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NSE Intra-day chart (01 November 2022)
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Market Commentary 02 November 2022
Benchmarks likely to get cautious start amid lackluster global cues

 

Indian benchmarks carried forward their northbound journey for yet another session on Tuesday aided by strong market heavyweights NTPC, Power Grid Corporation and Dr. Reddy's Lab amid positive cues in the global market. Key indices made optimistic start supported by drop in crude oil prices overnight coupled with steady foreign flows. Foreign institutional investors (FIIs) net bought shares worth Rs 4,178.61 crore on October 31, according to the provisional data available on the NSE. Traders got encouragement as production of eight infrastructure industries that comprise the core sector recovered to grow at 7.9 per cent in September - a three-month high - owing to a favourable base and double-digit growth in output of fertilisers, cement, and electricity. Some optimism also came with Chief Economic Adviser V Anantha Nageswaran's statement that India is expected to clock better growth than IMF's projections next year aided by enhanced capital formation. Recently, the International Monetary Fund (IMF) projected 6.8 per cent real growth for this year and 6.1 per cent for next year for India. However, key gauges trimmed some of their gains to come off their day's high points in early afternoon deals, as traders got anxious with data released by the Controller General of Accounts showing that the Central government's fiscal deficit widened to Rs 6.20 lakh crore in April-September, accounting for 37.3 percent of the full-year target. But, markets regained traction to end higher, taking support from private survey showing that India's factory activity expanded at a stronger pace in October as demand and output remained solid, encouraging firms to hire workers at the fastest pace in nearly three years. The Manufacturing Purchasing Managers' Index, compiled by S&P Global, rose to 55.3 in October from September's 55.1, remaining above the 50-level separating growth from contraction for a sixteenth month. Adding to the optimism, Finance Ministry said that the GST collections up 16.6 per cent to Rs 1.52 lakh crore in October. The revenue for October 2022 is second highest monthly collection, next only to the collection in April 2022 and it is for the second time the gross GST collection has crossed Rs 1.50 lakh crore mark. Finally, the BSE Sensex rose 374.76 points or 0.62% to 61,121.35 and the CNX Nifty was up by 133.20 points or 0.74% to 18,145.40.

 

The US markets ended lower on Tuesday as investors looked ahead to the Federal Reserve's monetary policy announcement, due on Wednesday. The Fed is widely expected to raise interest rates by another 75 basis points, but traders have recently expressed optimism the central bank will signal plans to slow the pace of rate hikes at upcoming meetings. Meanwhile, shares from transportation, retail, pharmaceutical and housing sectors mostly struggled for support. Apple Inc, Microsoft, Salesforce.com, United Health and Merck & Co drifted down 1.4 to 2 percent. However, Uber Technologies soared 12 percent after the company raised its fourth-quarter operating profit forecast. On the economic data front, construction spending in the US unexpectedly showed a modest increase in the month of October, according to a report released by the Commerce Department. The report said construction spending inched up by 0.2 percent to an annual rate of $1.811 trillion in September after falling by 0.6 percent to a revised rate of $1.807 trillion in August. The uptick surprised street, who had expected construction spending to decrease by 0.5 percent. Meanwhile, a report released by the Institute for Supply Management (ISM) showed a slight increase in US manufacturing activity in the month of October. The ISM said its manufacturing PMI edged down to 50.2 in October from 50.9 in September, but a reading above 50 still indicates growth in the sector. Street had expected the index to dip to 50.0.

 

Crude oil futures ended sharply higher on Tuesday on weaker dollar and reports about likely relaxation in China's Zero-Covid policy. Further, oil prices were also supported by the reduction in Organization of the Petroleum Exporting Countries (OPEC) crude output, an upward revision in oil demand forecast by the OPEC, and record US oil export data. In its monthly report, the OPEC raised its forecasts for world oil demand in the medium to longer term. It revised its previous forecast for 2023 higher by 1.4 million barrels per day, saying that the combination of a more robust recovery than previously expected and a global shift toward prioritizing energy security over an energy transition will drive this demand growth. Benchmark crude oil futures for December delivery rose $1.84 or about 2.1 percent at $88.37 a barrel on the New York Mercantile Exchange. Brent crude for January delivery surged $2.05 or about 2.21 percent to settle at $94.86 (Provisional) a barrel on London's Intercontinental Exchange.    

 

Indian Rupee ended higher against US dollar on Tuesday, on the back of selling of the American currency by exporters. Traders got encouragement as production of eight infrastructure industries that comprise the core sector recovered to grow at 7.9 per cent in September - a three-month high - owing to a favourable base and double-digit growth in output of fertilisers, cement, and electricity. Some optimism also came with Chief Economic Adviser V Anantha Nageswaran's statement that India is expected to clock better growth than IMF's projections next year aided by enhanced capital formation. Recently, the International Monetary Fund (IMF) projected 6.8 per cent real growth for this year and 6.1 per cent for next year for India. On the global front, U.S. dollar sank from a one-week high against a basket of major peers on Tuesday as the mood in financial markets brightened ahead of Federal Reserve and Bank of England (BoE) meetings this week. Finally, the rupee ended at 82.71 (Provisional), stronger by 10 paisa from its previous close of 82.81 on Monday.

 

The FIIs as per Tuesday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 12403.08 crore against gross selling of Rs 5486.67 crore, while in the debt segment, the gross purchase was of Rs 280.82 crore against gross selling of Rs 2308.14 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.79 crore against gross selling of Rs 9.06 crore.

 

The US markets ended lower on Monday after data indicating that the labour market remained on solid ground dimmed hopes the Federal Reserve might have enough reason to begin reducing the size of its interest rate hikes. Asian markets are trading mixed on Tuesday as investors brace for another likely 75 bps rate hike by the Federal Reserve. Indian markets started the new month on a strong note and also ended in the positive territory for the fourth straight session on Monday. Today, the markets are likely to get cautious start amid lackluster global cues ahead of the US Fed policy outcome later in the day. Some cautiousness will come as a private report stated that market borrowing cost for the states remained high with the average yield hitting 7.83 per cent at the auctions held on Tuesday, which is a paltry 1 basis points lower than the last auction of state securities. However, buying by FIIs likely to aid domestic sentiments. Foreign institutional investors (FIIs) have net bought shares worth Rs 2,609.94 crore on November 1, as per provisional data available on the NSE. Some support may come later in the day as the government collected Rs 1.52 trillion as goods and services tax (GST) in October, a 16.6 per cent rise year-on-year, driven by festival-related spending, higher tax rates, and better compliance. This was the second-highest monthly collection since the implementation of the indirect tax regime in July 2017. GST collection touched a record high of Rs 1.67 trillion in April. Traders may take note of latest data released by the Centre for Monitoring Indian Economy (CMIE) that after the unemployment rate fell to a four year low in September, it rose to a four month high of 7.77 per cent in October. There will be some buzz in auto stocks as a private report showed that domestic passenger vehicle (PV) sales saw a significant growth in October due to increased availability of semiconductor chips and rising consumer confidence. Aviation, oil and gas industry stocks will be in focus as the Centre increased the special additional excise duty, commonly known as windfall tax on the export of aviation turbine fuel (ATF) and diesel. The new rates will be effective November 2. However, it reduced taxes on domestically produced crude oil amid fear of slowing fuel demand as China put extensive Covid curbs. There will be some reaction in textile industry stocks as Union minister Piyush Goyal said the government is considering the second phase of the Production Linked Incentive scheme for the textile sector to help the industry compete with top exporting countries like China and Vietnam. Gold industry stocks will be in limelight as a World Gold Council (WGC) report showed that India's gold demand has reached pre-pandemic levels and has witnessed an annual growth of 14 per cent during the July-September quarter at 191.7 tonnes mainly driven by strong consumer interest. Meanwhile, Fusion Micro Finance IPO will open for bidding today (2 November), and the closing date would be 4 November. The price band for the public issue has been fixed at Rs 350-368 per share. Investors will also be eyeing the second quarter results for further cues.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,145.40

18,078.44

18,194.09

BSE Sensex

61,121.35

60,896.79

61,317.83

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

690.31

101.20

99.35

102.25

NTPC

411.01

182.00

176.01

185.46

Axis Bank

291.91

871.50

859.00

894.00

ITC

196.65

349.50

347.64

350.94

Tata Motors

173.24

421.00

415.06

424.66

 

  • Tata Steel has reported 89.66% fall in its consolidated net profit at Rs 1,297.06 crore for Q2FY23 as compared to Rs 12,547.70 crore for the same quarter in the previous year. 
  • Coal India's coal production has increased by 6.3% to 52.9 million tonnes in October 2022 as against 49.8 million tonnes in October 2021. 
  • Bajaj Auto has reported fall of 10% in total sales to 3,95,238 units in October 2022 as against 4,39,615 in the same month last year. 
  • TCS has launched TCS Managed Services for Security with SAP, building on its suite of solutions that help enterprises establish and run their SAP environments securely on Microsoft Azure.
News Analysis