Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (11 February 2022)
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Market Commentary 14 February 2022
Markets likely to get gap-down opening amid global sell-off


Halting a three-day winning streak, Indian equity benchmarks came under heavy selling pressure and settled with losses of over a percent on Friday. The markets had a weak start and selling accentuated throughout the session as Former Reserve Bank of India Governor D Subbarao said the concern today was that the low interest rates and the enormous liquidity available in the system could potentially disrupt financial stability. He added that the challenge for central banks and for the Reserve Bank of India was to juggle between maintain price stability, supporting growth and employment, preserving financial stability and all this in a globalised world. Some concern also came as Finance Minister Nirmala Sitharaman's statement that the Indian economy suffered the biggest contraction due to the COVID-19 pandemic, but the government has been able to contain retail inflation at 6.2 percent. She also said that the Indian economy suffered Rs 9.57 lakh crore loss due to the pandemic, compared to a loss of Rs 2.12 lakh crore during the global meltdown in 2008-09. Market participants overlooked Union Revenue Secretary Tarun Bajaj's statement the country's fiscal deficit will come down once revenues start to grow. He said that the government had adopted a loose fiscal policy on the backdrop of increased capital expenditure. Traders also paid no heed towards RBI report that the consumer confidence has shown gradual improvement for the third successive round of the survey. The Reserve Bank of India (RBI) said the current situation index (CSI) increased marginally on the back of better sentiments on general economic situation, household income and spending. Meanwhile, the Reserve Bank of India (RBI) Governor Shaktikanta Das has urged banks and NBFCs to continue the process of augmentation of capital and building up of appropriate buffers to meet future uncertainties. Finally, the BSE Sensex fell 773.11 points or 1.31% to 58,152.92 and the CNX Nifty was down by 231.10 points or 1.31% to 17,374.75.


Extending the sell-off seen in the previous session, the US markets ended sharply lower on Friday amid concerns about a potential Russian invasion of Ukraine. White House national security adviser Jake Sullivan suggested a Russian invasion could occur during the Winter Olympics currently being held in Beijing. Sullivan also said any Americans in Ukraine should leave the country in the next 24 to 48 hours, reiterating a plea President Joe Biden made on Thursday. The U.K. Foreign Office has also urged British citizens to get out of Ukraine as Russia has amassed more than 100,000 troops near the border. Earlier in the day, uncertainty about the outlook for interest rates led to choppy trading on Wall Street following comments from several Federal Reserve officials. St. Louis Fed President James Bullard indicated he supports raising interest rates by a full percentage point by the start of July, including a possible 50-basis point hike. On the sectoral front, semiconductor stocks showed a substantial move to the downside as the day progressed, dragging the Philadelphia Semiconductor Index down by 4.8 percent. Considerable weakness also emerged among airline stocks, resulting in a 4.2 percent nosedive by the NYSE Arca Airline Index. Software stocks also saw considerable weakness on the day, as reflected by the 3 percent slump by the Dow Jones U.S. Software Index. Retail, chemical and networking stocks also showed notable moves to the downside, while gold stocks soared as the price of the precious metal spiked in electronic trading. Energy stocks also bucked the downtrend amid a sharp increase by the price of crude oil. Crude for March delivery surged $3.22 to $93.10 a barrel amid concerns about the situation in Ukraine.


Crude oil futures ended significantly higher on Friday, extending recent gains, following a report from the International Energy Agency (IEA) that said oil production from OPEC and allies were significantly below target in January. The IEA report said the group produced 900,000 barrels per day in January. Also, the OPEC maintained its outlook for oil demand in 2022 but said there is an upside potential to the forecast, citing an ongoing observed strong recovery from the coronavirus pandemic. Besides, data from Energy Information Administration showed earlier this week that U.S. crude oil stockpiles unexpectedly fell 4.8 million barrels in the week to Feb. 4 as overall refined product demand reached an all-time record. According to a report from Baker Hughes, the rig count in the U.S. has risen by 19 to 516, the highest since April 2020. Benchmark crude oil futures for March delivery rose $3.22 or 3.6 percent to settle at $93.10 a barrel on the New York Mercantile Exchange. Brent crude for April delivery gained $3.03 or 3.3 percent to settle at $94.44 a barrel on London's Intercontinental Exchange.


Indian rupee ended substantially weak against the US dollar due to fears of an aggressive rate hike by the Federal Reserve after US inflation raced to a 40-year high in January. US inflation surged 7.5% on an annual basis with the consumer price index for all items rising 0.6% in January. Sentiments were fragile with Former Reserve Bank of India Governor D Subbarao's statement that concern today was that the low interest rates and the enormous liquidity available in the system could potentially disrupt financial stability. He added that the challenge for central banks and for the Reserve Bank of India was to juggle between maintain price stability, supporting growth and employment, preserving financial stability and all this in a globalised world. Aggressive FII selling and muted domestic equities also weighed on the local unit. On the global front, dollar rose to an eight-day high on Friday after U.S. inflation surged to a 40-year peak and comments from a Federal Reserve official unleashed a wave of bets on aggressive rate hikes. Finally, the rupee ended at 75.38 (Provisional), weaker by 44 paise from its previous close of 74.94 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 8700.20 crore against gross selling of Rs 10392.83 crore, while in the debt segment, the gross purchase was of Rs 557.24 crore against gross sales of Rs 592.49 crore. Besides, in the hybrid segment, the gross buying was of Rs 19.44 crore against gross selling of Rs 19.51 crore.


The US markets ended lower on Friday on rising worries over escalating Ukraine-Russia tensions and the prospect of a tightened interest rate hike timeline from the Fed in response to decades-high inflation. Asian markets are trading in red on Monday as warnings Russia could invade Ukraine at any time sent oil prices to seven-year peaks, boosted bonds. Indian markets ended 1.31 percent lower each to halt a three-day winning run on Friday amid weakness across global markets. Today, markets are likely to make a gap-down opening tracking a sell-off across global markets. Investor will be eyeing on retail inflation and wholesale inflation data to be out later in the day. Traders will be concerned as India's industrial production growth slowed down for a fourth straight month in December to 0.4 per cent mainly due to a poor performance by the manufacturing sector. According to the data released by the National Statistical Office (NSO), the manufacturing sector, which constitutes 77.63 per cent of the Index of Industrial Production (IIP), contracted by 0.1 per cent in December. However, some support may come as the commerce ministry said exports of agricultural and processed food products through APEDA are expected to exceed the target of $23.7 billion in the current fiscal. Agricultural and Processed Food Products Export Development Authority (APEDA) is taking a series of steps such as promoting IT-enabled activities for ease of doing business in the promotion and development of exports from India. Traders may take note of a report by industry body CII has suggesting that India needs to adopt a multidimensional approach to take the country's merchandise exports to $1 trillion by 2030. The report recommends finalising free trade agreements with large markets, extending RoDTEP to all exports, attracting global firms and addressing domestic manufacturing issues to achieve the target. Besides, RBI data showed the country's foreign exchange reserves increased by $2.198 billion to $631.953 billion in the week ended February 4. There will be some reaction in edible oil industry stocks as India has cut its tax on crude palm oil (CPO) imports to 5% from 7.5%, as the world's biggest edible oil importer tries to rein in local prices of the commodity and help domestic refiners and consumers. Meanwhile, LIC filed a draft red herring prospectus (DRHP) over the weekend to float an IPO. Under the mega IPO, the government will sell five percent in the insurance major for an estimated Rs 63,000 crore through an offer for sale (OFS).


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



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Tata Motors






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