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NSE Intra-day chart (18 January 2022)
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Market Commentary 19 January 2022
Markets likely to open in red amid weak global cues

 

Indian equity benchmarks failed to hold intra-day recovery and closed at day's low on Tuesday tracking deep losses in basic materials, realty and telecom stocks amid widespread selling pressure in global markets. Key gauges made flat-to-positive start, as traders took some support with RBI article stating that India's overall economic activity remains strong, driven by an upbeat consumer confidence and uptick in bank credit, and expectations that Omicron may turn out to be a flash flood rather than a wave have further brightened the prospects. Some support also came with Commerce and Industry Minister Piyush Goyal's statement that the country is on track to achieve the $650 billion export target set for goods and services in the ongoing fiscal year (FY22). However, markets soon turned negative as traders got anxious with a private survey report stating that in the wake of COVID-19 and new digital operations, banking and financial institutions have been struggling to deal with an increasing number of fraud incidents and the trend is expected to continue. Key indices extended fall in late afternoon deals, as the sentiments remained downbeat with Crisil Ratings' report stated that securitisation volume growth slowed to around 8 percent on year to Rs 29,000 crore in the quarter ended December 31, 2021 (Q3FY22), on higher risk aversion amid the third wave of COVID-19. Traders were also cautious with private report stated that the fast-spreading third wave of COVID-19 has undone the gains achieved due to resumption of business since the end of the lethal second wave last year. Meanwhile, tightening rules for initial public offering (IPO), Sebi has put a cap on the usage of the issue proceeds for unidentified future acquisitions and restricted the number of shares that can be offered by significant shareholders. Finally, the BSE Sensex fell 554.05 points or 0.90% to 60,754.86 and the CNX Nifty was down by 195.05 points or 1.07% to 18,113.05.

 

The US markets ended lower on Tuesday with losses led by the technology-laden Nasdaq Composite Index, as the high-growth tech sector fell under pressure from climbing Treasury yields and investors began digesting a busy week for company earnings.  The technology-focused Nasdaq sits more than 10% from its most recent high and closed below its 200-day moving average for the first time since April 2020. Tesla dropped 1.8%. Meta Platforms and Amazon fell 4.1% and about 2%, respectively. The shortened trading week will feature quarterly reports from 35 companies in the S&P 500, including Bank of America, UnitedHealth and Netflix. US markets were closed Monday due to the Martin Luther King Jr. holiday. markets dropped sharply as Treasury yields rose in anticipation of the Federal Reserve tightening monetary policy this year. The yield on the 10-year Treasury note rose 9.5 basis points on Tuesday to 1.866%, the highest in about two years based on trading levels at 3 p.m. Eastern Time. The yield on the 2-year Treasury note which is more sensitive to Fed policy expectations, shot up 7.3 basis points to 1.038% to reach the highest level since late February 2020. Meanwhile, Goldman Sachs shares dropped nearly 7% after the bank missed street's expectations for its fourth-quarter earnings. Goldman's operating expenses surged 23% on increased pay for Wall Street employees.

 

Crude oil futures ended at their highest level since 2014 on Tuesday on worries about possible supply disruptions after Yemen's Houthi group attacked the United Arab Emirates (UAE). A suspected drone attack in the United Arab Emirates has killed three people and injured six others. While Houthi rebels far away in Yemen claimed credit for the attack and warned to attack more facilities, the UAE said it reserved the right to respond to these terrorist attacks. The attack raises the geopolitical risk in the region and may signal the Iran-US nuclear deal is off the table for the foreseeable future. That would mean Iranian oil barrels are off the market, boosting demand for similar grade crude originating elsewhere. Both benchmarks hovered near their highest levels since October 2014 as attacks in the Mideast Gulf added to an already tight supply outlook. Benchmark crude oil futures for February delivery rose $1.61 or 1.9 percent to settle at $85.43 a barrel on the New York Mercantile Exchange. Brent crude for March delivery increased $1.03 or 1.2 percent to settle at $87.51a barrel on London's Intercontinental Exchange.

 

Continuing previous session losses, Indian rupee concluded substantially weaker against dollar on increased demand for the greenback from importers and banks. Traders were worried, as the International Labour Organization said that the global job market will take longer to recover than previously thought, with unemployment levels set to remain above pre-COVID-19 levels until at least 2023 due to uncertainty about the pandemic's course and duration. Additional pressure came with private report stating that the fast-spreading third wave of COVID-19 has undone the gains achieved due to resumption of business since the end of the lethal second wave last year. Also, heavy selloff in the Indian equity markets impacted rupee sentiments. On the global front, sterling traded lower against the dollar on Tuesday after data showed British employers added a record number of staff in December, another sign the economy's rebound could potentially fuel further inflation. Finally, the rupee ended 74.58, weaker by 33 paise from its previous close of 74.25 on Monday.

 

The FIIs as per Tuesday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 6312.37 crore against gross selling of Rs 6555.97 crore, while in the debt segment, the gross purchase was of Rs 870.63 crore against gross selling of Rs 443.27 crore. Besides, in the hybrid segment, the gross buying was of Rs 26.62 crore against gross selling of Rs 33.77 crore.

 

The US markets fell sharply on Tuesday as yields continued its northbound journey. Asian markets are trading mostly lower on Wednesday as rising US Treasury yields continued to fuel a global sell-off. Indian markets ended a volatile session on Tuesday sharply lower amid across-the-board selling. Today, the markets are likely to make weak start amid lackluster trade in global markets. High oil prices and sustained FII outflows are also seen to be weighing on investors' sentiments. Traders will be concerned with a private report that The third wave of the COVID-19 pandemic is likely to peak in India on January 23 when the country will record nearly 7.2 lakh cases per day. There will be some cautiousness as the SBI Business Activity Index declined to 101 as on January 17 from 109 in the week ended January 10. The latest reading, even as the country is in the midst of the third wave of the pandemic, is the lowest since November 15. However, some support may come later in the day with a private report stating that private equity and venture capital funds invested $77 billion in Indian companies in 2021, a jump of 62 per cent over the previous year. It added going by a number of deals, there was a 37 per cent growth to 1,266 transactions. Housing finance companies stocks will be in focus as Crisil Ratings said the third wave of Covid-19 could shave up to 200 basis points (bps) off from the growth in assets of housing finance companies (HFCs) in the current and next financial year (FY23). Sans the risk from the third wave, under base case, HFCs were to deliver a compounded annual growth rate (CAGR) of 9-11 per cent in FY22 and FY23. There will be some reaction in fashion retail industry stocks as ICRA said renewed restrictions on operating hours of malls, non-essential stores and curtailment of mobility amid the third Covid wave is expected to shave-off 8 per cent of fashion retailer's revenues in FY22. Meanwhile, AGS Transact Technologies Rs 680 crore IPO will open for subscription today. The public issue will be the first to open in 2022. Ahead of the IPO AGS Transact Technologies has raised Rs 204 crore from 17 anchor investors at the upper price band of Rs 175 per equity share. Investors awaited more Q3 numbers from India Inc for cues.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,113.05

18,015.65

18,280.70

BSE Sensex

60,754.86

60,453.23

61,265.81

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Axis Bank

240.55

725.35

714.44

736.09

Tata Motors

193.53

510.95

502.56

523.91

ITC

143.94

220.60

218.16

225.16

Indian Oil Corporation

142.63

123.75

122.89

125.09

State Bank of India

125.92

507.40

502.45

514.90

 

  • Tech Mahindra has acquired Com Tec Co IT for 310 million euro including earnouts and synergy linked payouts.  
  • L&T's the Heavy Engineering arm has flagged off five critical renewable diesel reactors to North America's largest renewable diesel producer Diamond Green Diesel. 
  • TCS has partnered with CRS to become the new title sponsor and official IT services and technology consulting partner of the Toronto Waterfront Marathon and Virtual Race through November 2026. 
  • Reliance Industries' subsidiary -- Reliance Retail has acquired 54 percent stake in domestic robotics company Addverb for $132 million (about Rs 983 crore).
News Analysis