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NSE Intra-day chart (07 October 2022)
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Market Commentary 10 October 2022
Benchmarks likely to make gap-down amid global sell-off

 

In a volatile trade, Indian Benchmark indices erased most of their initial losses and ended flat with negative bias on Friday weighed by Oil & Gas and Energy stocks amid a weak trend in global equity markets. Markets made negative start and stayed in red for whole day as traders were concerned as the World Bank projected a growth rate of 6.5 per cent for the Indian economy for the fiscal year 2022-23, a drop of one per cent from its previous June 2022 projections, citing deteriorating international environment. It added that private investment growth is likely to be dampened by heightened uncertainty and higher financing costs. Some anxiety also came with a private report stated that India's rupee will trade near its record low against the mighty greenback beyond this year, buffeted by rising oil prices and an aggressive U.S. Federal Reserve rate-hiking campaign. However, key gauges managed to trim most of their initial losses in late afternoon deals, as traders took some support with Chief economic adviser V Anantha Nageswaran's statement that India is still on course for 7% growth in the current fiscal year although downside risks dominate the upside risk but it's better placed than other countries. Some support also came as the Department of Expenditure, Ministry of Finance, has released the 7th monthly instalment of Post Devolution Revenue Deficit (PDRD) grant of Rs 7,183.42 crore to 14 states. With the release of seventh instalment for the month of October, 2022, the total amount of Revenue Deficit Grants released to the states in current fiscal has gone up to Rs 50,282.92 crore. Besides, as per provisional data available on the NSE, foreign institutional investors (FIIs) remained net buyers to the tune of Rs 279.01 crore on October 6. Finally, the BSE Sensex fell 30.81 points or 0.05% to 58,191.29 and the CNX Nifty was down by 17.15 points or 0.01% to 17,314.65.

 

The US markets ended deeply in red on Friday, with Nasdaq settling around cut of four percent, following the release of the Labor Department's closely watched monthly jobs report, which failed to ease concerns about the outlook for interest rates. The report showed US job growth slowed in the month of September but still came in slightly stronger than street had anticipated. The report showed non-farm payroll employment jumped by 263,000 jobs in September after surging by an unrevised 315,000 jobs in August and spiking by an upwardly revised 537,000 jobs in July. Street had expected employment to leap by 250,000 jobs. The slightly stronger than expected job growth reflected notable increases in employment in the leisure and hospitality and healthcare sectors, which added 83,000 jobs and 75,400 jobs, respectively. Street noted the job growth was even stronger excluding a drop in state and local government education payrolls, which reflected shifting seasonal patterns in teacher hiring. Besides, a sales warning from Advanced Micro Devices (AMD) also weighed on the markets, with the chipmaker plummeting by 13.9 percent. On the sectoral front, semiconductor stocks helped lead the markets lower following the warning from AMD, dragging the Philadelphia Semiconductor Index down by 6.1 percent. The warning also contributed to considerable weakness among computer hardware stocks, resulting in a 4.2 percent plunge by the NYSE Arca Computer Hardware Index. Substantial weakness was also visible among gold stocks, as reflected by the 4.6 percent nosedive by the NYSE Arca Gold Bugs Index. The sell-off by gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery falling $11.50 to $1,709.30 an ounce.

 

Crude oil futures ended sharply higher on Friday, carried higher again by an OPEC+ decision this week to make its largest supply cut since 2020.  The cut from the Organization of Petroleum Exporting Countries and allies including Russia, known as OPEC+, comes ahead of a European Union embargo on Russian oil and will squeeze supply in an already tight market. Besides, oil prices kept rallying even as the dollar moved higher after data showing the US economy was creating jobs at a strong pace gave the Federal Reserve a reason to continue hefty interest rate hikes. A strong dollar can pressure oil demand, making crude more expensive for other currency holders. Benchmark crude oil futures for November delivery rose $4.19 or 4.7 percent at $92.64 a barrel on the New York Mercantile Exchange. Brent crude for December delivery surged $3.5 or about 3.71 percent to settle at $97.92 a barrel on London's Intercontinental Exchange.

 

Indian rupee closed at all-time low against dollar on Friday amid firm American currency, rising crude oil prices and negative trend in domestic equities. Sentiments were downbeat as World Bank in its latest report on South Asia Economic Focus has downgraded India's economic growth forecast to 6.5 per cent for the fiscal year 2022-23 (FY23), a drop of one per cent from its previous June 2022 projections, citing deteriorating international environment. Meanwhile, RBI issues concept paper on digital currency; says will soon launch pilot e-rupee for specific use cases soon. On the global front, dollar retreated on Friday, ahead of a key employment report later that could offer a litmus test of the strength of the U.S. economic recovery, but with the Federal Reserve's commitment to fighting inflation, strategists believe any weakness won't last. Finally, the rupee ended at 82.30 (Provisional), weaker by 13 paisa from its previous close of 82.17 on Thursday.

 

The FIIs as per Friday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 9664.32 crore against gross selling of Rs 8915.03 crore, while in the debt segment, the gross purchase was of Rs 223.84 crore against gross selling of Rs 251.82 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.21 crore against gross selling of Rs 21.11 crore.

 

The US markets ended sharply lower on Friday following a solid jobs report for September that increased the likelihood the Federal Reserve will barrel ahead with an interest rate hiking campaign many investors fear will push the U.S. economy into a recession. Asian markets are trading in red on Monday after a surprise drop in US unemployment quashed any thought of a pivot on policy tightening ahead of a reading on inflation which is expected to see core prices move higher again. Indian markets ended on a flat note in the highly volatile session on October 7, as investors remain concerned amid the rupee hit fresh high. Today, markets are likely to get gap-down opening of new week amid sell-off in global markets. There will be some cautiousness as the Reserve Bank of India's (RBI) weekly statistical supplement showed that India's foreign exchange reserves fell to $532.66 billion in the week through Sept. 30, their lowest level since July 2020. Traders may take note of Union Finance Secretary T V Somanathan's statement that India has a nano demographic window to achieve developed country status, and if it misses, it may not reach there. He said the country has to grow at a rate of 8-8.5 per cent to reach developed country status. However, some respite may come later in the day as Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal said India will perhaps emerge as the strongest major economy with 7 per cent growth rate in FY23 amid fears of the world slipping into recession. Sanyal observed that India can grow at 9 per cent in an external conducive environment like in early 2000s when the global economy was growing. Some support may also come as the tax department said the gross collection of tax on corporate and individual earnings jumped nearly 24 per cent so far in the current fiscal year to Rs 8.98 trillion. This includes a 32 per cent growth in personal income tax (including Securities Transaction Tax) mop up and 16.73 per cent increase in corporate tax revenues over the same period last year. Meanwhile, the government on October 10, 2022 will kick off its annual Budget making exercise for financial year 2023-24, that is expected to look at measures to revive growth amid a gloomy global outlook. Metal stocks will be in focus with a private report stating that India's crude steel output rose by 2.56 per cent to 30.06 million tonne (MT) during the July-September period of the ongoing financial year. There will be some reaction in oil industry stocks as the government data showed that India's monthly fuel demand in September was at the lowest since November 2021. Total monthly fuel demand in September fell 3.6% from August, although it was up 8.1% when compared with September 2021. Road and infrastructure industry stocks will be in limelight as government report stated that the road transport and highways sector has the maximum number of delayed projects at 248, followed by railways at 116 and petroleum sector at 88. Meanwhile, IT major Tata Consultancy Services will kick off the Q2 earnings today.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,314.65

17,241.95

17,362.35

BSE Sensex

58,191.29

57,938.52

58,356.71

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

360.80

103.20

102.24

103.84

Coal India

146.41

231.20

228.15

233.90

Oil & Natural Gas Corporation

135.32

134.00

132.05

135.10

State Bank of India

110.65

531.00

526.50

535.55

Power Grid Corporation of India

107.12

209.30

205.61

211.36

 

  • NTPC and GE Gas Power have signed MoU for feasibility to demonstrate of hydrogen co-firing blended with natural gas in GE's 9E gas turbines installed at NTPC's Kawas combined-cycle gas power plant in Gujarat.  
  • HCL Technologies and Google Cloud have expanded their long-standing partnership, with new capabilities and service offerings to expedite enterprise migration to Google Cloud. 
  • Maruti Suzuki India has expanded its subscribe program to cover 5 new cities. 
  • Titan Company has witnessed healthy double-digit growth across most businesses with overall sales growing 18% Year-on- Year.
News Analysis