Halting a
three-day winning streak, Indian equity benchmarks came under heavy selling
pressure and settled with losses of over a percent on Friday. The markets had a
weak start and selling accentuated throughout the session as Former Reserve
Bank of India Governor D Subbarao said the concern today was that the low
interest rates and the enormous liquidity available in the system could
potentially disrupt financial stability. He added that the challenge for
central banks and for the Reserve Bank of India was to juggle between maintain
price stability, supporting growth and employment, preserving financial
stability and all this in a globalised world. Some concern also came as Finance
Minister Nirmala Sitharaman's statement that the Indian economy suffered the
biggest contraction due to the COVID-19 pandemic, but the government has been
able to contain retail inflation at 6.2 percent. She also said that the Indian
economy suffered Rs 9.57 lakh crore loss due to the pandemic, compared to a
loss of Rs 2.12 lakh crore during the global meltdown in 2008-09. Market
participants overlooked Union Revenue Secretary Tarun Bajaj's statement the
country's fiscal deficit will come down once revenues start to grow. He said
that the government had adopted a loose fiscal policy on the backdrop of
increased capital expenditure. Traders also paid no heed towards RBI report
that the consumer confidence has shown gradual improvement for the third
successive round of the survey. The Reserve Bank of India (RBI) said the
current situation index (CSI) increased marginally on the back of better
sentiments on general economic situation, household income and spending.
Meanwhile, the Reserve Bank of India (RBI) Governor Shaktikanta Das has urged
banks and NBFCs to continue the process of augmentation of capital and building
up of appropriate buffers to meet future uncertainties. Finally, the BSE Sensex
fell 773.11 points or 1.31% to 58,152.92 and the CNX Nifty was down by 231.10
points or 1.31% to 17,374.75.
Extending the sell-off seen in
the previous session, the US markets ended sharply lower on Friday amid
concerns about a potential Russian invasion of Ukraine. White House national
security adviser Jake Sullivan suggested a Russian invasion could occur during
the Winter Olympics currently being held in Beijing. Sullivan also said any
Americans in Ukraine should leave the country in the next 24 to 48 hours,
reiterating a plea President Joe Biden made on Thursday. The U.K. Foreign
Office has also urged British citizens to get out of Ukraine as Russia has
amassed more than 100,000 troops near the border. Earlier in the day,
uncertainty about the outlook for interest rates led to choppy trading on Wall
Street following comments from several Federal Reserve officials. St. Louis Fed
President James Bullard indicated he supports raising interest rates by a full
percentage point by the start of July, including a possible 50-basis point
hike. On the sectoral front, semiconductor stocks showed a substantial move to
the downside as the day progressed, dragging the Philadelphia Semiconductor
Index down by 4.8 percent. Considerable weakness also emerged among airline
stocks, resulting in a 4.2 percent nosedive by the NYSE Arca Airline Index.
Software stocks also saw considerable weakness on the day, as reflected by the
3 percent slump by the Dow Jones U.S. Software Index. Retail, chemical and
networking stocks also showed notable moves to the downside, while gold stocks
soared as the price of the precious metal spiked in electronic trading. Energy
stocks also bucked the downtrend amid a sharp increase by the price of crude
oil. Crude for March delivery surged $3.22 to $93.10 a barrel amid concerns
about the situation in Ukraine.
Crude oil futures ended
significantly higher on Friday, extending recent gains, following a report from
the International Energy Agency (IEA) that said oil production from OPEC and
allies were significantly below target in January. The IEA report said the
group produced 900,000 barrels per day in January. Also, the OPEC maintained
its outlook for oil demand in 2022 but said there is an upside potential to the
forecast, citing an ongoing observed strong recovery from the coronavirus
pandemic. Besides, data from Energy Information Administration showed earlier
this week that U.S. crude oil stockpiles unexpectedly fell 4.8 million barrels
in the week to Feb. 4 as overall refined product demand reached an all-time
record. According to a report from Baker Hughes, the rig count in the U.S. has
risen by 19 to 516, the highest since April 2020. Benchmark crude oil futures
for March delivery rose $3.22 or 3.6 percent to settle at $93.10 a barrel on
the New York Mercantile Exchange. Brent crude for April delivery gained $3.03
or 3.3 percent to settle at $94.44 a barrel on London's Intercontinental
Exchange.
Indian rupee ended substantially
weak against the US dollar due to fears of an aggressive rate hike by the
Federal Reserve after US inflation raced to a 40-year high in January. US
inflation surged 7.5% on an annual basis with the consumer price index for all
items rising 0.6% in January. Sentiments were fragile with Former Reserve Bank
of India Governor D Subbarao's statement that concern today was that the low
interest rates and the enormous liquidity available in the system could
potentially disrupt financial stability. He added that the challenge for
central banks and for the Reserve Bank of India was to juggle between maintain
price stability, supporting growth and employment, preserving financial
stability and all this in a globalised world. Aggressive FII selling and muted
domestic equities also weighed on the local unit. On the global front, dollar
rose to an eight-day high on Friday after U.S. inflation surged to a 40-year
peak and comments from a Federal Reserve official unleashed a wave of bets on
aggressive rate hikes. Finally, the rupee ended at 75.38 (Provisional), weaker
by 44 paise from its previous close of 74.94 on Thursday.
The FIIs as per Friday's data
were net sellers in both equity and debt segment. In equity segment, the gross
buying was of Rs 8700.20 crore against gross selling of Rs 10392.83 crore,
while in the debt segment, the gross purchase was of Rs 557.24 crore against
gross sales of Rs 592.49 crore. Besides, in the hybrid segment, the gross
buying was of Rs 19.44 crore against gross selling of Rs 19.51 crore.
The US markets ended lower on
Friday on rising worries over escalating Ukraine-Russia tensions and the
prospect of a tightened interest rate hike timeline from the Fed in response to
decades-high inflation. Asian markets are trading in red on Monday as warnings
Russia could invade Ukraine at any time sent oil prices to seven-year peaks,
boosted bonds. Indian markets ended 1.31 percent lower each to halt a three-day
winning run on Friday amid weakness across global markets. Today, markets are
likely to make a gap-down opening tracking a sell-off across global markets.
Investor will be eyeing on retail inflation and wholesale inflation data to be
out later in the day. Traders will be concerned as India's industrial
production growth slowed down for a fourth straight month in December to 0.4
per cent mainly due to a poor performance by the manufacturing sector.
According to the data released by the National Statistical Office (NSO), the manufacturing
sector, which constitutes 77.63 per cent of the Index of Industrial Production
(IIP), contracted by 0.1 per cent in December. However, some support may come
as the commerce ministry said exports of agricultural and processed food
products through APEDA are expected to exceed the target of $23.7 billion in
the current fiscal. Agricultural and Processed Food Products Export Development
Authority (APEDA) is taking a series of steps such as promoting IT-enabled
activities for ease of doing business in the promotion and development of
exports from India. Traders may take note of a report by industry body CII has
suggesting that India needs to adopt a multidimensional approach to take the
country's merchandise exports to $1 trillion by 2030. The report recommends
finalising free trade agreements with large markets, extending RoDTEP to all
exports, attracting global firms and addressing domestic manufacturing issues
to achieve the target. Besides, RBI data showed the country's foreign exchange
reserves increased by $2.198 billion to $631.953 billion in the week ended
February 4. There will be some reaction in edible oil industry stocks as India
has cut its tax on crude palm oil (CPO) imports to 5% from 7.5%, as the world's
biggest edible oil importer tries to rein in local prices of the commodity and
help domestic refiners and consumers. Meanwhile, LIC filed a draft red herring
prospectus (DRHP) over the weekend to float an IPO. Under the mega IPO, the
government will sell five percent in the insurance major for an estimated Rs
63,000 crore through an offer for sale (OFS).
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
17,374.75
|
17,300.25
|
17,452.00
|
BSE
Sensex
|
58,152.92
|
57,895.63
|
58,428.68
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
ITC
|
180.96
|
231.85
|
230.00
|
233.50
|
Indian Oil Corporation
|
176.57
|
122.10
|
119.89
|
123.49
|
Power Grid Corporation of India
|
150.53
|
207.65
|
205.80
|
210.75
|
State Bank of India
|
146.07
|
528.25
|
524.34
|
534.94
|
Tata Motors
|
135.34
|
497.55
|
494.04
|
504.04
|
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