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NSE Intra-day chart (11 October 2021)
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Market Commentary 12 October 2021
Markets likely to get negative start amid weak global cues

 

Indian equity benchmarks erased most of their initial gains but managed to end Monday's session marginally in green, despite not-so-encouraging cues from the global market. After making cautious start, markets gained some traction, as traders got some support with Commerce and Industry Minister Piyush Goyal's statement that the country's exports are growing at a healthy rate and now exporters can aim for $450-500 billion of outbound shipments during the next fiscal year. He added exports have touched $197 billion during April-September this fiscal. Traders also found some support by World Bank's report that buoyed by an increase in public investment and incentives to boost manufacturing, India's economy is expected to grow by 8.3 per cent in the fiscal year 2021-22. Buying further crept in with RBI Governor Shaktikanta Das' statement that the RBI is looking for growth signs to become entrenched and show signs of durability and closely 'watchful' of evolving dynamics. He said the RBI is studying developments around inflation and growth that are dynamic and are evolving. Additional optimism also came in as foreign portfolio investors (FPIs) remained net buyers to the tune of Rs 1,997 crore so far in October as India continues to be a competitive investment destination from a long-term perspective. However, last hour profit-booking in index heavyweights including TCS, Tech Mahindra, Infosys and HCL Technologies pulled back the indices from day's high. Some cautiousness came in as former Reserve Bank Governor C Rangarajan said India becoming a $5 trillion economy by 2025 is impossible under the current circumstance and the country needs to grow at nine per cent per annum for the next five years in order to achieve that. Some anxiety also came with latest RBI data showing that Industrial loan growth, which has been decelerating during the last decade, turned negative for the first time during 2020-21 as economic activity slowed down in the aftermath of the COVID-19 pandemic. Meanwhile, in order to make retail market more competitive and boost economic growth, Union Minister for Road Transport and Highways Nitin Gadkari has emphasized on reduction of logistic costs below 10%. He further said that the government is focusing on integrated infrastructure development through the announcement of the National Infra Pipeline and Gati-Shakti programs. Finally, the BSE Sensex rose 76.72 points or 0.13% to 60,135.78 and the CNX Nifty was up by 50.75 points or 0.28% to 17,945.95.

 

The US markets settled lower on Monday as investors grew more nervous ahead of the third-quarter earnings reporting season. Supply chain problems and higher costs for energy have fueled concern about earnings, set to kick off with JPMorgan Chase & Co results on Wednesday. Further, lingering concerns about the Federal Reserve scaling back its asset purchases weighed on Wall Street, as last Friday's disappointing job report is not seen as likely to dissuade the central bank from tapering. Worries about the outlook for inflation also generated selling pressure amid a sharp increase by the price of crude oil. Crude for November delivery jumped $1.17 to $80.52 a barrel after reaching its highest intraday level since late 2014. Trading activity was somewhat subdued as some traders remained away from their desks for Columbus Day, also known as Indigenous Peoples' Day. While the stock markets were open on the day, banks, government offices and the bond markets were closed for the holiday. Besides, brokerage stocks showed a notable move to the downside on the day, dragging the NYSE Arca Broker/Dealer Index down by 1.2 percent. Weakness was also visible among interest-rate sensitive utilities stocks, as reflected by the 1.1 percent drop by the Dow Jones Utility Average.

 

Crude oil futures ended higher on Monday fuelled by rebounding global demand that has contributed to power and gas shortages in key economies like China. The pace of economic recovery from the pandemic has supercharged energy demand at a time when oil output has slowed due to cutbacks from producing nations during the pandemic, focus on dividends by oil companies and pressure on governments to transition to cleaner energy. Meanwhile,  the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, have held back from boosting supply even as prices have risen. In July, the group agreed to boost output by 400,000 bpd to restore the 5.8 million bpd in supply curbs left from its 2020 deal to cut production in the wake of the coronavirus outbreak. Benchmark Crude oil futures for November delivery rose $1.17 or about 1.50 percent to settle at $80.52 barrel on the New York Mercantile Exchange. Brent crude for December delivery surged $1.26 or 1.50 percent to settle at $83.65 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably lower against dollar on Monday on emergence of demand for the greenback from importers. Sentiments were fragile as former Reserve Bank Governor C Rangarajan said that India becoming a $5 trillion economy by 2025 is impossible under the current circumstance and the country needs to grow at nine per cent per annum for the next five years in order to achieve that. Traders shrugged off Commerce and Industry Minister Piyush Goyal's statement the country's exports are growing at a healthy rate and now exporters can aim for $450-500 billion of outbound shipments during the next fiscal year. He added exports have touched $197 billion during April-September this fiscal. On the global front; dollar rose to its highest in nearly three years versus the yen on Monday as investors remained confident the U.S. Federal Reserve will announce a tapering of its massive bond-buying next month despite softer U.S. payrolls figures. Finally, the rupee ended 75.36, weaker by 37 paise from its previous close of 74.99 on Friday.

 

The FIIs as per Monday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 4030.80 crore against gross selling of Rs 6520.57 crore, while in the debt segment, the gross purchase was of Rs 171.68 crore with gross sales of Rs 1524.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.01 crore against gross selling of Rs 28.49 crore.

 

The US markets ended in red on Monday as investors grew nervous ahead of third-quarter earnings reporting season. Asian markets are trading lower on Tuesday as investors looked for fresh news with inflation worries continuing to weigh. Indian markets gained for the third straight session on Monday and touched another record high on October 11, though ended with marginal gains on profit-booking in the final hour of trade. Today, the markets are likely to make negative start after 3-day gains following weakness in global markets. Investors will be eyeing the September CPI Inflation numbers and the Industrial Output for August for further direction. Besides, high oil prices globally continue to remain a concern for the markets world-over. There will be some cautiousness as the World Bank's chief economist said Lack of growth is the biggest economic challenge facing developing economies. However, some respite may come later in the day with the Finance Ministry's Monthly Economic Review stating that strategic reforms and the rapid vaccination drive has placed the country on the path to swift recovery by enabling the economy to navigate the ravaging waves of the COVID-19 pandemic. Additionally, industry body PHDCCI said the economy is poised to achieve 10.25 per cent GDP growth in FY 2021-22 on the back of effective government policies, Reserve Bank's accommodative policy stance and improved business sentiments. Some support may come as Icra in its report said Securitisation volumes, originated largely by non-banking financial companies (NBFCs) and housing finance companies (HFCs), has likely grown by 45 per cent to around Rs 25,000 crore in the second quarter of the current fiscal. Traders may take note of a private report that Indian businesses have bullish hiring plans and are investing in their workforce as they look to rebuild from the pandemic. Meanwhile, the Finance Ministry said it has released Rs 9,871 crore of revenue deficit grant to 17 states. Energy sector stocks will be in focus as the Ministry of New and Renewable Energy (MNRE) said that India is set to achieve 450 GW renewable energy installed capacity by 2030. There will be some reaction in auto component industry stocks as ratings agency Icra revised downwards by 300 basis points the growth forecast for the auto components industry for the ongoing fiscal year citing the impact of semiconductor shortage on domestic vehicle manufacturers as well as on exports revenues. There will be some result announcements to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,945.95

17,842.71

18,045.56

BSE Sensex

60,135.78

59,806.09

60,470.80

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

1,134.04

415.75

395.54

428.44

Coal India

349.52

196.85

192.44

200.49

ITC

211.84

238.05

233.34

241.14

State Bank of India

206.86

469.25

460.29

476.59

Oil & Natural Gas Corporation

181.43

165.00

163.06

166.56

 

  • Reliance Industries' wholly owned subsidiary -- RNESL has acquired 100% shareholding of REC Solar Holdings AS from China National Bluestar Co, for an Enterprise Value of $771 million. 
  • TCS is aiming to continue to invest as per business requirements and not look at protecting profit margins. 
  • JSW Steel has reported group combined crude steel production at 5.07 million tonnes for Q2 FYདྷ, including the production at jointly controlled entities viz. BPSL and JISPL. 
  • Maruti Suzuki India is increasing the number of its mobile service vans to over 300 by the end of this fiscal under its Service on Wheels initiative.
News Analysis