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NSE Intra-day chart (10 October 2022)
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Market Commentary 11 October 2022
Benchmarks likely to get cautious start on weak global cues

 

Indian equity markets pared most of their losses but ended in negative territory on Monday tracking weakness in the global market. Markets started the week with nearly half a percent cut, as traders were anxious 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. Sentiments remained downbeat as private report projected a sharp moderation in India's growth rate for FY24 to 5.2 percent as compared to FY23, saying Indian policymakers are 'misplaced' about their optimism on the country's growth prospects. Traders took 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, markets managed to trim most of their losses in late afternoon deals, taking support from Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal's statement that 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. Some support also came after the Central Board of Direct Taxes (CBDT) has said that gross collection of tax on corporate and individual earnings jumped nearly 24 percent so far in the current fiscal year that started on April 1, 2022. Besides, after withdrawing over Rs 7,600 crore last month, foreign investors have resumed buying Indian stocks and have invested more than Rs 2,400 crore in the domestic equity markets in the first week of October. But, key gauges ended lower amid reports that exporters are keeping their fingers crossed due to visible recessionary trends in the European Union (EU) as it could affect demand for domestic goods in that market in the coming months. Finally, the BSE Sensex fell 200.18 points or 0.34% to 57,991.11 and the CNX Nifty was down by 73.65 points or 0.43% to 17,241.00.

 

The US markets ended in red on Monday as worries about interest rate hikes and slowing growth continued to weigh on sentiment.  Further, the declines also came as private report warned that the US would likely fall into a recession in 2023, and that it may not be just a mild economic contraction as some economists have projected. Investors were also cautious ahead of key earnings and inflation reports this week that will shed new light on the US economy. September Producer Price Index data comes Wednesday and Consumer Price report is scheduled for Thursday. Besides, Technology stocks dropped on Biden administration's decision to impose export controls on China. Washington published a set of export controls that limit companies selling advanced computing semiconductors and manufacturing equipment to China. Shares of Qualcomm Inc. fell more than 5 percent. Nvidia ended lower by about 4 percent, and Advanced Micro Devices shed about 1 percent. Micron Technology Inc. shares drifted down 2.89 percent. Microsoft and Intel both shed more than 2 percent. Salesforce.com, Walt Disney and Chevron also ended sharply lower. However, Walgreens Boots Alliance gained nearly 5 percent. Merck climbed 3.3 percent. Boeing, Amgen, 3M, McDonalds and Caterpillar posted sharp to moderate gains.

 

Crude oil futures ended lower on Monday as data from China raised concerns about the outlook for energy demand outweighed uncertainty about supply. Services activity in China during September contracted for the first time in four months as COVID containment measures hit demand and business confidence. The Caixin services purchasing managers' index (PMI) fell to 49.3 from 55.0 in August. Rising tension between Washington and Beijing following the Biden administration announcing new export controls targeting Chinese companies hurt as well. Meanwhile, Chinese cities are imposing fresh lockdowns and travel restrictions after the number of new daily Covid-19 cases tripled during a weeklong holiday. Benchmark crude oil futures for November delivery fell $1.51 or 1.6 percent at $91.13 a barrel on the New York Mercantile Exchange. Brent crude for December delivery dropped $1.94 or about 1.95 percent to settle at $95.98 (Provisional) a barrel on London's Intercontinental Exchange.

 

Indian rupee ended at a fresh lifetime low against the US dollar on Monday due to elevated crude oil prices. Traders were concerned 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 failed to took support with Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal's statement that 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. On the global front, Sterling slid versus the dollar on Monday after Friday's strong U.S. labour market data supported bets the Federal Reserve will keep raising rates aggressively. Finally, the rupee ended at 82.40 (Provisional), weaker by 10 paisa from its previous close of 82.30 on Friday.

 

The FIIs as per Monday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 3411.06 crore against gross selling of Rs 7319.14 crore, while in the debt segment, the gross purchase was of Rs 3592.90 crore against gross selling of Rs 3135.95 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.77 crore against gross selling of Rs 19.03 crore.

 

The US markets ended lower on Monday after a quiet session to open a news-jammed week filled with major economic reports and corporate earnings. Asian markets are trading mostly in red on Tuesday as investors weighed the impact of new US rules on chipmaker TSMC. Indian markets ended lower for the second straight session on Monday, in tandem with a bearish trend over­seas coupled with the rupee slipping to another all-time low against the dollar amid foreign fund outflows. Today, the start of session is likely to be cautious following weakness in global peers and amid rising geopolitical tensions in Europe. Traders will be concerned with a private report that India's retail inflation accelerated to a five month high of 7.30% in September due to surging food prices, staying well above the Reserve Bank of India's (RBI) upper tolerance band for a ninth month. Some cautiousness will come as foreign institutional investors (FIIs) turned net sellers to the tune of Rs 2,139.02 crore on October 10, as per provisional data available on the NSE. However, some support may come as Prime Minister Narendra Modi said that inflation in the country is much lower than that in developed countries. He said Compared to developed countries, inflation is quite low, for example the British are witnessing the worst inflation in the last 50 years, Americans are facing highest inflation of the last 45 years, interest rates are very high... compared to those countries, the nation's inflation is low because buoyant economy, our country's economy is very vibrant. Traders may take note of report that the government is planning to launch 7-8 production-linked incentive (PLI) schemes in the next round soon in a bid to further expand the coverage across critical manufacturing sectors, stimulate economic growth and spur job creation. There will be some buzz in auto stocks as the Federation of Automobile Dealers Associations (FADA) said in a major boost to the automobile sector and in a sign of recovery, retail vehicle sales this Navratri were up 57 per cent to 539,227 units, from 342,459 units during the Covid-hit 2021-22. Overall sales were 27 per cent higher than Navratri 2020 and 16 per cent above the pre-pandemic 2019 season. Banking stocks will be in focus after the Reserve Bank of India (RBI) said that a bank loan rating by rating agencies not having lenders' names won't be considered for capital computation by banks. Such loans will have to be treated by banks as unrated and they will assign risk weights to them. There will be some reaction in insurance industry stocks as Debasish Panda, chairman, Insurance Regulatory and Development Council of India said the Indian insurance sector, which is growing at 11 per cent CAGR for the last five years, the momentum is expected to continue and could lead India to become the sixth largest market globally, from ten now. Investors will keep an eye on earnings as they look for hints of an economic downturn.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,241.00

17,110.41

17,325.86

BSE Sensex

57,991.11

57,529.53

58,288.86

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

366.41

103.15

101.70

104.05

Tata Motors

329.15

396.55

391.94

402.29

Axis Bank

141.07

778.70

756.24

789.94

Power Grid Corporation of India

126.26

209.00

207.05

211.45

Coal India

108.51

229.25

226.56

231.96

 

  • Tata Motors Group global wholesales in Q2FY23, including Jaguar Land Rover, were at 3,35,976 nos., higher by 33%, as compared to Q2FY22.
  • Power Grid Corporation of India's subsidiary -- Power Grid Bhind Guna Transmission has successfully commissioned the transmission system in Madhya Pradesh. 
  • HCL Technologies has unveiled expansion plans in Mexico at its 14-year anniversary celebration in Guadalajara.
  • Tech Mahindra has entered into a strategic partnership with Altice Labs, an innovation center of Altice Group for telecommunications industry.
News Analysis