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NSE Intra-day chart (09 November 2022)
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Market Commentary 10 November 2022
Benchmarks likely to make negative start amid weak global cues

 

Indian equity benchmarks remained volatile and ended marginally lower on Wednesday. Selling pressure was seen across all major sectors except banking and FMCG stocks.  Key gauges made positive start, as traders took some support with Foreign Minister Subrahmanyam Jaishankar's statement that India will continue buying Russian oil as it is advantageous for the country.  He added it is government's fundamental obligation to ensure that the Indian consumer has the best possible access on most advantageous terms to international (oil and gas) markets. Some support also came in with latest quarterly survey on Indian manufacturing sector by FICCI stated that the growth momentum in India's manufacturing sector is likely to have picked up in the September quarter and may sustain for the next six to nine months over rising capacity utilization. The survey shows 61 per cent respondents reporting higher production level in September quarter compared to the same period a year ago as against 55 per cent respondents reporting higher output in June quarter of FY23.  However, benchmark indices reversed their gains and slipped into red terrain in morning deals, as traders turned cautious with Chief Economic Advisor V Anantha Nageswaran's statement that India's gross domestic product (GDP) growth for the current fiscal year (FY23) is now expected to be between 6.5 and 7 per cent. This was for the first time a government official said real economic growth may not exceed 7 per cent this fiscal year.  Since the April-June GDP print, a number of agencies, including the International Monetary Fund (IMF) and the Reserve Bank of India, have lowered their GDP forecast for India on the back of uneven pick-up in demand and global headwinds caused by the war in Europe. Sentiments remained weak with private report stating that hiring activity declined 6 per cent year-on-year in October as recruiters adopted a cautious approach in adding new workforce. Meanwhile, amid a slowdown in outbound shipments from India, Commerce and industry minister Piyush Goyal asked exporters to make temporary changes in their pricing structure in order to retain the export market. But, an appreciation in the rupee against the US dollar and unabated foreign capital inflows helped the indices restrict the losses.  Finally, the BSE Sensex fell 151.60 points or 0.25% to 61,033.55 and the CNX Nifty was down by 45.80 points or 0.25% to 18,157.00.

 

The US markets ended lower on Wednesday as traders cashed in on recent strength in the markets amid lingering uncertainty about the results of the US midterm elections. Control of both houses of Congress remains up for grabs following yesterday's elections, although Republicans are projected to earn a narrow majority in the House. The performance by Republicans was not as strong as many had expected, with many candidates backed by former President Donald Trump underperforming. It remains unclear which party will have a majority in the Senate, as key races in Georgia, Nevada and Arizona currently remain undecided. Traders were also moving money out of stocks ahead of tomorrow's highly anticipated report on consumer price inflation, which could have a significant impact on the outlook for interest rates. A slump by shares of Disney (DIS) also weighed on Wall Street, with the entertainment giant plunging by 13.2 percent to its lowest closing level in over two years. The steep drop by Disney came after the company reported fiscal fourth quarter results that missed street estimates on both the top and bottom lines. On the sectoral front, a steep drop by the price of crude oil contributed to substantial weakness among energy stocks, with crude for December delivery plunging $3.08 to $85.83 a barrel following a report showing a much bigger than expected weekly increase in US crude oil inventories. Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 5.6 percent, the NYSE Arca Oil Index dove by 4.4 and the NYSE Arca Natural Gas Index tumbled by 4.3 percent.

 

Crude oil futures ended deeply lower on Wednesday, magnifying their previous session's losses, weighed down by official data showing a jump in crude stockpiles in the week ended November 4th. Data released by US Energy Information Administration (EIA) showed crude stockpiles surged 3.9 million barrels last week to 440.8 million barrels. Further, a stronger US dollar also weighed on crude oil prices. The dollar surged higher against most of its major rivals with, traders looking ahead to the crucial US consumer price inflation data due on Thursday. Benchmark crude oil futures for December delivery fell $3.08 or about 3.5 percent at $85.83 a barrel on the New York Mercantile Exchange. Brent crude for January delivery dropped $2.71 or about 2.8 percent to settle at $92.65 a barrel on London's Intercontinental Exchange.    

 

Indian rupee strengthened against the dollar on Wednesday as persistent foreign capital inflows and fall in crude oil prices strengthened investor sentiment. Traders got some encouragement, as the growth momentum in India's manufacturing sector is likely to have picked up in the September quarter and may sustain for the next six to nine months over rising capacity utilisation, according to the latest quarterly survey on Indian manufacturing sector by Federation of Indian Chambers of Commerce and Industry (FICCI). The survey shows 61 per cent respondents reporting higher production level in September quarter compared to the same period a year ago as against 55 per cent respondents reporting higher output in June quarter of FY23. On the global front, dollar steadied near its weakest in two months against the euro on Wednesday as traders waited on results from U.S. elections and on inflation data this week that will guide expectations for the interest rate outlook. Finally, the rupee ended at 81.47 (Provisional), stronger by 45 paisa from its previous close of 81.92 on Monday.

 

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 9031.94 crore against gross selling of Rs 7089.93 crore, while in the debt segment, the gross purchase was of Rs 241.78 crore against gross selling of Rs 616.34 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.44 crore against gross selling of Rs 29.84 crore.

 

The US markets ended lower on Wednesday amid Republican gains in midterm elections appeared more modest than some expected, with investors also focusing on upcoming inflation data that will provide clues about the severity of future interest rate hikes. Asian markets were trading mostly lower in early deals on Thursday following negative cues from US markets overnight. Indian equity benchmarks ended lower on Wednesday led by Realty, Metal and Consumer Durables stocks. Today, markets are likely to make negative start on weak cues from global markets.  Traders may remain concerned as a private report said that India's GDP growth will slow down to 5.5 per cent in FY24 from the 6.9 per cent expected in the current fiscal 2022-23. The slowdown was attributed to slowing global growth and tightening of monetary policies. It said India will be among the lesser affected economies in the world, but made it clear that the world's fifth largest economy is not immune from global headwinds. However, some respite may come later in the day on falling crude oil prices. Traders may take some solace as the Centre amended the foreign trade policy (FTP) to enable traders to claim export benefits even if payment is settled in the rupee. So far, export incentives were available only when the trade was settled in a foreign currency. The amendments by the Directorate General of Foreign Trade (DGFT) came into force with immediate effect. The development comes against the backdrop of the mechanism to settle international trade transactions in the rupee which was unveiled by the Reserve Bank of India (RBI) in July. Given the government's push towards the internationalisation of the rupee, these policy amendments shall help ease international trade transactions in the domestic currency. Some support may also come as Union Minister of Road Transport and Highways Nitin Gadkari approved a slew of new road projects, valued at Rs 68,000 crore, in four Northeastern states to make international standard surface connectivity. There will be some buzz in TV Broadcasting related stocks as the government unveiled revised uplinking and downlinking guidelines for satellite television channels that allows Indian teleports to uplink foreign channels and scraps permission for live telecast of events. The Guidelines for Uplinking and Downlinking of Satellite Television Channels in India, 2022, which have been approved by the Union Cabinet, also makes it mandatory for television channels to telecast content in national and public interest for 30 minutes every day.  There will be some reaction in coal related stocks as the Centre said that the demand for coal in India is still to reach its peak and the dry fuel will continue to play a key role in the energy mix till 2040 and beyond. Therefore, shift from coal will not happen in foreseeable future in the country.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,157.00

18,084.20

18,263.10

BSE Sensex

61,033.55

60,810.05

61,352.13

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Coal India

403.91

256.85

253.14

261.99

Tata Steel

382.95

105.90

105.11

107.11

ITC

206.11

360.70

355.45

363.70

Adani Ports And Special Economic Zone

200.88

887.00

863.66

905.66

State Bank Of India

189.39

614.60

609.76

620.21

  •  Adani Ports and Special Economic Zone (APSEZ) has acquired a 49.38 per cent stake in Indian Oiltanking, a developer and operator of liquid storage facilities, for Rs 1,050 crore.
  •  Mahindra & Mahindra has tied up with three electric vehicle infrastructure partners -- Jio-bp, Statiq, and Charge+Zone -- to offer charging solutions for its upcoming range of passenger electric vehicles.
  •  Reliance Industries' wholly owned subsidiary -- Model Economic Township (MET City) is developing a world class Greenfield Smart City near Gurugram, Haryana.
  •  Sun Pharmaceutical Industries and SPARC have signed a licensing agreement for commercialization of benzyl alcohol and propylene glycol-free phenobarbital sodium powder for injection in United States.
News Analysis