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NSE Intra-day chart (02 February 2024)
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Market Commentary 05 February 2024
Benchmarks likely to open in red on Monday

Indian equity benchmarks ended with gains of over half percent on Friday helped by buying in Oil & Gas, Energy and Metal stocks. Strength in overseas peers also aided the sentiment. Markets made a positive start and traded in green for whole day, as sentiments got a boost with Commerce and Industry Minister Piyush Goyal's statement that India has sustained its export growth notwithstanding the global challenges emerging due to issues like the Israel-Hamas war and the Budget has laid out a strong foundation to push the economic growth. Traders got support as the government's gross tax revenue is projected to grow 11.46 per cent to Rs 38.31 trillion in the next fiscal (FY25), buoyed by 11.6 per cent growth in Goods and Services Tax (GST) collections. GST collection in 2024-25 is estimated to rise to Rs 10.68 trillion, an increase of Rs 1.1 trillion or 11.6 per cent. However, markets cut some gains in afternoon deals but managed to end the session in green as some optimism remained among traders with Managing Director of International Monetary Fund (IMF) Kristalina Georgieva's statement that the economic success of India is grounded in the pursuit of reforms over the last years and exuded confidence that it would achieve its goal of being a developed nation by 2047 by staying the course. Some support also came in as the government has targeted a fiscal deficit of 5.1 percent of the GDP for 2024-25. In absolute terms, the fiscal deficit for 2024-25 is seen at Rs 16.85 lakh crore, with the number for 2023-24 lowered to Rs 17.35 lakh crore from the budget estimate of Rs 17.87 lakh crore. Meanwhile, Central Board of Direct Taxes (CBDT) chief Nitin Gupta said that the income tax department has garnered about Rs 4,600 crore in taxes from 56 lakh updated I-T returns filed by taxpayers in the past two years. Finally, the BSE Sensex rose 440.33 points or 0.61% to 72,085.63 and the CNX Nifty was up by 156.35 points or 0.72% to 21,853.80.

Magnifying their previous session's gains, the US markets ended higher on Friday amid a positive reaction to earnings news from Facebook parent Meta Platforms (META) and online retail giant Amazon (AMZN). Shares of Meta are soared by 20.3 percent after the company reported better than expected fourth quarter results, announced its first-ever quarterly dividend and authorized a $50 billion share buyback. Amazon also spiked by 7.9 percent after reporting fourth quarter results that exceeded analyst estimates on both the top and bottom lines. On the sectoral front, retail stocks saw substantial strength on the day, with the strong jobs data generating optimism about the outlook for consumer spending. Considerable strength was also visible among brokerage stocks, as reflected by the 1.9 percent gain posted by the NYSE Arca Broker/Dealer Index. On the data front, a closely watched report from the Labor Department showed much stronger than expected job growth in the month of January. The Labor Department said non-farm payroll employment spiked by 353,000 jobs in January compared to street estimates for an increase of about 180,000 jobs. The report also showed significantly stronger than previously reported job growth in December, with employment surging by 333,000 jobs during the month compared to the jump of 216,000 jobs that had been reported. The Labor Department also said the unemployment rate in January came in unchanged from the previous month at 3.7 percent. Street had expected the unemployment rate to inch up to 3.8 percent.

Crude oil futures extend their previous session's losses and settled sharply lower on Friday as hopes of an early rate cut by the Federal Reserve faded after data showed a much bigger than expected increase in U.S. non-farm payroll employment in the month of January. Fading rate cut hopes outweighed OPEC+ group's decision to leave its production policy unchanged. Moreover, worries about economic slowdown in China weighed on oil prices. The International Monetary Fund has forecast that China's economic growth would slow to 4.6% in 2024 and decline further to about 3.5% in 2028. Also, the dollar's sharp uptick after the jobs data, weighed on oil prices. Benchmark crude oil futures for March delivery dropped $1.54 or about 2.1% to settle at $72.28 a barrel on the New York Mercantile Exchange. Brent crude for March delivery fell $1.49 or about 1.9% to $77.21 per barrel on London's Intercontinental Exchange.  

Indian rupee ended higher against the U.S. dollar on Friday supported by a firm trend in domestic equities and a weak greenback against major currencies overseas amid rising appetite for riskier assets. Traders got support as the government's gross tax revenue is projected to grow 11.46 per cent to Rs 38.31 trillion in the next fiscal (FY25), buoyed by 11.6 per cent growth in Goods and Services Tax (GST) collections. GST collection in 2024-25 is estimated to rise to Rs 10.68 trillion, an increase of Rs 1.1 trillion or 11.6 per cent. On the global front, dollar index was set for its first weekly fall this year, hurt by lower U.S. bond yields on the back of banking sector jitters, as traders awaited U.S. jobs data due later on Friday for clues on when the Federal Reserve could begin easing rates. Finally, the rupee ended at 82.92 (Provisional), stronger by 6 paise from its previous close of 82.98 on Thursday.

The FIIs as per Friday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 19033.66 crore against gross selling of Rs 18721.02 crore, while in the debt segment, the gross purchase was of Rs 2951.11 crore with gross sales of Rs 683.53 crore. Besides, in the hybrid segment, the gross buying was of Rs 30.89 crore against gross selling of Rs 20.93 crore.

The US markets ended higher on Friday as strong earnings and a blowout January employment report boosted confidence in the economy, even while lowering the likelihood that the Federal Reserve will cut interest rates any time soon. Asian markets are trading mixed on Monday as investors awaited policy decisions from key central banks, including from the Reserve Bank of Australia on February 06. Indian markets surged on Friday a day after the presentation of the interim Budget 2024, aided by the positive global sentiment. Today, markets are likely to get negative start amid escalation in the Red Sea crisis, and concerns over delayed rate cut by the US Federal Reserve. With militant attacks on commercial ships in the Red Sea getting more frequent, the Indian shipping is all set to bleed as its vessels now circumnavigate Africa through the Cape of Good Hope to reach the country. The transit time between northwest Europe to Asia has increased from 16 days to 32 days, incurring an additional cost of around $1 million per voyage.  The Reserve Bank of India's (RBI) policy outcome on February 08 remains the key economic event for the week. Investors will be looking ahead to the Services PMI data to be out later in the day for cues. However, foreign fund inflows likely to aid sentiments. Foreign institutional investors (FIIs) net bought shares worth Rs 70.69 crore on February 2, provisional data from the NSE showed. Some support will come as the Reserve Bank of India (RBI) said India's forex reserves increased $591 million to $616.733 billion for the week ended January 26. In the previous reporting week, the overall reserves had dropped $2.795 billion to $616.143 billion. Traders may take note of CRISIL's latest report that the Indian economy is expected to grow at an average rate of 6.7% per annum until the end of the decade. The economy will grow at this rate between the financial years 2024 to 2031, a notch above the pre-pandemic average of 6.6%. According to CRISIL, the key contributor to this trend will be capital. Meanwhile, Finance Minister Nirmala Sitharaman said global ratings agencies should view India's reforms as a whole and that macroeconomic stability had been maintained. The Indian government has been in a running battle with global ratings agencies S&P Global Ratings, Moody's Investors Services, and Fitch Ratings as it thinks the sovereign rating assigned to the country is not a fair reflection of its economic strength. There will be some reaction in infrastructure industry stocks as Secretary Anurag Jain said the Ministry of Road Transport and Highways (MoRTH) aims to create a national record by constructing 13,813 km of highways in the current financial year. Jain said the ministry aims to eliminate less than two-lane national highways by 2027-28. Investors will be keeping close eye on earnings of many companies to be out later in the day for more directional cues.

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  • NTPC has received an approval from the Department of Investment and Public Asset Management to list its green energy arm NTPC Green Energy to raise up to Rs 10,000 crore.
  • Adani Ports and Special Economic Zone has handled 35.1 MMT of cargo volumes in January 2024 implying a robust 26% Y-o-Y increase.
  • Eicher Motors' motorcycle arm -- Royal Enfield has reported growth in its total vehicle sales of 2 per cent year-on year to 76,187 units in January 2024.
  • Adani Enterprises has reported over 2-fold jump in its consolidated net profit at Rs 1,972.75 crore for Q3FY24 as compared to Rs 739.88 crore for the same quarter in the previous year.

News Analysis