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NSE Intra-day chart (02 November 2022)
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Market Commentary 03 November 2022
Benchmarks likely to make gap-down opening amid weak global cues

 

Indian equity benchmarks snapped their four-session gaining streak and ended lower on Wednesday weighed by selling in Telecom, Realty and TECK stocks. Investors also remained cautious ahead of the outcome of US Federal Reserve's rate announcement and guidance on future rate hikes due later in the day. After a positive beginning, key gauges failed to hold on to the gains and traded dull for whole day, as traders got anxious with 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. Some concern also came with 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. Sentiments remained weak in late afternoon deals, amid a private report stating that India's fast-depleting foreign exchange reserves are likely to drop more than was predicted just a month ago by end-2022 as the Reserve Bank of India will continue to shield the rupee from the dollar's strength. However, losses remain capped as some support came with provisional data available on the NSE showed that foreign institutional investors (FIIs) have net bought shares worth Rs 2,609.94 crore on November 1, 2022. Meanwhile, Finance Minister Nirmala Sitharaman said India will press for collective efforts to deal with the spillovers of happenings in advanced economies as well as global regulation of crypto assets to check terror funding under its G20 presidency. She outlined eight priority areas, including reforms in multilateral institutions and food and energy security, for discussion under its G20 presidency which will begin from December 1. Finally, the BSE Sensex fell 215.26 points or 0.35% to 60,906.09 and the CNX Nifty was down by 62.55 points or 0.34% to 18,082.85.

 

The US markets ended sharply lower on Wednesday as traders reacted to the Federal Reserve's monetary policy announcement and subsequent comments by Fed Chair Jerome Powell. The Fed announced its widely expected decision to raise interest rates by another 75 basis points. Citing efforts to achieve maximum employment and inflation at the rate of 2 percent over the longer run, the Fed announced its decision to raise the target range for the federal funds rate to 3.75 to 4 percent. The Fed also said that ongoing increases in rates will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. The central bank noted that future rate hikes will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. The change in the language from the Fed comes following recent reports some officials are becoming increasingly uneasy about the pace of interest rate increases and the impact on the economy. Besides, comments from Fed Chair Jerome Powell tamped down optimism about the outlook for interest rates. Powell said it is very premature to be thinking about pausing. People when they hear lags think about a pause. He added It is very premature, in my view, to think about or be talking about pausing our rate hikes. We have a ways to go. On the sectoral front, significant weakness emerged among steel stocks, as reflected by the 4.8 percent plunge by the NYSE Arca Steel Index. Retail stocks also saw considerable weakness on the day, dragging the Dow Jones U.S. Retail Index down by 3.3 percent.

 

Crude oil futures ended higher on Wednesday, magnifying their previous session's rally, after data showed declines in crude and gasoline stockpiles in the US in the week ended October 28th. Data released by the Energy Information Administration (EIA) showed crude oil inventories in the US fell by about 3.1 million barrels last week. The EIA data also said gasoline inventories dropped by 1.257 million barrels last week, as against expectations for a draw of 1.358 million barrels. Meanwhile, distillate stockpiles rose by 0.427 million barrels last week, as against forecasts for a draw of 0.56 million barrels. Benchmark crude oil futures for December delivery rose $1.63 or about 1.8 percent at $90.00 a barrel on the New York Mercantile Exchange. Brent crude for January delivery surged $1.40 or about 1.5 percent to settle at $96.05 (Provisional) a barrel on London's Intercontinental Exchange.    

 

Indian rupee tumbled against dollar on Wednesday, on account of sustained dollar demand from importers and banks. Investors maintained cautious approach 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. Besides, another private report stated that India's fast-depleting foreign exchange reserves are likely to drop more than was predicted just a month ago by end-2022 as the Reserve Bank of India will continue to shield the rupee from the dollar's strength. On the global front, Sterling edged up against the dollar on Wednesday as markets braced for policy decisions from the U.S. Federal Reserve and Bank of England on benchmark interest rates aimed at curbing soaring inflation. Finally, the rupee ended at 82.78 (Provisional), weaker by 19 paisa from its previous close of 82.59 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 12736.80 crore against gross selling of Rs 6543.59 crore, while in the debt segment, the gross purchase was of Rs 168.74 crore against gross selling of Rs 260.97 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.01 crore against gross selling of Rs 12.83 crore.

 

The US markets ended deeply in red on Wednesday after Federal Reserve Chair Jerome Powell said inflation was still too high and indicated that the central bank has more rate hiking ahead. The Fed implemented another 0.75 percentage point rate increase, and Powell said that its inflation fight was far from done. Asian markets were trading in red on Thursday after the US Federal Reserve laid the groundwork for a protracted tightening campaign that torpedoed market hopes for a pause, sank bonds and lifted the dollar. Indian equity benchmarks halted 4-day gaining streak on Wednesday ahead of Fed outcome. Today, markets are likely to make gap-down opening tracking weak global cues after the Fed announced a 75-basis-point hike in benchmark interest rates. Traders will be eyeing on Services PMI data for October and RBI Monetary Policy Committee meeting. Monetary Policy Committee meeting today to discuss failure to curb inflation. There may be some cautiousness as Shanaka Jayanath Peiris, Division Chief of Regional Studies Division, Asia Pacific Department at the IMF, said the Asia Pacific region is facing three main risks, including due to global financial tightening and a slowdown in China. Peiris also said that currencies in the region have depreciated sharply while public debt ratios have increased. However, some support may come later in the day as Saket Dalmia, president, PHD Chamber of Commerce and Industry, said the wholesale price index (WPI) inflation has softened to 10.7 per cent in September 2022 from its peak of 16.2 per cent in June 2022. Dalmia said deceleration in the WPI inflation will continue and it will have a significant impact on the price corrections in the retail inflation; CPI inflation is expected to soften below 6 per cent by December 2022. Traders may get some support as Prime Minister Narendra Modi said his government has rolled out the red carpet for investors, instead of pushing them into the web of red tape. He added building a new India is possible only with bold reforms, big infrastructure, and best talent. The government's proactive steps have led to a situation where India has been hailed as a bright spot amid the current global turmoil by experts and agencies. Traders may take note of report that Governor Shaktikanta has Das said the Reserve Bank of India wishes to concentrate on inflation in the same way as Arjuna focussed on hitting the eye of a revolving fish in the epic Mahabharata. The remarks come at a time when inflation is ruling high and RBI will soon be explaining to the government about the reasons for overshooting the inflation target for nine consecutive months. There will be some buzz in aviation stocks as Civil Aviation Minister Jyotiraditya Scindia said the country's civil aviation sector is likely to log around 400 million passengers over the next 7 to 10 years. There may be some reaction on fertilisers stocks as the government approved a subsidy of Rs 51,875 crore for phosphatic and potassic (P&K) fertilisers for second half of 2022-23 as part of efforts to provide affordable soil nutrients to farmers.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,082.85

18,028.09

18,158.19

BSE Sensex

60,906.09

60,730.43

61,145.69

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

423.36

101.15

100.30

102.50

NTPC

221.46

181.20

179.90

182.60

Oil & Natural Gas Corporation

211.17

136.50

134.84

138.69

ITC

167.81

354.00

349.59

357.34

Coal India

149.74

245.85

242.14

249.59

 

  • Tata Motors' wholly owned subsidiary -- Jaguar Land Rover has entered into a strategic partnership with Wolfspeed Inc for supply of silicon carbide semiconductors for next generation electric vehicles.
  •  Bharti Airtel has crossed the 1 million unique 5G user mark on its network.
  •  Infosys and Microsoft have completed the migration of Spark's corporate functions to Microsoft Dynamics 365.
  •  Grasim Industries has received approval to raise funds not exceeding Rs 1,000 crore through issue of NCDs on private placement basis in one or more tranches.
News Analysis