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NSE Intra-day chart (11 January 2021)
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Market Commentary 12 January 2021
Benchmarks to get slightly negative start amid weak global cues; IIP, CPI data eyed

 

Indian equity benchmarks continued their bulls run to end at fresh record close on Monday, tracking gains in HCL Technologies, Infosys and HDFC amid strong earnings expectation. Markets remained positive throughout the day, as traders took encouragement with Assocham's statement that India's economy is showing decisive signs of a V-shaped recovery in 2021 with the return of consumer confidence, robust financial markets, an uptick in manufacturing and exporters braving it out in the global market with never-say-die spirit. Sentiments remained upbeat as India's exports grew 16.22 percent YoY to $6.21 billion in the first week of January, mainly driven by healthy growth in pharmaceuticals, and engineering sectors, reflecting signs of revival. Imports during January 1-7 this year too increased by 1.07 percent to $8.7 billion as against $8.6 billion in the same period of 2020. Some support also came as IHS Markit said Indian economy is likely to rebound with an 8.9 percent growth in the fiscal year beginning April 2021 after economic activity showed significant improvement in the last quarter. Benchmarks extended their gains in late afternoon session, taking support from Union Minister Piyush Goyal's statement that India is strengthening the entire ecosystem through rapid structural reforms to achieve the same. He said we are working simultaneously to bring about a quantum leap in our quality, in our productivity, in our efficiency, so that Indian Industry can truly expand our export basket, making it bigger, better and broader. Market participants also took a note of Fitch Ratings in its latest report expects India's economy to contract by a record 9.4 per cent in the current fiscal year ending March 2021 (FY21) amid the shock from coronavirus pandemic but this represents a 1.1 percentage point improvement from its previous forecast, reflecting a stronger-than-anticipated rebound in 3Q 2020. Risks to the growth outlook appear to have eased in recent weeks as vaccine rollouts began in other parts of the world. Meanwhile, FPIs have pumped Rs 5,156 crore into Indian capital markets in the first six trading sessions this year amid expectations of strong third-quarter earnings and a reformist budget. As per depositories data, FPIs invested a net Rs 4,819 crore in equities and Rs 337 crore in debt segment between January 1 and 8. Finally, the BSE Sensex rose 486.81 points or 1.00% to 49,269.32, while the CNX Nifty was up by 137.50 points or 0.96% to 14,484.75.

 

The US markets ended lower on Monday as investors stayed largely cautious, assessing valuations and taking some profits. Rising coronavirus cases across the world and concerns about developments in Washington also weighed on stocks. The US saw at least 208,338 new cases of COVID-19 reported on Sunday and counted at least 1,777 deaths. Besides, House Democrats are preparing to impeach Donald Trump even though the president has less than two weeks left in his term. After the siege of the US Capitol building by Trump supporters last week, Democrats are concerned about additional incitement by the president in his final days in office. Twitter shares plunged sharply after the social media platform announced its decision to permanently suspend Trump's account on fears he could incite further violence. FaceBook shares slid as well. Sales of Travelers Companies tumbled more than 10%. Apple, Boeing, American Express, Coca-Cola and Procter & Gamble also lost notable ground. Meanwhile, on the stimulus front, President-elect Joe Biden pledged last Friday to come up with a massive economic stimulus. He said it will be in the trillions of dollars, and will include $2,000 direct payments to Americans and aid for small businesses.

 

Crude oil futures ended almost flat on Monday as pressure from a rising dollar and rising coronavirus cases and tighter lockdown measures in several countries across the world raised concerns about outlook for energy demand. The US saw at least 208,338 new cases of COVID-19 reported on Sunday and counted at least 1,777 deaths, numbers that may be underreported due to lower weekend staffing. China saw its biggest daily increase in Covid-19 cases in more than five months, as new infections in Hebei province, which surrounds the capital Beijing, continued to rise. Investors fear that travel bans and the closure of schools and workplaces in Europe coupled with new movement restrictions in China could weigh on fuel demand. Crude oil futures for February rose a penny to settle at $52.25 a barrel on the New York Mercantile Exchange. However, March Brent crude declined 33 cents or 0.6 percent to settle at $55.66 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably lower against dollar on Monday on emergence of demand for the greenback from importers and higher US bond yields. Sentiments were impacted despite report that India's exports grew 16.22 percent YoY to $6.21 billion in the first week of January, mainly driven by healthy growth in pharmaceuticals, and engineering sectors, reflecting signs of revival. Imports during January 1-7 this year too increased by 1.07 percent to $8.7 billion as against $8.6 billion in the same period of 2020. On the global front, dollar gained broadly on Monday as widening US Treasury yields and expectations of more fiscal stimulus lifted the greenback against its rivals, with the euro falling to a two-week low.  Finally, the rupee ended at 73.40, 16 paise weaker from its previous close of 73.24 on Friday.

 

The FIIs as per Monday's data were net buyer in both equity segment and debt segment. In equity segment, the gross buying was of Rs 13159.45 crore against gross selling of Rs 7147.95 crore, while in the debt segment, the gross purchase was of Rs 1094.35 crore with gross sales of Rs 930.24 crore. Besides, in the hybrid segment, the gross buying was of Rs 16.72 crore against gross selling of Rs 17.96 crore.

 

The US markets settled lower on Monday as investors took some profits after last weeks' records while they waited for earnings season to begin and eyed events in Washington with trepidation. Asian markets are trading mixed on Tuesday tracking Wall Street declines as political turmoil in Washington and rising coronavirus cases worldwide weighed on sentiment ahead of the start of the quarterly earnings season. Indian markets ended at record high on Monday mainly led by IT stocks, which surged after IT major TCS reported better than expected earnings in the December quarter. Today, the markets are likely to make flat-to-negative start amid weakness in global markets. Investors will be eyeing the Index of Industrial Production (IIP) and Consumer Price Index (CPI) data to be out later in the day. Traders will be concerned as the Reserve Bank of India (RBI) warned that the Indian banking system's bad loans may rise to a two-decade high on the back of COVID-19 induced stress. In its latest Financial Stability Report (FSR), the RBI said Public Sector Banks (PSBs) may see gross NPAs rise from 9.7 percent in September 2020 to 16.2 percent by September 2021. However, some respite may come later in the day as ICRA projected that India's GDP will record a double-digit expansion of 10.1 percent in the upcoming fiscal year. It also expects the monetary policy to be changed to neutral from accommodative in the August 2021 Policy review or later. Some support may come with report that Bharat Biotech inked a purchase agreement with the Government of India on January 11 to provide 55 lakh doses of COVID-19 vaccine Covaxin at Rs 295 per dose. The Indian pharma firm will be providing its coronavirus vaccine directly to 12 states, and the process will be completed in two days by January 14. Market participants may take note of report that India continues to show a downward trend in the number of new coronavirus cases. In the last 24 hours, only 12,448 fresh cases were recorded which took the tally to 10,479,879. Meanwhile, the National Stock Exchange (NSE) has launched derivatives on the Nifty Financial Services Index, which will give more flexibility to institutional as well as retail investors to manage their hedge. Auto stokes will be in focus as automobile dealers' body FADA said passenger vehicle (PV) retail sales in December witnessed a year-on-year increase of 23.99 per cent to 2,71,249 units on the back of the pent up demand continuing from the festive season. There will be some reaction in aviation industry stocks with ICRA's report that India's domestic traffic declined around 45 per cent to about 71 lakh passengers in December last year over December 2019 even as passenger traffic was up 12 per cent sequentially over November 2020. There will be some earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

14,484.75

14,412.50

14,527.60

BSE Sensex

49,269.32

49,049.21

49,396.62

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

1,824.83

220.65

205.06

230.81

Wipro

473.34

446.80

437.54

453.54

ITC

429.71

202.50

200.46

205.31

Oil & Natural Gas Corporation

363.02

102.55

99.44

104.29

State Bank of India

297.03

282.50

278.66

287.26

 

  • Dr. Reddy's Laboratories has launched Febuxostat Tablets, a therapeutic equivalent generic version of Uloric (Febuxostat) Tablets approved by the USFDA. 
  • Cipla is recalling over 5.8 lakh packets of a drug for the reduction in the occurrence of gastric ulcers from the US market. 
  • ONGC has raised Rs 1500 crore through unsecured, listed, redeemable, non-cumulative, taxable, NCDs and allotted 15,000 NCDs to identified persons. 
  • Infosys has successfully implemented a global warranty solution on SAP S/4 HANA, across all Johnson Controls ducted products.
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