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NSE Intra-day chart (18 January 2023)
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Market Commentary 19 January 2023
Benchmarks to make negative start on weak global cues

 

Indian equity benchmarks extended gains for a second straight session on Wednesday, with the Nifty ended 112 points higher while the Sensex was up by 390 points. Recovery in most of the Asian markets and positive start in European equity exchanges added to the momentum. After making a cautious start, key gauges gained traction as foreign institutional investors turned net buyers of domestic shares, breaking their longest selling streak in six months. FIIs snapped a 17-day sales run, purchasing Rs 211 crore worth of equity shares on a net basis on January 17. Traders took a note of Former RBI governor Raghuram Rajan's statement that it is too premature to think that India will replace China when it comes to influencing global economic growth. However, the situation may change going forward as India is already the world's fifth largest economy, it is growing and has the potential to keep expanding. Key gauges added more gains in late morning deals, as sentiments got boost with a private report stating that the government is likely to increase the allocation for the ongoing Production-Linked Incentive (PLI) schemes by as much as 20-30 per cent in the next Budget to spur domestic manufacturing and boost exports. Traders remained optimistic with IMF Deputy Managing Director Gita Gopinath's statement that there's a lot of positive sentiment towards India. She highlighted areas that need more reforms to attract more manufacturing FDI. Additional support also came with the Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Anurag Jain's statement that several other steps are underway on further improving ease of doing business in India, including on the labour laws front. Finally, the BSE Sensex rose 390.02 points or 0.64% to 61,045.74 and the CNX Nifty was up by 112.05 points or 0.62% to 18,165.35.

 

The US markets ended deeply in red on Wednesday, with Dow Jones settling over one and half percent, as traders reacted to a slew of U.S. economic data, including a Commerce Department report showing a steep drop in U.S. retail sales in the month of December. The Commerce Department said retail sales tumbled by 1.1 percent in December after slumping by a revised 1.0 percent in November. Street had expected retail sales to decrease by 0.8 percent compared to the 0.6 percent drop originally reported for the previous month. A separate report released by the Federal Reserve showing industrial production in the U.S. decreased by much more than expected in the month of December. The Fed said industrial production slid by 0.7 percent in December after falling by a revised 0.6 percent in November. Street had expected industrial production to edge down by 0.1 percent compared to the 0.2 percent dip originally reported for the previous month. However, the initial strength on markets came after a report from the Labor Department showed U.S. producer prices fell by more than expected in the month of December. The Labor Department said its producer price index for final demand declined by 0.5 percent in December after inching up by a revised 0.2 percent in November. Street had expected producer prices to edge down by 0.1 percent compared to the 0.3 percent increase originally reported for the previous month. The report also showed the annual rate of producer price growth slowed to 6.2 percent in December from 7.3 percent in November. The year-over-year growth was expected to slow to 6.8 percent. On the sectoral front, Oil service stocks moved sharply lower over the course of the session, dragging the Philadelphia Oil Service Index down by 3.2 percent. The index ended the previous session at its best closing level in over three years. The pullback by oil service stocks came amid a decrease by the price of crude oil, with crude for February delivery falling $0.70 to $79.48 a barrel.

 

Crude oil futures settled in red on Wednesday, surrendering early gains, on concerns about a possible U.S. recession. Meanwhile, Concerns about interest rates weighed as well on oil prices after St. Louis Fed President James Bullard commented that the central bank needs to quickly hiked interest rates above 5%. However, Oil prices rose earlier in the day after the Organization of the Petroleum Exporting Countries (OPEC) forecast that Chinese demand for oil is on track for a bounce. OPEC in its monthly report said that Chinese oil demand would rebound this year due to the recent relaxation of the country's COVID-19 containment measures. Benchmark crude oil futures for February delivery dropped $0.70 or 0.9 percent at $79.48 a barrel on the New York Mercantile Exchange. Brent crude for March delivery fell $0.94 or 1.1 percent at $84.98 a barrel on London's Intercontinental Exchange.

 

Indian rupee strengthened against the dollar on Wednesday tracking firm trend in domestic equities. Sentiments were positive as foreign institutional investors turned net buyers of domestic shares, breaking their longest selling streak in six months. FIIs snapped a 17-day sales run, purchasing Rs 211 crore worth of equity shares on a net basis on January 17. Besides, a private report stated that the government is likely to increase the allocation for the ongoing Production-Linked Incentive (PLI) schemes by as much as 20-30 per cent in the next Budget to spur domestic manufacturing and boost exports. On the global front, Sterling edged up against the dollar on Wednesday, as data showed British consumer price inflation fell to a three-month low of 10.5% in December but remains near 40-year highs. Finally, the rupee ended at 81.25 (Provisional), stronger by 44 paise from its previous close of 81.69 on Tuesday.


The FIIs as per Wednesday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 8667.68 crore against gross selling of Rs 7308.98 crore, while in the debt segment, the gross purchase was of Rs 318.82 crore against gross selling of Rs 176.93 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.06 crore against gross selling of Rs 4.49 crore.

 

The US markets ended lower on Wednesday as retail sales and producer prices declined more than expected in December and factory production fell more than expected. Asian markets are trading mostly in red on Thursday after tracking losses on Wall Street overnight. Indian markets extended previous session's gains and ended higher for a second straight session on Wednesday, shrugging off mixed moves across global markets. Today, benchmark indices are likely to make negative start tracing weakness in the global markets. Traders will be concerned as IMF's Gita Gopinath said the global economy is facing a unique situation due to unprecedented level of high inflation and that is causing tension between monetary and fiscal policies. Foreign fund outflows likely to dent sentiments in domestic markets. Foreign institutional investors (FII) have net-sold shares worth Rs 319.23 crore on January 18, as per provisional data available on the NSE. Further, weekly expiry of F&O may bring some volatility in the today's session. However, some respite may come later in the day with a private report that India is likely to become a $26-trillion economy in 100th year of its Independence in 2047 with per capita GDP growing six times from current level to over $15,000 during the period. There will be some buzz in coal industry stocks as the government said that it has set a coal production target of more than one billion tonnes (BT) for the next financial year. Of the said target, state-owned Coal India has been given the task to produce 780 MT of coal. Auto industry stocks will be in focus as a report by rating agency ICRA said the domestic automotive industry is expected to grow at high single-digit levels in 2023-24. According to the report, the demand for the passenger vehicles segment is expected to grow at 6-9 per cent, commercial vehicles by 7-10 per cent, two-wheelers by 6-9 per cent and tractors by 4-6 per cent in FY24. There will be some reaction in paint industry stocks with a private report that the paints sector has been an underperformer with most listed majors shedding 17-25 per cent since their highs in August. There will be lots of earnings reaction based on the performance of the companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,165.35

18,070.61

18,221.91

BSE Sensex

61,045.74

60,706.53

61,247.59

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

647.49

122.20

120.46

123.46

Tata Motors

133.10

408.80

405.51

414.01

ITC

125.55

335.10

332.81

336.96

Oil & Natural Gas Corporation

121.39

149.20

148.35

149.90

Hindalco Industries

120.45

502.20

492.46

507.96

 

  • Cipla has launched Cippoint, a point-of-care testing device. 
  • ITC has signed a Binding Term Sheet to acquire 100% of the share capital (on a fully diluted basis) of Sproutlife Foods.
  • Bharti Airtel has launched its cutting edge 5G services in NCR (national capital region) cities of Noida, Ghaziabad and Faridabad. 
  • Adani Enterprises, Ashok Leyland and Ballard Power Systems have signed an agreement to launch a pilot project to develop a hydrogen fuel cell electric truck for mining logistics and transportation.
News Analysis