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NSE Intra-day chart (06 December 2021)
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Market Commentary 07 December 2021
Benchmarks likely to get optimistic start on firm global cues

 

Indian equity benchmarks extended losses for the second straight session and settled over one and half percent lower on Monday, as investors fretted over the spread of the Omicron variant of Covid-19 and looked ahead to the RBI's bi-monthly monetary policy meeting this week for directional cues. Domestic equities started in the red amid reports about continues foreign fund outflow. The exchange data showed that foreign portfolio investors (FPIs) remained net sellers for Rs 3356.17 crore in the Indian markets. Some concern also came with India Ratings and Research (Ind-Ra) stating that tightening of norms may increase non-banking finance companies' (NBFCs) headline non-performing advances (NPA) by around one third. However, the impact on provisioning could be modest, given NBFCs are using IND-As and generally for higher rated NBFCs, provision policy is more conservative than IRAC requirements. Key gauges have extended losses and registered fresh intra-day lows in late afternoon session. Traders took a note of report that amid the rising scare from the new coronavirus variant Omicron and ahead of the MPC meet, SBI house economists have urged the central bank to delay liquidity normalisation measures through a reverse repo hike, as such a 'prudent step' in the current situation will give more time for economic recovery to strengthen further. Traders overlooked Commerce and Industry Minister Piyush Goyal's statement that India's foreign trade is in comfortable position and the time has come for India to engage more with the world. Meanwhile, Union Minister of Micro, Small and Medium Enterprises (MSME) Narayan Rane urged Indian entrepreneurs to take advantage of closure of factories in China. He said Indian industrialists should start manufacturing the products which are no longer produced in China. Finally, the BSE Sensex fell 949.32 points or 1.65% to 56,747.14 and the CNX Nifty was down by 284.45 points or 1.65% to 16,912.25.

 

The US markets ended higher on Monday on easing concerns about the Omicron variant of the coronavirus amid indications the new strain causes milder symptoms. President Joe Biden's chief medical adviser Dr. Anthony Fauci said it is too early to make definitive statements but said early signals regarding the severity of Omicron are encouraging. Fauci also expressed optimism the Biden administration could lift travel restrictions on several African nations in a reasonable period of time. On the sectoral front, Airline stocks skyrocketed amid easing concerns about the Omicron variant, with the NYSE Arca Airline Index soaring by 5.8 percent. The index continued to rebound after hitting its lowest levels in a year last week. Substantial strength was also visible among oil service stocks, as reflected by the 3.7 percent spike by the Philadelphia Oil Service Index. The rally by oil service stocks came as the price of crude oil for January delivery surged $3.23 to $69.49 a barrel. Housing stocks also showed a significant move to the upside on the day, driving the Philadelphia Housing Sector Index up by 2.5 percent to its best closing level in almost seven months. Steel, financial and telecom stocks also saw considerable strength, moving higher along with most of the other major sectors.

 

Crude oil futures ended sharply higher on Monday with gain of around five percent as Saudi Arabia's Aramco hiked prices of its crude exported to Asia and the US and amid easing concerns about Omicron. Saudi Arabia raised official selling prices for all crude grades sold to Asia and the US by up to $0.80 from the previous month. The move suggests that Saudi is very optimistic about demand despite the spread of the Omicron variant of the coronavirus. Meanwhile, fading prospects of a rise in Iranian oil exports following the failure of US-Iranian talks on saving the 2015 Iran nuclear deal also contributed to the spike in crude oil prices. Benchmark crude oil futures for January delivery surged $3.23 or 4.9 percent to settle at $69.49 a barrel on the New York Mercantile Exchange. Brent crude for February delivery rose $3.65 or 5.3 percent to settle at $73.53 a barrel on London's Intercontinental Exchange.

 

Rupee ended substantially weaker against dollar on Monday on account of continued dollar demand from importers and banks and massive sell in domestic stocks as concerns over the new Omicron variant also continued to weigh on sentiment. Traders' mood was fragile as country's foreign exchange reserves declined by $2.713 billion to $637.687 billion in the week to November 26, RBI data showed. Investors were worried as India Ratings and Research (Ind-Ra) stated that tightening of norms may increase non-banking finance companies' (NBFCs) headline non-performing advances (NPA) by around one third. On the global front, Sterling edged higher against dollar on Monday but remained close to a 2021 low hit last week as investors awaited a speech on monetary policy and economic growth from Bank of England Deputy Governor Ben Broadbent. Finally, the rupee ended 75.45, weaker by 33 paise from its previous close of 75.12 on Friday.

 

The FIIs as per Monday's data were net seller in both equity and debt segments. In equity segment, the gross buying was of Rs 7800.55 crore against gross selling of Rs 10755.73 crore, while in the debt segment, the gross purchase was of Rs 590.86 crore with gross sales of Rs 854.68 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.03 crore against gross selling of Rs 11.19 crore.

 

The US markets ended higher on Monday as investors shake off Omicron worries, that its risk might not be as bad as feared. Asian markets are trading mostly in green on Tuesday as Wall Street rallied on optimism that the omicron variant risk might not be as bad as feared. Indian markets saw another big sell-off on Monday as the Omicron-induced volatility accelerated selling by foreign portfolio investors (FPIs). Today, Sensex and Nifty likely to start the session on a positive note tracking gains across global markets. Traders will be taking encouragement with a private report that Indian economy is showing strong signs of recovery from the devastation caused by the pandemic, with an upswing being reported in 19 out of the 22 economic indicators as compared to the pre-Covid levels. High-frequency indicators (HFIs) are being monitored to track the progress of economic recovery in India since the first COVID-19 case was reported in the country in January 2020. Some support will come as new research from the US India Strategic Partnership Forum (USISPF) and digital currency exchange CrossTower has said web 3.0, the idea that the next iteration of the Internet which will be built on concepts of decentralisation, openness, and greater user utility, can help India contribute an additional $1.1 trillion of economic growth to its GDP over the next 11 years. Traders may take note of Minister of State for Finance Pankaj Chaudhary's statement that India currently has the fourth largest foreign exchange reserves in the world. However, traders may be concerned with report that two more cases of the Omicron variant were detected in Mumbai on Monday, taking the state's tally to 10. This has also pushed the overall number of Omicron cases in India to 23. Some cautiousness may come with a private report that the continued effects of the COVID-19 pandemic and concerns about future public health crises remain top-of-mind for Indian business leaders for the second consecutive year. There will be some buzz in the fertilizer industry stocks with Crisil's report that the Centre's fertiliser subsidy bill is set to soar by 62 per cent over the budgeted amount to Rs 1.3 lakh crore this fiscal due to the massive rise in raw material prices despite lower demand. Power and coal industry stocks will be in focus as Union minister Pralhad Joshi said there is no shortage of coal in the country. There will be some reaction in aviation industy stocks as Minister of State for Civil Aviation V K Singh said the airlines and airports in India incurred an estimated loss of Rs 19,564 crore and Rs 5,116 crore, respectively, in 2020-21 due to severe disruption caused by the COVID-19 pandemic. Infrastructure industry stocks will be in limelight with report that as many as 144 central infrastructure projects have reported delays (single and multiple) in its completion in the current financial year and the total cost overrun of these is Rs 14,960.02 crore. RateGain Travel Technologies is open its three-day initial public offer today. The company has fixed a price band of Rs 405-425 per share and hopes to garner close to Rs 1,336 crore at the upper price band of the offer.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,912.25

16,797.05

17,122.10

BSE Sensex

56,747.14

56,362.68

57,456.52

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Coal India

241.85

148.75

147.09

151.44

ICICI Bank

201.29

708.95

702.04

721.34

Tata Motors

174.73

467.95

462.34

477.24

State Bank of India

143.53

464.95

460.16

473.36

JSW Steel

136.99

641.65

631.94

656.19

 

  • SBI has invited bids from asset reconstruction companies, and other financial institutions to sell an NPA account KSK Mahanadi Power Company, with a total outstanding against the company standing over Rs 4,100 crore. 
  • Coal India's subsidiary -- Mahanadi Coalfields is planning to set up a 50-MW solar power plant in Odisha's Sambalpur district at a cost of Rs 301.92 crore as part of its goal to achieve carbon neutrality by 2024. 
  • Hero Motocorp has launched the Harley-Davidson Sportster S at India Bike Week 2021. 
  • In a bid to support the Start-Ups operating in identified focus areas, GAIL (India) is planning to invest in such companies through its Start-Up initiative Pankh.
News Analysis