Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (21 March 2022)
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Market Commentary 22 March 2022
Benchmarks likely to get cautious start amid surge in crude oil prices

 

Snapping two day sharp rally, Indian equity markets ended the Monday's trade in red terrain with a percent cut as continued conflict in Ukraine pushed oil prices higher. Crude prices past $110 a barrel mark, blowing fears of higher inflation. Markets made slightly positive opening as some support came in as India's collection from tax on personal and corporate income jumped over 48 per cent in the current fiscal after a 41 per cent surge in advance tax payments, mirroring sustained economic recovery in a year that witnessed two waves of coronavirus infections. Soon, markets pared gains to enter into red terrain as traders turned cautious as according to the latest data from the RBI, the country's foreign exchange reserves declined $9.646 billion to $622.275 billion in the week ended March 11. Traders paid no heed towards European and International Affairs Alexander Schallenberg's statement that 'huge business opportunities exist for India and Austria to enhance bilateral trade and investments. The bilateral trade between the two countries has crossed $1 billion and it shows what kind of potential we have. Key gauges extended losses in second half of the day to end near intraday lows as sentiments dampened after retail inflation for farm workers and rural labourers rose to 5.59 per cent and 5.94 per cent respectively in February, mainly due to higher prices of certain food items. Traders also remained on sidelines with Former finance minister Yashwant Sinha's statement that huge expenditure on welfare schemes by the Modi government has severely impacted the public finances which are currently in a mess with fiscal deficit touching abnormally high levels. Traders shrugged off the latest payroll data report stating that retirement fund body EPFO added 15.29 lakh subscribers on a net basis in January 2022, an increase of over 21 per cent compared to 12.60 lakh in December 2021. Finally, the BSE Sensex fell 571.44 points or 0.99% to 57,292.49 and the CNX Nifty was down by 169.45 points or 0.98% to 17,117.60.

 

The US markets ended lower on Monday after Federal Reserve Chair Jerome Powell sounded alarms on surging inflation and vowed tough action. Powell said inflation is much too high and pledged to take necessary steps to bring prices under control. He noted rate hikes could go from the traditional quarter-percentage-point moves to more aggressive half-basis-point increases if necessary. The comments from Powell come after the Fed raised interest rates by 25 basis points last week and signaled more rate hikes are likely in the coming months. Further, the pullback on markets also reflected profit taking, as lingering concerns about the Russia-Ukraine conflict and higher oil prices inspired some traders to cash in on last week's gains. On the sectoral front, tobacco stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Tobacco Index down by 2.7 percent. Concerns about the outlook for interest rates also weighed on housing stocks, as reflected by the 2.5 percent slump by the Philadelphia Housing Sector Index. Airline stocks also gave back ground following recent strength, resulting in a 1.4 percent dive by the NYSE Arca Airline Index. Brokerage and retail stocks also saw notable weakness on the day, while energy stocks moved sharply higher along with the price of crude oil.

 

Crude oil futures ended sharply higher on Monday on concerns over the ongoing war in Ukraine and on expectations the EU might impose a ban on Russian oil. European Union governments will consider joining the United States in a Russian oil embargo as they gather this week with US President Biden for a series of summits. The US and the UK have already announced plans to ban Russian oil. Meanwhile, an attack on Saudi oil facilities over the weekend raised concerns about crude supplies and contributed to the surge in prices. Saudi Arabia announced a temporary reduction in oil output at a facility run by energy giant Aramco on Sunday, after Yemen's Houthi rebels launched multiple cross-border attacks. Benchmark crude oil futures for April delivery rose $7.42 or 7.1 percent to settle at $112.12 a barrel on the New York Mercantile Exchange. Brent crude for May delivery added $8.29 or 7.7 percent to settle at $116.22 a barrel on London's Intercontinental Exchange.

 

Indian rupee tumbled against dollar on Monday, on account of sustained dollar demand from importers and banks amid rising crude oil prices and lacklustre trend in domestic equities. Amid intensifying Russia-Ukraine conflict, investors assessed diplomatic efforts to negotiate an end to the war. Traders were worried as latest data from the RBI, the country's foreign exchange reserves declined $9.646 billion to $622.275 billion in the week ended March 11. Adding pessimism, retail inflation for farm workers and rural labourers rose to 5.59 per cent and 5.94 per cent respectively in February, mainly due to higher prices of certain food items. On the global front, dollar edged lower versus major currencies on Monday, with investors awaiting remarks from U.S. Federal Reserve chair Jerome Powell later in the day and from other central bank policymakers this week for monetary policy clues. Finally, the rupee ended at 76.18 (Provisional), weaker by 34 paise from its previous close of 75.84 on Thursday.

 

The FIIs as per Monday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 25373.87 crore against gross selling of Rs 22254.10 crore, while in the debt segment, the gross purchase was of Rs 491.27 crore against gross sales of Rs 1244.27 crore. Besides, in the hybrid segment, the gross buying was of Rs 30.59 crore against gross selling of Rs 57.74 crore.

 

The US markets ended lower on Monday as there was no substantial progress on the Ukraine peace deal, and the EU considered a possible energy embargo against Russia. Asian markets are trading mixed on Tuesday following weakness on Wall Street overnight. Indian markets fell amid choppy trade on Monday as investors returned to trade after a long weekend. Losses in financial, IT and oil & gas shares pulled the headline indices lower. Today, the markets are likely to make cautious start as global sentiment remains subdued amid a sharp rally in oil prices again. Investors will continue to watch out for developments on the Russia-Ukraine conflict. However, some support may come with Reserve Bank Governor Shaktikanta Das' statement that the RBI will continue to ensure adequate liquidity to support the economy, which is facing many headwinds in the form of soaring crude oil and key commodity prices following the Russian invasion of Ukraine. Meanwhile, Petroleum Minister Hardeep Singh Puri said India buying more volumes of crude oil from Russia is still less than 1 per cent of the total oil imports while the volumes from the US will rise significantly. There will be some buzz in advertising industry stocks as a joint report by industry body Ficci and consultancy firm EY stated that the Indian advertising sector is expected to grow with a CAGR of 12 per cent and should reach Rs 1 lakh crore revenue by 2024. Aviation industry stocks will be in limelight as domestic air traffic rose 20 per cent sequentially to 7.69 million in February, up from 6.4 million in January. Airlines saw a sharp rebound in traffic with the decline of Covid cases and easing of restrictions. This was reflected in a jump in passenger load factors registered in February. There will be some reaction in insurance companies stocks with a private report that the government is soon likely to announce a plan to strengthen state-run general insurance firms, including details of the capital infusion of about Rs 5,000 crore that it has already approved. E-commerce industry stocks will be in focus as Commerce and Industry Minister Piyush Goyal has said that several ministries, which are related to e-commerce, are deliberating on the e-commerce policy draft and it will be put out in the public domain after discussions. Besides, a private report stated that domestic state fuel retailers will raise petrol and diesel pump prices by 0.8 rupees ($0.0105) per litre from Tuesday, the first increase since November.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,117.60

17,024.89

17,281.84

BSE Sensex

57,292.49

56,971.73

57,870.60

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ITC

279.75

244.50

242.95

246.90

Oil & Natural Gas Corporation

206.14

172.20

170.00

174.70

Coal India

202.71

182.35

177.79

186.64

State Bank of India

190.64

490.25

485.50

498.50

Tata Motors

182.70

427.70

424.44

433.64

 

  • Maruti Suzuki India's parent organization -- SMC has signed MoU with the State of Gujarat, India to invest around 150 billion yen for local manufacturing of BEV and BEV batteries.
  • Tata Motors has launched the much-awaited ALTROZ Dual Clutch Automatic at an attractive starting price of Rs 8.1 lakh. 
  • State Bank of India is all set to place 12 non-performing assets for sale to recover loan dues worth over Rs 820 crore. 
  • Tata Steel has planned to extend its support to the Professional Golf Tour of India, as an umbrella partner for three more years starting from the 2022 season.
News Analysis