Indian equity markets rebounded
from previous day's fall and settled with strong gains on Wednesday, as strong
performances from index heavyweights Tata Steel, Power Grid Corporation and HCL
Technologies boosted sentiments. The markets were negative at the beginning, as
provisional data from the NSE showed that foreign institutional investors
(FIIs) continued to be net sellers for five days in a row, selling shares worth
Rs 3,115.39 crore on January 23. However, markets soon wiped out losses and
traded higher as traders took encouragement with Union Petroleum Minister
Hardeep Puri's statement that the Indian economy is poised to touch $5 trillion
next financial year - 2024-25 - and capitalise to double to $10 trillion by the
end of this decade. Some optimism also came in as data released by the Central
Board of Direct Taxes showed that the government's direct tax-to-GDP ratio
stood at a 23-year high of 6.11% in FY23. The Centre's direct tax collections
rose 17.8% year-on-year at Rs 16.6 trillion in FY23. However, in the afternoon
deals, markets erased gains and traded marginally in red on the back of mixed
cues from Asian markets amid heightened geopolitical tensions and uncertainty
over when the Fed will cut rates. But, selling proved short-lived as markets
once again gained traction to end higher, taking support from a private report
stating that India will remain the fastest-growing major economy this year and
next, boosted by continued strong government spending. It said inflation was
unlikely to surge again. Some support also came as India's business activity
expanded at the fastest pace in four months in January on stronger demand.
HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by
S&P Global, rose to 61.0 this month, its highest since September, from
December's final reading of 58.5. Finally, the BSE Sensex rose 689.76 points or
0.98% to 71,060.31 and the CNX Nifty was up by 215.15 points or 1.01% to
21,453.95.
The US markets ended mostly higher
on Wednesday. The S&P 500 crept up to a new record closing high and the
Nasdaq reached its best closing level in over two years. Technology stocks
helped lead the way higher in early trading on markets, with shares of Netflix
(NFLX) soaring by 10.7 percent on the day. Netflix rallied after the streaming
giant reported better than expected fourth quarter revenues on stronger than
expected subscriber growth. Dutch chip equipment maker ASML (ASML) also spiked
by 8.9 percent after reporting better than expected fourth quarter results.
However, buying interest waned over the course of the session potentially
reflecting renewed interest rate concerns amid a rebound by treasury
yields. Yields moved lower early in the
session but showed a significant turnaround as the day progressed following
some upbeat U.S. economic data and a disappointing five-year note auction. On
the sectoral front, despite the pullback by the broader markets, oil service
stocks continue to see substantial strength resulting in a 3.1 percent spike by
the Philadelphia Oil Service Index. The rally by oil service stocks came as the
price of crude oil for March delivery climbing $0.72 to $75.09 a barrel
following the release of a report showing a much bigger than expected weekly
decrease in crude oil inventories. Significant strength also remained visible
among semiconductor stocks, as reflected by the 1.5 percent gain posted by the
Philadelphia Semiconductor Index. The index reached a new record closing high.
On the economic data front, continuing to signal underlying weakness in the
U.S. economy, the Conference Board released a report showing a modest decrease
by its index of leading U.S. economic indicators in the month of December. The
Conference Board said its leading economic index edged down by 0.1 percent in
December after falling by 0.5 percent in November. Street had expected the
index to decrease by 0.3 percent. The report said the lagging economic index
also dipped by 0.2 percent in December following a 0.5 percent increase in November.
Crude oil futures ended higher on
Wednesday on optimism about increased demand from China after announcement of
stimulus. In China, the People's Bank of China said it will cut the amount of
cash that banks must hold as reserves from February 5, freeing up an estimated
1 trillion yuan ($140 billion) to the market. Further, oil prices also climbed
on data showing a larger-than-expected decline in U.S. crude inventories. Data
released by U.S. Energy Information Administration (EIA) showed crude inventory
dropped by 9.2 million barrels in the week ended January 19th, more than four
times the expected declined of 2.2 million barrels. Benchmark crude oil futures
for February delivery rose $0.72 or 1 percent to settle at $75.09 a barrel on
the New York Mercantile Exchange. Brent crude for March delivery gained $0.49
or 0.6 percent to settle at $80.04 a barrel on London's Intercontinental
Exchange.
Indian rupee ended higher against
the dollar on Wednesday as positive domestic markets and a soft US dollar
supported the rupee while rising crude oil prices and foreign fund outflows capped
gains. Traders took support as data released by the Central Board of Direct
Taxes showed that the government's direct tax-to-GDP ratio stood at a 23-year
high of 6.11% in FY23. The Centre's direct tax collections rose 17.8%
year-on-year at Rs 16.6 trillion in FY23. Meanwhile, the first ever HSBC Flash
India PMI data showing that the health of the Indian private sector economy
improved substantially in January, as a sharper upturn in new work intakes
fuelled output growth. The headline HSBC Flash India Composite PMI Output Index
- a seasonally adjusted index that measures the month-on-month change in the
combined output of India's manufacturing and service sectors - was at 61.0 in
January, inside expansion territory for the thirtieth successive month. On the
global front, yen rose on Wednesday as Japanese bond yields climbed sharply on
hopes that ultra-loose monetary policy will soon end, while the dollar fell as
the euro and pound advanced. Finally, the rupee ended at 83.13 (Provisional),
stronger by 2 paise from its previous close of 83.15 on Tuesday.
The FIIs as per Wednesday's data
were net sellers in equity segment, while they were net buyers in debt segment.
In equity segment, the gross buying was of Rs 26680.79 crore against gross
selling of Rs 29387.99 crore, while in the debt segment, the gross purchase was
of Rs 1595.45 crore with gross sales of Rs 846.84 crore. Besides, in the hybrid
segment, the gross buying was of Rs 75.65 crore against gross selling of Rs
70.32 crore.
The US markets ended mostly
higher on Wednesday as Netflix surged following blowout quarterly results and a
strong report from ASML fuelled gains in chipmakers. Asian markets are trading
mixed on Thursday as investors assessed South Korea's gross domestic product
numbers and markets respond to China's central bank cutting reserve
requirements for the country's lenders. Indian markets ended volatile session
with notable gains of around a percent each on Wednesday amid buying in index
heavyweights. Today, markets are likely to get cautious start amid mixed global
cues. Investors are likely to remain on sidelines as there will be some
volatility in the markets amid the monthly expiry of the January F&O
contracts. Market participants are likely to keep close eye on earnings of the
companies to be out later in the day for more directional cues. Persistent
foreign fund outflows likely to dent sentiments. Foreign institutional
investors (FIIs) maintained selling pressure in the cash segment for six days
in a row, offloading shares worth Rs 6,934.93 crore on January 24, provisional
data from the NSE showed. Meanwhile, the Economic Research Department of the
State Bank of India (SBI) has released a comprehensive research report
forecasting the fiscal scenario for the upcoming financial years. According to
the report, the fiscal deficit for the fiscal year 2024-25 is anticipated to be
set close to 5.5 per cent of the Gross Domestic Product (GDP). However, some
respite may come later in the day as rating agency ICRA revised upwards its
projections for bank credit growth for the current financial year (FY24) to
14.9-15.3 per cent from an earlier estimate of 12.8-13.0 per cent on the back
of strong offtake in the retail segment and non-banking finance companies
(NBFCs). Anil Gupta, Senior Vice President at ICRA, said the retail credit and
bank lending to NBFCs have been strong in the nine months ended December 2023,
which has led to the revision. The incremental credit is expected to be Rs
20.4-20.9 trillion as against an earlier estimate of incremental Rs 17.5-17.8
trillion in FY24. This will be the highest ever incremental bank credit growth
and would surpass the previous high of Rs 18.2 trillion (growth of 15.4 per
cent Y-o-Y in FY23). Some support will also come as the India Meteorological
Department (IMD) expects the persisting El Nino conditions to turn neutral prior to the start of monsoon season in June. Neutral El Nino conditions imply
that it would not have an adverse impact on the monsoon rains next season. Auto
stocks will be in focus with a private report that the Passenger Vehicles (PV)
segment volumes are expected to log a record 8-10 per cent growth this fiscal
as the pent-up demand levels off amid hike in vehicle prices. There will be
some reaction coal industry stocks as the government approved an outlay of Rs
8,500 crore as financial assistance for promoting coal, lignite gasification
projects.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
21,453.95
|
21,233.31
|
21,578.46
|
BSE
Sensex
|
71,060.31
|
70,324.73
|
71,472.74
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
HDFC
Bank
|
430.02
|
1456.30
|
1404.89
|
1483.09
|
Tata
Steel
|
393.40
|
134.90
|
131.49
|
136.94
|
ICICI
Bank
|
345.79
|
998.30
|
984.65
|
1023.95
|
Power
Grid
|
283.10
|
245.70
|
238.14
|
250.14
|
NTPC
|
239.22
|
308.65
|
301.04
|
313.49
|
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