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NSE Intra-day chart (16 November 2021)
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Market Commentary 17 November 2021
Markets likely to make negative start amid weak cues from other Asian markets


 

Indian equity benchmarks edged lower in a volatile session on Tuesday despite stable global cues. Weakness in heavyweights from the sectors like Energy, PSU, Oil & Gas and Banking dragged the benchmarks lower. Key indices started in the negative territory, as traders got anxious with Finance Secretary T V Somanathan's statement that the entire revenue loss on account of reduction in excise duty on petrol and diesel by Rs 10 and Rs 5 a litre respectively will be borne by the Centre. Some concern also came as All India Financial Institutions (AIFI) said that with the ripple down effect of declining automobile sales, the forging industry is facing the heat with a sharp decline in demand which has resulted in substantial production cuts.  However, key indices recouped most of their losses in afternoon session, taking support from data showing that merchandise exports grew for the eleventh consecutive month to $35.65 billion, up 43 per cent on-year in October, as external demand continued to remain robust. The preliminary data released by the commerce and industry ministry showed growth being driven by higher demand for items, primarily engineering goods, petroleum products, gems and jewellery, as well as organic and inorganic chemicals, among other items.  Some support also came as the Reserve Bank of India (RBI) in its article on the state of the economy has stated that the Indian economy is on the path of a durable recovery on the back of conducive monetary and credit conditions, the global headwinds notwithstanding. Finally, the BSE Sensex fell 396.34 points or 0.65% to 60,322.37 and the CNX Nifty was down by 110.25 points or 0.61% to 17,999.20.

 

The US markets ended higher on Tuesday on upbeat US economic data, including a Commerce Department report showing retail sales shot up by more than expected in the month of October. The report said retail sales spiked by 1.7 percent in October after climbing by an upwardly revised 0.8 percent in September. Street had expected retail sales to jump by 1.4 percent compared to the 0.7 percent increase originally reported for the previous month. Excluding sales by motor vehicles and parts dealers, retail sales still surged up by 1.7 percent in October after rising by 0.7 percent in September. Ex-auto sales were expected to advance by 1.0 percent. Further, support also came in as the Federal Reserve also released a report showing industrial production rebounded by much more than expected in the month of October. The report showed industrial production surged up by 1.6 percent in October after tumbling by 1.3 percent in September. Street had expected industrial production to increase by 0.7 percent. The Fed said about half of the rebound in industrial production in October reflected a recovery from the effects of Hurricane Ida. On the sectoral front, Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 1.7 percent to a new record closing high. Considerable strength was also visible among housing stocks, as reflected by the 1.4 percent gain posted by the Philadelphia Housing Sector Index.

 

Crude oil futures ended marginally lower on Tuesday, weighed down by a forecast by the International Energy Agency (IEA) that global crude output will rise and help ease tight supplies. Further, oil prices were also weighed down by concerns about the outlook for energy demand following a surge in coronavirus cases and fresh restrictions of movements in several countries in Europe. The US Centers for Disease Control and Prevention moved four European destinations to its highest-risk category for travel - a reflection of the growing concern over rising cases in Europe. Benchmark crude oil futures for December delivery fell 12 cents or 0.2 percent to settle at $80.76 a barrel on the New York Mercantile Exchange. However, Brent crude for January delivery gained 38 cents or 0.5 percent to settle at $82.43 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended higher against dollar on Tuesday as banks and exporters continued to sell the US currency amid persistent capital inflows. Sentiments were upbeat as the merchandise exports grew for the eleventh consecutive month to $35.65 billion, up 43 per cent on-year in October, as external demand continued to remain robust. In another positive development, RBI in its article on the state of the economy has stated that the Indian economy is on the path of a durable recovery on the back of conducive monetary and credit conditions, the global headwinds notwithstanding. Meanwhile, RBI remained net buyer of the US currency in September 2021, after it purchased USD 791 million on the net basis from the spot market. On the global front, pound rose on Tuesday as data showed British employers hired more people in October after the government's job-protecting furlough scheme ended, easing some of the Bank of England concerns about the risks of raising interest rates. Finally, the rupee ended 74.37 (provisional), stronger by 9 paise from its previous close of 74.46 on Monday.

 

The FIIs as per Tuesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 8826.67 crore against gross selling of Rs 7904.49 crore, while in the debt segment, the gross purchase was of Rs 1288.15 crore with gross sales of Rs 632.51 crore. Besides, in the hybrid segment, the gross buying was of Rs 29.99 crore against gross selling of Rs 244.57 crore.

 

The US markets ended higher on Tuesday after positive retail data. Commerce Department report showed retail sales shot up by more than expected in the month of October. The report said retail sales spiked by 1.7 percent in October after climbing by an upwardly revised 0.8 percent in September. Asian markets are trading lower in early deals on Wednesday despite positive cues from US markets. Indian equity markets closed in the red on Tuesday amid volatility, dragged by banking, metal, pharma and oil & gas stocks. Today, markets are likely to make negative start tracking weakness across other Asian markets despite overnight gains on Wall Street. There will be cautiousness as Fitch Ratings kept India's sovereign rating unchanged at 'BBB-' with a negative outlook, and said that the rating balances a still-strong medium-term growth outlook and external resilience from solid foreign-reserve buffers against high public debt, a weak financial sector and some lagging structural issues. It said the country's rapid economic recovery from the Covid-19 pandemic and easing financial sector pressures are narrowing risks to the medium-term growth outlook. Though, the negative outlook on the rating reflects lingering uncertainty around the medium-term debt trajectory, particularly given India's limited fiscal headroom relative to rating peers. However, some respite may come later in the day as a private report stated that private equity (PE) and venture capital (VC) investments touched an all-time high of USD 12.9 billion in October, on the back of high-value deals. The investments were 71 per cent higher as compared with October 2020's USD 7.5 billion and 2.5 times the USD 5.2 billion value recorded in September this year. Some support may come with Commerce and industry minister Piyush Goyal stating that India attracted record foreign direct investment over the last several years and the trend is expected to continue, considering the major structural reforms being undertaken by the government. Meanwhile, Member of Commission of India Sangeeta Verma has said the Indian competition law is broad enough to deal with new-age competition concerns in digital markets. She added that the Indian law has extra-territorial jurisdiction and can deal with market practices anywhere in the world if it has anti-competitive effects in India. She noted there exists a bargaining power imbalance between digital platforms and business suppliers in digital markets. There will some action in Gem and Jewellery stocks as Gem and Jewellery Export Promotion Council (GJEPC) has said the gem and jewellery exports witnessed a growth of 45.2 per cent during October at Rs 31,241.09 crore (USD 4,170.59 million) compared to the same month last year due to strong demand from key markets, led by the US. There may be some buzz in banking sector stocks as Reserve Bank Governor Shaktikanta Das asked banks to be investment-ready when the private Capex cycle picks up, as the pandemic-battered economy is on a strong recovery path that will demand huge investments to sustain in the long run. Crediting the faster-than-expected recovery primarily to the improved vaccination pace and the resultant steady fall in the infection caseload, Das said this has led not only to lower extreme health outcomes like mortality/ hospitalisation but also boosted consumer confidence, which was visible in the festival demand.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,999.20

17,927.79

18,101.64

BSE Sensex

60,322.37

60,080.35

60,683.58

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

558.97

517.95

507.15

527.80

State Bank of India

195.53

494.25

489.36

503.26

Power Grid Corporation of India

174.04

187.80

185.75

190.60

ITC

146.75

235.25

233.61

238.26

Oil & Natural Gas Corporation

129.56

157.60

156.36

159.26

 

  • Kotak Mahindra Bank and multiplex chain operator PVR have launched a co-branded debit card, claiming to be the first ones to offer such a product in the movie and entertainment genre.
  • HCL Technologies has entered into new multi-year application deal with Euroclear Group to accelerate its agile transformation journey with technologies and working practices to improve its digital capabilities. 
  •  TCS has entered into strategic transformation engagement with Zebra Technologies Corporation.
  •  Cipla has been selected in the S&P Dow Jones Sustainability Index for the Emerging Markets for 2021.
News Analysis