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NSE Intra-day chart (11 October 2022)
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Market Commentary 12 October 2022
Markets to get flat-to-positive start amid mixed global cues

 

Indian equity benchmarks ended the sluggish day of trade with losses of around one and half percent on Tuesday, following weakness in global peers and amid rising geopolitical tensions in Europe. Markets started the session on pessimistic note and gradually drifted lower as the session progressed amid subdued foreign flows. 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. Traders remained cautious 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. Sentiments also weighed on by a private report stating that a number of rating agencies, domestic banks, and groups have pared the forecast for India's economic growth. Key gauges witnessed heavy selling pressure in late afternoon session as market participants awaited September's retail inflation data, due to be released on Wednesday. Traders overlooked Prime Minister Narendra Modi's statement 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. Even better-than-expected Q2 performance from TCS, and a proposed share buyback plan by Infosys failed to cheer investor sentiment. Meanwhile, 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. Finally, the BSE Sensex fell 843.79 points or 1.46% to 57,147.32 and the CNX Nifty was down by 257.45 points or 1.49% to 16,983.55.

 

The US markets ended mostly lower on Tuesday with indications from the Bank of England that it would support the country's bond market for just three more days adding to market jitters late in the session. Further, weakness also prevailed in the markets as in its latest World Economic Outlook Report, the IMF has lowered the global growth projection for next year and warned that the world economy is set to witness more pain next year. The global lender cut the growth projection for next year to 2.7% from 3.3%, while it retained the outlook for this year at 3.2% after a 6% expansion in 2021. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic and reflects significant slowdowns for the largest economies. Meanwhile, investors looked ahead to U.S. inflation data, minutes from the Fed's September meeting and reports on retail sales and consumer sentiment due this week, for more insights into policymakers' view of where inflation stands and the outlook for the future path of interest rates. Stock specific developments, Meta Platforms share shed more than 4 percent following a rating downgrade due to challenging microeconomic environment. JP Morgan Chase dropped 2.8 percent. Salesforce.com, Goldman Sachs, Walt Disney, Visa, Microsoft and Verizon lost 1.2 to 2.2 percent.

 

Crude oil futures ended lower with cut of two percent on Tuesday, on concerns about outlook for energy demand amid rising possibility of a global recession. World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva both warned of recession risks, raising concerns over global demand. Further, a surge in Covid-19 cases in China, and fears of further monetary policy tightening also weighed. Benchmark crude oil futures for November delivery fell $1.78 or 2 percent at $89.35 a barrel on the New York Mercantile Exchange. Brent crude for December delivery dropped $1.90 or about 2 percent to settle at $94.29 a barrel on London's Intercontinental Exchange.

 

Reversing previous session drubbing, Indian rupee appreciated significantly against dollar on Tuesday. Traders found support with report stating that the UAE is aiming trade with India to cross $100 billion-mark over the next 2-3 years. The Indo-UAE trade stood at $73 billion in FY22, which got a major fillip since the two nations signed the comprehensive economic partnership agreement (CEPA) on May 1, 2022. Traders took a note of reports U.S. President Joe Biden pledged to Ukraine President Volodomyr Zelenskiy that the United States will provide Ukraine with advanced air systems after a devastating missile barrage from Russia. On the global front, U.S. dollar edged back toward September's multi-year highs on Tuesday as worries about rising interest rates and geopolitical tensions unsettled investors, while the yen hovered near the level that prompted last month's intervention. Finally, the rupee ended at 82.21 (Provisional), stronger by 19 paisa from its previous close of 82.40 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 4936.96 crore against gross selling of Rs 5702.01 crore, while in the debt segment, the gross purchase was of Rs 98.47 crore against gross selling of Rs 274.70 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.31 crore against gross selling of Rs 11.25 crore.

 

The US markets ended mostly lower on Tuesday with indications from the Bank of England that it would support the country's bond market for just three more days adding to market jitters late in the session. Asian markets are trading mostly in red on Wednesday amid concerns over the global economy and ahead of the Bank of Korea's rate decision. Indian markets closed in red for a third straight day on Tuesday amid weakness across global peers. Today, start of the session is likely to be flat-to-positive amid falling crude oil prices, but persistent worries over economic growth-inflation dynamics and renewed geopolitical tensions following attacks by Russia on major Ukrainian cities may limit upside. Some support will come as Finance Minister Nirmala Sitharaman exuded confidence on India's relative and absolute growth performance in the rest of the decade and forecast the country's growth rate to be around 7 per cent this financial year, amidst reports of a global recession and downgrading of growth rates of almost all major economies. However, traders may be concerned as the International Monetary Fund (IMF) in its annual World Economic Outlook report said outlook for India is growth of 6.8 per cent in 2022 - a 0.6 percentage point downgrade since the July forecast, reflecting a weaker-than-expected outturn in the second quarter and more subdued external demand. Pierre-Olivier Gourinchas, Chief Economist of the IMF said India's economy is doing fairly well, but additional monetary tightening is required. Also, foreign institutional investors (FIIs) turned net sellers to the tune of Rs 4,612.67 crore on October 11, as per provisional data available on the NSE. Meanwhile, traders will be eyeing in industrial growth and retail inflation data to be out later in the day for more cues. As per a private report, India's retail inflation for September is likely to stay elevated. Railways related stocks will be in focus with a private report that the railways' passenger revenue in the period between April 1 and October 8 was around Rs 33,476 crore, an increase of 92 per cent over the corresponding period last year. The Indian Railways' passenger revenue on originating basis during the April 1-October 8 period last year was Rs 17,394 crore. There will be some reaction in aviation industry stocks as global airlines' grouping IATA said India is a key aviation market for the Asia Pacific region as well as the rest of the world and is expected to see robust air travel demand, amid the country's domestic air passenger traffic inching towards pre-COVID levels. Moreover, Investors awaited quarterly results of IT majors Wipro and HCL Tech due later in the day for domestic cues.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,983.55

16,868.64

17,180.14

BSE Sensex

57,147.32

56,789.30

57,766.42

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

410.83

100.00

98.65

102.50

IndusInd Bank

216.64

1,164.80

1,145.89

1,199.84

Coal India

191.54

224.50

222.01

228.96

Axis Bank

159.53

785.00

774.50

795.50

Tata Motors

146.41

391.75

388.86

397.06

 

  • Adani Ports and Special Economic Zones has received approvals from NCLT Ahmedabad and NCLT Hyderabad for acquiring the remaining 58.1% stake in Gangavaram Port through the composite scheme of arrangement. 
  • Cipla's Indore Oral Solid Dosage plant has been designated by the World Economic Forum as an Advanced Fourth Industrial Revolution Lighthouse. 
  • Bajaj Auto has bought back over 64 lakh shares from public shareholders for Rs 2,499.97 crore under its share buyback exercise.
  • Hero MotoCorp's emerging mobility brand -- VIDA has commenced reservations for its first electric vehicle, the VIDA V1, from October 10, 2022.
News Analysis