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Market Commentary | | 19 January 2021 | |
Markets likely to get positive start tracking gains in Asian peers
Indian equity benchmarks ended
the Monday's trade in red terrain as traders remained worried on account of
weak global cues. Markets made a cautious start as India registered 13,962
fresh Covid-19 cases in the last 24 hours, taking the tally to 10,572,672.
Sentiments also remain dampened on report stating that the Indian economy is
not recovering as fast as the government claims and the country's economy may
contract 25 per cent in the current financial year. It further states that due
to a big decline in the GDP during the current financial year, the budget
estimates have gone completely out of gear and, therefore, there is a need to
correct the Budget. Traders also took note of former chief economic adviser
Arvind Virmani's statement that the Indian economy is likely to contract in the
range of 5-7.5 per cent this fiscal (FY21) but will see a growth of 9 to 11 per
cent in FY 2021-22. Further, Virmani said in the upcoming Budget, the
government should come up with policies to accelerate India's economic growth.
Markets trimmed most of their initial losses in second half of the trade as the
Reserve Bank of India (RBI) has decided to conduct purchase of Government
securities under Open Market Operations (OMO) for an aggregate amount of Rs
10,000 crore on January 21, 2021. Some support also came after the government
data showing that India's exports rose marginally to $27.15 billion in December
2020, while imports surged 7.56 per cent to $42.59 billion. The merchandise
exports were valued at $27.11 billion in December 2019, while imports had
totalled $39.59 billion. Traders also took some solace with Reserve Bank of
India (RBI) in its latest report has showed that bank credit grew 3.2 per cent
to Rs 107.05 lakh crore in the first nine months (April-December) of the
current financial year (FY21), against a growth of 2.7 per cent registered in
the corresponding period of 2019-20. In the fortnight ended March 27, 2020,
bank advances stood at Rs 103.72 lakh crore. However, intense selling in last
of trade dragged markets below their psychological levels of 14,300 (Nifty) and
48,600 (Sensex). Finally, the BSE Sensex fell 470.40 points or 0.96% to
48,564.27, while the CNX Nifty was down by 152.40 points or 1.06% to 14,281.30.
The US markets were closed on
Monday on account of Martin Luther King, Jr. Day.
Rupee ended substantially weaker
against dollar on Monday on account of continued dollar demand from importers
and banks. Besides, heavy selloff in domestic equity markets also weighed on
the rupee sentiment. Investors' mood remained fragile with former chief
economic adviser Arvind Virmani's statement that the Indian economy is likely
to contract in the range of 5-7.5 per cent this fiscal (FY21) but will see a
growth of 9 to 11 per cent in FY 2021-22. Further, Virmani said in the upcoming
Budget, the government should come up with policies to accelerate India's
economic growth. Meanwhile, foreign portfolio investors (FPI) put in Rs 14,866
crore in Indian markets in the first half of January with participants
expecting strong third-quarter results by companies. On the global front,
dollar held firm at a four-week high against its rivals on Monday as an
undercurrent of risk aversion swept through currency markets in the backdrop of
weak U.S. economic data, knocking the Australian dollar and the euro lower.
Finally, the rupee ended at 73.28, 21 paise weaker from its previous close of
73.07 on Friday.
The FIIs as per Monday's data
were net seller in both equity segment and debt segment. In equity segment, the
gross buying was of Rs 5247.32 crore against gross selling of Rs 6300.18 crore,
while in the debt segment, the gross purchase was of Rs 864.05 crore with gross
sales of Rs 1265.77 crore. Besides, in the hybrid segment, the gross buying was
of Rs 10.27 crore against gross selling of Rs 20.67 crore.
The US markets was shut on Monday
on account of Martin Luther King Jr. Day. Asian markets are trading mostly
higher on Tuesday as investors awaited comments from Joe Biden's Treasury
Secretary nominee Janet Yellen on US stimulus and the dollar. India markets
ended lower on Monday dragged by heavy selling across the board. Today, the
markets are likely to make positive start tracking gains in Asian peers.
Traders will be taking encouragement with Icra's report stating that economic
activity recorded a broad-based improvement in December as against November,
showing a return of demand. Icra said most of the indicators have displayed a
year-on-year (y-o-y) expansion in December 2020, which signals a tentative
return to pre-COVID normalcy. Some support will come as the Finance Ministry on
Monday released the 12th instalment of Rs 6,000 crore to states to meet the GST
compensation shortfall, taking the total amount released so far under this
window to Rs 72,000 crore. Traders may take note of report that India recorded
9,975 fresh cases of the coronavirus disease (Covid-19), the lowest daily rise
since June 8, 2020, resulting in the total active cases in the country falling
below 205,500. The death toll has increased to 152,593. India's caseload tally
stands at 10,582,647. Meanwhile, as part of pre-Budget deliberations, Finance
Minister Nirmala Sitharaman has held a meeting with state finance ministers who
suggested steps to revive growth and boost revenue collection against the
backdrop of COVID-19 crisis. Banking stocks will be in focus as S&P Global
Ratings said India's banking system's low profitability and weak asset quality
present some difficulties in significantly boosting digitalisation for several
state-owned and smaller private-sector banks. There will be some reaction oil
& gas sector stocks with Union Minister for Petroleum and Natural Gas
Dharmendra Pradhan's statement that fuel prices had gone up because of lower
production in oil-producing nations due to the coronavirus pandemic. This lower
production had caused an imbalance in demand and supply. There will be lots of
earnings reaction to keep the markets buzzing.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
14,281.30
|
14,183.01
|
14,419.36
|
BSE
Sensex
|
48,564.27
|
48,271.41
|
48,989.67
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata
Motors
|
1,733.83
|
245.95
|
237.25
|
258.55
|
ITC
|
676.08
|
219.75
|
215.56
|
222.96
|
State
Bank of India
|
549.69
|
294.45
|
288.21
|
304.66
|
UPL
|
371.75
|
561.30
|
534.20
|
578.20
|
Gail
India
|
341.72
|
137.90
|
134.34
|
141.74
|
HDFC Bank has reported 18.09% rise in its net profit of Rs 8,758.29 crore for Q3FY21 as against net profit of Rs 7,416.48 crore for Q3FY20. L&T's construction arm -- L&T construction has secured a large order for its Heavy Civil Infrastructure business from Rail Vikas Nigam in the State of Uttarakhand, India. TCS has been selected by Three UK, one of the UK's leading mobile network carriers, to help the latter configure its mobile network for its ongoing rollout of 5G services. NTPC's JV has inked a pact with Petroleum Conservation Research Association for implementation of Energy Efficient PNG Cook Stove programme, across India.
News Analysis
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