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NSE Intra-day chart (04 March 2022)
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Market Commentary 07 March 2022
Markets likely to see gap-down opening amid surge in crude oil prices

 

Indian equity benchmarks extended fall for the third straight session on Friday tracking a weak trend in global equities amid escalating tensions between Russia and Ukraine. Markets made a gap-down opening and stayed in red for whole day, as traders remained cautious with a private report that India's trade and current account deficits are likely to widen, putting pressure on the rupee, as global oil prices surge and the domestic economy reopens from a third wave of the pandemic. Traders were also cautious, as the CBIC cautioned the public against sharing Aadhaar and PAN details without a valid reason or for monetary gains, saying that the information could be misused by fraudsters for GST evasion. However, key gauges recouped some of their losses in afternoon deals, as traders took some support as India's service sector activity improved in the month of February, as COVID-19 cases declined and restrictions were lifted. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index surged to 51.8 in February from 51.5 in January. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- also improved to 53.5 in February from 53.0 in January. But, markets failed to hold recovery and ended lower as some pessimism remained among traders with private report stated that the value of foreign portfolio investors' (FPI) holdings in domestic equities reached $654 billion in three months ended December 2021, a drop of nearly 2 per cent from the preceding quarter. Finally, the BSE Sensex fell 768.87 points or 1.40% to 54,333.81 and the CNX Nifty was down by 252.70 points or 1.53% to 16,245.35.

 

The US markets extended their previous session's losses and ended lower on Friday as concerns about the impact of the Russian invasion of Ukraine continued to weigh on the markets, with Russia ratcheting up its attacks. Russia has reportedly taken control of Ukraine's Zaporizhzhia nuclear power plant, which is the largest nuclear power plant in Europe. The Russian attack on the plant had previously caused a fire to break out at the facility, raising concerns about a potential nuclear disaster. Worries about Ukraine overshadowed a typically closely watched Labor Department report showing U.S. employment once again jumped by much more than expected in the month of February. The report showed non-farm payroll employment spiked by 678,000 jobs in February after surging by an upwardly revised 481,000 jobs in January. Street had expected employment to increase by 400,000 jobs compared to the addition of 467,000 jobs originally reported for the previous month. With the stronger than expected job growth, the unemployment rate dipped to 3.8 percent in February from 4.0 percent in January. The unemployment rate was expected to edge down to 3.9 percent. The report also showed a slowdown in the annual rate of wage growth, which economists suggested could lead to less pressure on the Federal Reserve to aggressively raise interest rates.

 

Crude oil futures rallied on Friday, with U.S. prices settling at their highest since 2008, as worries about supply disruptions grew amid an escalation in the Russia-Ukraine conflict after Russia attacked and seized Ukraine's Zaporizhzhia nuclear power plant. As the war continues to rage, it is feared that Western countries will likely impose more stringent sanctions on Russia that could significantly disrupt oil exports from the country, which is the world's biggest exporter of crude and oil products combined. A report from Baker Hughes said the oil rigs count in the U.S. dropped by 3 to 519 in the week ending March 4. The number of total active drilling rigs in the U.S. remains unchanged at 650. Benchmark crude oil futures for April delivery rose $8.01 or 7.4 percent to settle at $115.68 a barrel on the New York Mercantile Exchange. Brent crude for May delivery climbed $7.65 or 6.9 percent to settle at $118.11 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended substantially lower against dollar to touch its lowest level since mid-December, as the deepening crisis in Ukraine sent oil prices surging and stoked inflation fears. Traders were worried as Russian troops were shelling Europe's largest nuclear power plant, in Ukraine, raising worries over radiation risks. Additional pressure came with private report stating that India's trade and current account deficits are likely to widen, putting pressure on the rupee, as global oil prices surge and the domestic economy reopens from a third wave of the pandemic. On the global front, euro fell to a seven-year low versus the Swiss franc and hit its lowest point in almost two years versus the dollar on Friday as the war in Ukraine lowered expectations of European economic growth. Finally, the rupee ended at 76.17 (Provisional), weaker by 23 paise from its previous close of 75.94 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 7092.83 crore against gross selling of Rs 13623.41 crore, while in the debt segment, the gross purchase was of Rs 145.07 crore against gross sales of Rs 403.91 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.67 crore against gross selling of Rs 8.21 crore.

 

The US markets ended lower on Friday as the war in Ukraine overshadowed an acceleration in U.S. jobs growth last month that pointed to strength in the economy. Asian markets are trading deeply in red on Monday as oil prices soar amid the risk of a US and European ban on Russian supply and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets. Indian markets extended losses to a third straight day on Friday amid heightened geopolitical tensions, after Ukrainian authorities said Russian forces captured the Zaporizhzhia nuclear plant. Today, markets are likely to make gap-down opening as Brent Crude surged to hit the $130 per barrel-mark in early trade, highest since 2008, amid heightened geopolitical tensions. Traders will be concerned as a private report lowered India's economy growth forecast to 7.8 per cent for 2022 due to the nation's exports being impacted by the Russia-Ukraine war and spiking oil prices causing ripple effects. It said rupee is likely to further depreciate against US dollar while soaring commodity prices will push inflation up. However, Indian banking sector will likely remain resilient. There will be some cautiousness as the Reserve Bank data stated that India's forex reserves declined by $1.425 billion to $631.527 billion for the week ended in February 25 due to a dip in currency assets. Meanwhile, the GST Council in its next meeting may look at raising the lowest tax slab to 8 percent, from 5 percent, and prune the exemption list in the Goods and Services Tax regime as it looks to increase revenues and do away with states' dependence on Centre for compensation. There will be some buzz in the sugar sector stocks as industry body ISMA said India's sugar exports are estimated to increase 15.38 per cent year-on-year to 7.5 million tonnes (MT) in the current marketing year 2021-22, on likely rise in demand for the Indian sweetener amid the possibility of a global deficit. Agriculture industry stocks will be in focus as India's exports of agricultural items and processed foods rose 23% year on year to $19,709 million during April-January 2021-22, indicating continued robustness of the segment in the country's exports basket. There will be some reaction in tea industry stocks as latest Tea Board data showed that tea exports during the 12 months of 2021 declined marginally at 195.50 million kilogramme from 209.72 million kg during the previous similar period. Metal stocks will be in limelight as somestic steel makers have hiked the prices of hot-rolled coil (HRC) and TMT bars by up to Rs 5,000 per tonne as supply chain is being impacted amid ongoing Russia-Ukraine conflict.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,245.35

16,100.76

16,422.96

BSE Sensex

54,333.81

53,809.93

54,935.48

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ITC Coal India

668.35

225.00

218.86

229.26

Tata Motors

387.65

418.40

411.49

428.59

Coal India

360.95

181.70

177.80

188.30

Oil & Natural Gas Corporation

326.58

165.90

162.84

169.99

State Bank of India

206.84

462.45

456.44

469.69

 

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News Analysis