exports surged 37 percent on an annual basis to $37.29 billion in December 2021, the highest-ever monthly figure, on the back of healthy performance by sectors like engineering, textiles and chemicals, even as the trade deficit widened to $21.99 billion. Imports in December too rose by 38 per cent to $59.27 billion on account of an increase in oil imports, which soared 65.17 per cent to $15.9 billion. Key gauges extended gains in late afternoon session, as traders remain energized with a another private report stating that export-dependent software companies are set to report a strong sequential revenue growth in the range of 2.6 to 6 per cent in the seasonally weak December quarter. Some optimism also came with Union Commerce and Industry Minister Piyush Goyal's statement that the Omicron variant of COVID-19 will be a short-term disruption on businesses, adding that supply chains and industrial activities will continue at full speed. In another positive development, foreign institutional investors stood as buyer with net buying of shares worth Rs 902.64 crore, while domestic institutional investors' net purchased shares worth Rs 803.11 crore in the Indian equity market on 3 January. Finally, the BSE Sensex rose 672.71 points or 1.14% to 59,855.93 and the CNX Nifty was up by 179.55 points or 1.02% to 17,805.25.

 

The US markets ended mostly in red on Tuesday. A continuing spike in bond yields to start the new year caused investors to rotate out of tech stocks, sending the Nasdaq lower. Losses in tech shares that were big winners last year like Nvidia and Tesla weighed on the broader market. The sharp pullback by Nasdaq partly reflected substantial weakness among software and biotechnology stocks. Reflecting the weakness in the sectors, the Dow Jones US Software Index and the NYSE Arca Biotechnology Index plunged by 2.5 percent and 2.1 percent, respectively. Healthcare and pharmaceutical stocks also moved notably lower on the day. However, the Dow Jones Industrial Average rose for a second day to start 2022 as investors bet on the kinds of stocks that would benefit from a robust economy this year despite the omicron threat. Significant strength was visible among banking stocks, as reflected by the 3.4 percent jump by the KBW Bank Index. Banking stocks benefited from a continued increase by Treasury yields, with notable gains by financial giants JPMorgan Chase and Goldman Sachs contributing to the upward move by the Dow.

 

Crude oil futures settled higher on Tuesday after the Organization of the Petroleum Exporting Countries (OPEC) and its allies announced they would stick to their plan to raise monthly crude production by 400,000 barrels per day in February. The OPEC and its allies took the expected decision following a meeting. The group's next meeting will take place on February 2nd. Further, Oil prices were also up owing to easing concerns about the outlook for energy demand after studies showed the new Omicron variant causes milder symptoms. Benchmark crude oil futures for February delivery gained $0.91 or 1.2 percent to settle at $76.99 a barrel on the New York Mercantile Exchange. Brent crude for March delivery rose $0.89 or 1.1 percent to settle at $79.87 a barrel on London's Intercontinental Exchange.

 

Snapping its three-day gaining streak, Indian rupee depreciated against dollar on Tuesday due to demand for American currency from banks and importers. Growing concerns over the Omicron variant of coronavirus and its impact on economic recovery weighed on the local unit. Traders shrugged off government data showing that India's exports surged 37 percent on an annual basis to $37.29 billion in December 2021, the highest-ever monthly figure, on the back of healthy performance by sectors like engineering, textiles and chemicals, even as the trade deficit widened to $21.99 billion. Imports in December too rose by 38 per cent to $59.27 billion on account of an increase in oil imports, which soared 65.17 per cent to $15.9 billion. On the global front, dollar rose to a five-year high versus the yen on Tuesday, boosted by expectations of U.S. Federal Reserve rate hikes, as investors bet that the fast-spreading Omicron coronavirus variant would have limited economic impact. Finally, the rupee ended 74.58 (Provisional), weaker by 29 paise from its previous close of 74.28 on Monday.

 

The FIIs as per Tuesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 6106.70 crore against gross selling of Rs 3790.11 crore, while in the debt segment, the gross purchase was of Rs 259.55 crore with gross sales of Rs 479.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.21 crore against gross selling of Rs 4.06 crore.

 

The US markets ended mostly lower on Tuesday amid selective profit-taking. Asian markets are trading mixed on Wednesday amid concerns about the increasing Omicron cases across regions. Indian markets extended gains to a third straight day on Tuesday, led by financial, oil & gas and IT stocks, though losses in healthcare stocks played spoilsport. Today, the start of session is likely to be weak amid mixed global market cues and the rapidly rising cases of covid-19 in the country. According to the Union health ministry's data updated a total of 1,892 cases of Omicron variant of coronavirus have been detected across 23 states and Union Territories so far. India's Covid tally rose to 3,49,60,261 with 37,379 new cases, while the active cases increased to 1,71,830. There will be some cautiousness as a private report indicated that growth might be impacted by up to 0.30 per cent in the March quarter as normal economic activities come under pressure due to restrictions being imposed by more states to curb rising Omicron cases. However, some support may come as State Bank of India former chairman Rajnish Kumar said the country needs to accelerate economic growth to above eight per cent to achieve its target of becoming a $5-trillion economy by 2025. For a growth of eight per cent and above, he said, the country needs a huge investment in the economy, lower tax rates that can ensure surplus in the hands of the people as well as of corporates, ease of doing business at the lower level and availability of land. Traders may take note of report that with the country's outbound shipments all set to cross $400 billion this fiscal year, the commerce ministry is planning to launch Brand India Campaign to give momentum to exports of both services and products in new markets. There will be some reaction in road sector stocks as domestic rating agency Icra said the Indian road logistic sector is likely to witness healthy growth in FY2022 on the back of demand recovery and improved business activities. The optimism stems from the favourable scenario wherein most players reported strong growth in freight volumes on a sequential basis in the second quarter of FY'22, and the momentum is likely to continue in the third quarter of the ongoing fiscal. Textile industry stocks will be in focus as Union Minister Piyush Goyal said the government is making efforts towards gaining access to new markets and getting concessional duties on textile products through free-trade agreements.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,805.25

17,656.66

17,890.71

BSE Sensex

59,855.93

59,314.45

60,167.38

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

NTPC

339.86

132.50

128.40

134.95

Tata Motors

241.00

489.35

482.60

497.55

State Bank of India

232.96

483.75

474.96

488.61

Oil & Natural Gas Corporation

163.51

148.30

144.74

150.24

Coal India

137.44

153.00

151.35

155.65

 

  • HDFC Bank's advances have aggregated to around Rs 12,600 billion as of December 31, 2021, a growth of around 16.4% over Rs 10,823 billion as of December 31, 2020. 
  • Maruti Suzuki India has exported 205,450 vehicles in CY 2021. 
  • Axis Bank has concluded structured derivative transactions with leading Indian corporates. 
  • L&T's construction arm -- L&T construction has won a prestigious order for its Heavy Civil Infrastructure business from DMRC for the design and construction of the Underground Metro Project of Phase-1 of Patna MRTS.
News Analysis