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NSE Intra-day chart (05 October 2021)
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Market Commentary 06 October 2021
Benchmarks likely to make cautious start on Wednesday


Indian benchmark indices ended higher for the second consecutive session on Tuesday with Sensex rising as much as 400 points and Nifty 50 index moving above its important psychological level of 17,800 on the back of a broad-based buying interest. In the first half of the session, benchmarks fluctuated between gains and losses owing to weak global cues. Traders remain concerned with ICRA Ratings' report stated that total infrastructure credit by banks and NBFC-Infrastructure Finance Companies (NBFC-IFCs) remained sluggish in the first quarter of the current fiscal (Q1FY22) due to the disruptions caused by the second wave of the COVID-19 pandemic. Some pessimism also came with a survey by a private firm showed India's services sector activity eased sequentially in September as rising inflationary pressure worried producers regarding sustainability of high growth in coming months, even though loosening of pandemic restrictions supported an improvement in market conditions and overall demand. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index stood at 55.2 in September from 56.7 in August. However, markets staged a sharp recovery in second half of the session, as hopes of strong September quarter earnings, which will start with IT giant TCS and continuation of dovish monetary policy from the Reserve Bank of India lifted investors' sentiment. Traders also found support with Economic Affairs Secretary Ajay Seth's statement that India is on the path of economic recovery supported by various government reforms in the last seven years under Prime Minister Narendra Modi's leadership. Notwithstanding the COVID-19 pandemic, he said, the government continued with the reform process and many strategic reforms were announced even during pandemic. Meanwhile, the government has extended the Credit Guarantee Scheme for Subordinate Debt (CGSSD) for stressed MSMEs till March 31, 2022. The scheme was approved by the government on June 1, 2020. It was launched on June 24 the same year to provide credit facility through lending institutions to the promoters of stressed MSMEs. Finally, the BSE Sensex rose 445.56 points or 0.75% to 59,744.88 and the CNX Nifty was up by 131.05 points or 0.74% to 17,822.30.


Recouping losses of previous session, the US markets ended higher on Tuesday. The major averages all showed strong upward moves on the day. Sentiments got a boost as traders looked to pick up stocks at reduced levels following the sell-off seen on Monday. Concerns about inflation and the Federal Reserve tapering its asset purchases weighed on the markets along with an increase in treasury yields. Adding to the positive sentiment, the Institute for Supply Management released a report showing activity in the U.S. service sector unexpectedly grew at a slightly faster pace in the month of September. The ISM said its services PMI inched up to 61.9 in September from 61.7 in August, with a reading above 50 indicating growth in the service sector. Street had expected the index to edge down to 60.0. Anthony Nieves, Chair of the ISM Services Business Survey Committee said The slight uptick in the rate of expansion in the month of September continued the current period of strong growth for the services sector. He added however, ongoing challenges with labor resources, logistics, and materials are affecting the continuity of supply. A separate report released by the Commerce Department showed the U.S. trade deficit widened by much more than expected in the month of August. The Commerce Department said the trade deficit widened to $73.3 billion from a revised $70.3 billion in July. Street had expected the trade deficit to increase to $70.5 billion from the $70.1 billion originally reported for the previous month. The wider trade deficit came as the value of imports jumped by 1.4 percent to $287.0 billion, while the value of exports rose by 0.5 percent to $213.7 billion.


Crude oil futures ended higher on Tuesday, extending recent gains following the Organization of the Petroleum Exporting Countries and other major oil producers including Russia, collectively known as OPEC+, deciding to stick to their plan of gradually raising crude production. Amid rising demand for energy and surging prices, participants were hoping that the cartel will significantly increase output. However, the group has decided to stick to their earlier plan for now. Markets now look ahead to weekly oil reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). Benchmark Crude oil futures for November delivery rose $1.31 or about 1.7 percent to settle at $78.93 barrel on the New York Mercantile Exchange. Brent crude for December delivery added $1.8 or about 2.2 percent to settle at $83.11 a barrel on London's Intercontinental Exchange.


Continuing previous session's drubbing, Indian rupee ended significantly lower against dollar as crude prices shot up to a seven-year high and on firming up the dollar index. This is the second consecutive session when the rupee traded lower against dollar. Traders were worried as rise in bond yields will make the monetary policy committee's (MPC) policy decisions trickier. The six-member committee, headed by Reserve Bank of India governor Shaktikanta Das, is meeting for three days to decide on rates. The central bank has kept rates low even before the pandemic started, but rising yields make its objective of supporting growth difficult. However, the central bank also gave a signal about its comfort with higher rates by allowing the cut-off at the seven-day reverse repo at 3.99 per cent, the same as the repo rate. On the global front, dollar edged back toward a one-year high versus major peers on Tuesday ahead of a key payrolls report at the end of the week that could boost the case for the Federal Reserve to start tapering stimulus as soon as next month. Finally, the rupee ended 74.44, weaker by 13 paise from its previous close of 74.31 on Monday.


The FIIs as per Tuesday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 17174.04 crore against gross selling of Rs 13941.94 crore, while in the debt segment, the gross purchase was of Rs 724.97 crore with gross sales of Rs 564.72 crore. Besides, in the hybrid segment, the gross buying was of Rs 16.24 crore against gross selling of Rs 30.07 crore.


The US markets closed higher on Tuesday as Microsoft and Apple spearheaded a strong rebound in growth stocks. Asian markets are trading mixed on Wednesday following an overnight bounce on Wall Street. Indian markets started flat but gained momentum later and ended nearly a percent higher for the second straight session on Tuesday on buying in power and oil & gas stocks. Today, the markets are likely to get a cautious start amid weakness in other Asian markets despite overnight gains on Wall Street. The Reserve Bank of India's three-day policy meeting, which is set to begin later today, will be on investor radar. Market participants do not expect the monetary policy committee to change its accommodative stance or the repo rate. There will be some cautiousness after the Bombay Chamber of Commerce and Industry's survey found that an overwhelming number of exporters are worried about competitiveness as global trade picks up pace after the ravages of the pandemic. Besides, foreign institutional investors (FIIs) offloaded shares worth Rs 1,915.08 crore, while domestic institutional investors (DIIs) lapped up shares worth Rs 1,868.23 crore on a net basis in the Indian stock market. Though, some support may come as Moody's Investors Service changed its outlook on India's sovereign ratings to stable from negative. However, it retained the ratings, both on foreign and domestic currencies, at the lowest investment grade. Experts said this would have a beneficial impact on debt allocations by foreign portfolio investors (FPIs) to Indian papers. There will be some buzz in the oil & gas industry stocks with a substantial increase in the offing in coming days as international oil prices touched seven-year high. Road logistic sector stocks will be in focus as ICRA Ratings said the outlook for the Indian road logistics sector continues to remain stable, supported by improved economic recovery in September quarter, increased pace of vaccination and decline in fresh COVID-19 cases from June onwards. There will be some reaction in coal industry stocks as the government said it has amended rules with a view to allow 50 per cent sale of coal from captive mines. The move is likely to benefit over 100 captive coal and lignite blocks with over 500 million tonnes per annum peak rated capacity as well as all coal and lignite bearing states. Real estate industry stocks will be in limelight with a private report that housing sales across Mumbai Metropolitan Region (MMR) during the January-August period have risen more than three times to Rs 1.33 lakh crore.


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



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  • Tata Motors' wholly owned subsidiary -- JLR has started deliveries of the new performance SUV Jaguar F-PACE SVR in India. 
  • Coal India has supplied 117.6 MT of coal to power utilities during Q2FY22, the highest for Q2 of any year, posting 12.3 per cent growth.  
  • M&M has introduced two new variants of XUV700 i.e. AX7 Luxury - MT (7-Seater) and AX7 Luxury - AT + AWD (7-Seater).   
  • HDFC Bank's advances aggregated to approximately Rs 11,985 billion in Q2FY22, a growth of around 15.4% over Rs 10,383 billion as of September 30, 2020.
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