Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (08 March 2022)
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Market Commentary 09 March 2022
Benchmarks likely to get slightly positive start

 

Indian equity benchmarks snapped a four-day losing streak to end higher in the volatile session on Tuesday led by strong buying interest in Realty, IT and TECK stocks. Key indices made weak start, as traders remained cautious with rating agency Icra's statement that the ongoing conflict between Ukraine and Russia will burden domestic steelmakers with high input costs. Some cautiousness also came as a Crisil report warned that the Russian invasion of Ukraine, and the flurry of punitive sanctions imposed on the former by the US and European nations, have the potential to cull India's imports on one hand and also lead to input cost pressure on downstream companies in India Inc. Selling further crept in as a private report has downgraded Indian equities from overweight to underweight citing soaring oil prices that hit a 14-year high of over $140 a barrel in trade on Monday. However, domestic indices reversed their trend and traded with gains in late afternoon deal, taking support from private report stating that hiring activity witnessed a 31 per cent increase in February as multiple sectors recorded strong growth compared to the previous year. Traders also found some solace with Commerce and Industry Minister Piyush Goyal's statement that goods exports will exceed the ambitious target set for the current fiscal and touch $410 billion, despite the supply-side disruptions caused by the Russia-Ukraine conflict. Traders also took a note of Credit rating agency, India Ratings and Research (Ind-Ra) report stated that the direct impact of the Russia-Ukraine war on Indian credits appears to be limited. Ind-Ra's initial assessment indicates that the impact would be largely restricted to small entities and those at the lower end of the credit spectrum. Finally, the BSE Sensex rose 581.34 points or 1.10% to 53,424.09 and the CNX Nifty was up by 150.30 points or 0.95% to 16,013.45.

 

The US markets ended lower on Tuesday as investors continue to assess geopolitical tensions between Russia and Ukraine and high commodity prices. Cautiousness also prevailed in the markets as crude oil prices continued to skyrocket as President Joe Biden officially announced a US ban on the import of Russian oil, liquefied natural gas, and coal in response to Russia's unprovoked invasion of Ukraine. Biden acknowledged many European countries would not be able to join the US in the ban but said his administration would work with their partners to reduce their dependence on Russian energy. Earlier in the day, the European Union's executive arm the European Commission had pledged to reduce Russian gas imports by two-thirds by the end of this year. On the sectoral front, Steel stocks showed a substantial move to the downside amid worries about global economic growth, with the NYSE Arca Steel Index plunging by 2.8 percent. Significant weakness was also visible among healthcare stocks, as reflected by the 2 percent slump by the Dow Jones US Health Care Index. Utilities, tobacco and natural gas stocks also moved to the downside on the day. The Dow Jones Utility Average gave back ground after ending the previous session at a record closing high. However, airline stocks moved sharply higher over the course of the session, with the NYSE Arca Airline Index soaring by 5.6 percent after ending the previous session at its lowest closing level in over a year.

 

Crude oil futures ended sharply higher on Tuesday, magnifying their many previous sessions' rally, on concerns about global oil supply after US President Joe Biden announced a ban on import of Russian energy products. Biden said the decision to ban Russian energy products was taken after close consultation with allies around the world, particularly in Europe. Earlier, the United Kingdom announced its own restrictions on buying Russian oil imports, saying it will phase out the country's imports by the end of the year. The European Union also unveiled a plan to wean itself off of Russian fossil fuels. Benchmark crude oil futures for April delivery rose $4.30 or 3.6 percent to settle at $123.70 a barrel on the New York Mercantile Exchange. Brent crude for May delivery surged $5.52 or 4.5 percent to settle at $128.73 a barrel on London's Intercontinental Exchange.

 

Continuing previous session drubbing, Indian rupee concluded substantially weaker against dollar on Tuesday on account of continued dollar demand from importers and banks. Sentiments remained dented as a steep rise in oil prices fanned fears of runaway inflation and slowing economic growth. However, downfall remain capped with Commerce and Industry Minister Piyush Goyal's statement that goods exports will exceed the ambitious target set for the current fiscal and touch $410 billion, despite the supply-side disruptions caused by the Russia-Ukraine conflict. On the global front, euro was trading near 22-month lows on Tuesday as war in Ukraine darkens Europe's economic outlook, while currencies lifted by rocketing energy prices paused after a weeks-long rally. Finally, the rupee ended at 77.00 (Provisional), weaker by 7 paise from its previous close of 76.93 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 6732.84 crore against gross selling of Rs 14654.07 crore, while in the debt segment, the gross purchase was of Rs 197.70 crore against gross selling of Rs 213.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.08 crore against gross selling of Rs 12.67 crore.

 

The US markets ended lower on Tuesday as President Joe Biden officially announced a U.S. ban on Russian imports of oil and energy. Asian markets are trading mostly in green on Wednesday as investors assess the impact of a worsening Russia-Ukraine conflict. Indian markets made a comeback on Tuesday, halting a losing streak that lasted four straight trading sessions, helped by strength in financial and IT stocks. Today, markets are likely to make slightly positive start amid gains across most other Asian markets, though oil prices continued to rise after the US banned Russia oil imports over Moscow's invasion of Ukraine. State election results are just a day away, investors will likely take note of the exit polls prior to that. Some support will come with report that the Agriculture Ministry is ready with a new central scheme to promote natural farming in the country with an estimated outlay of Rs 2,500 crore. The proposed new scheme on natural farming will soon be placed before the Cabinet for approval. Traders may take note of the Reserve Bank has extended the interest equalisation scheme for pre and post shipment rupee credit for MSME exporters till March 2024 with the objective of boosting outbound shipments. However, there may be some cautiousness as rating agency Icra warned of serious downside risks to the economy next fiscal with runaway current account deficit, steep fall in the rupee and a hardening yields on government bonds, as a result of the Russian-Ukraine crisis and the resultant spike in crude and other commodity prices. Traders may be worried as Union Finance Minister Nirmala Sitharaman expressed concern over rising crude prices due to the Ukraine crisis and indicated that the central government is looking to tap alternative sources. Metal stocks will be in focus with a private report that the price of steel will continue to move upwards on good demand and as the supply chain remains affected amid the Ukraine-Russia conflict. There will be some reaction in auto stocks as India Ratings and Research (Ind-Ra) revised its outlook for the auto sector to 'neutral' from 'improving' for 2022-23, saying supply-side constraints and a muted rural demand will restrict growth. It said domestic automobile sales volume is expected to grow 5-9 per cent year-on-year in 2022-23, after three consecutive years of decline, and is likely to fall 5-8 per cent in 2021-22. Meanwhile, a private report stated that LIC IPO has received capital markets regulator SEBI's nod for its mega public issue. The issue will entirely be an offer for sale (OFS) by the government that is attempting to garner somewhere around Rs 63,000 crore to meet its divestment target.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,013.45

15,780.35

16,137.65

BSE Sensex

53,424.09

52,628.52

53,851.96

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil & Natural Gas Corporation

731.27

178.70

172.69

189.84

Tata Motors

555.43

391.30

379.95

399.05

State Bank of India

425.10

440.00

429.30

446.40

ITC

360.36

226.80

224.21

228.91

NTPC

285.72

133.25

130.56

135.86

 

  • Coal India's subsidiary -- BCCL has recorded 61 percent growth in its production to 3.24 MT in February this year over the corresponding month last fiscal.  
  • Infosys has collaborated with Dow Jones to develop new human centered digital experiences. 
  • APSEZ has signed an agreement with Indian Oil Corp towards augmentation of IOC's crude oil volumes at Mundra. 
  • Tata Motors has bagged order for 65 electric vehicles from Kerala State Electricity Board.
News Analysis