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NSE Intra-day chart (15 December 2021)
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Market Commentary 16 December 2021
Benchmarks to start session on positive note on firm global cues

 

Indian equity benchmarks ended lower for fourth session in a row on Wednesday, tracking losses in index majors Bajaj Finance, Bajaj Finserv, ITC and TCS. After making cautious start, frontline indices slipped into red terrain, as traders got anxious as Asian Development Bank (ADB) for the second time in three months scaled down India's growth estimate for the fiscal year ending March 2022 due to supply chain issue of industries. It has pegged India's growth estimate at 9.7% for the current fiscal in its latest supplement. It had projected a growth rate of 10% in its September supplement. Some anxiety also came as Centre for Monitoring Indian Economy (CMIE) stated that the urban unemployment rate spiked to the double-digit rate for the first time in 17 weeks, to be 10.09% for the week-ended December 12, pushing the country's overall jobless rate to a nine-week high of 8.53%. However, key indices have recouped some of its losses in late afternoon deals, taking support from the government data showing that India's merchandise exports jumped 27.16 per cent to $30.04 billion in November on the back of good performance by sectors like petroleum products, engineering goods and electronic items. Some support also came with Foreign Secretary Harsh Vardhan Shringla's statement that the Indian economy is rapidly recovering from the pandemic-induced downturn and is returning to its trajectory of rapid growth. He also said India's trade figures are promising and that the total foreign direct investment the country received in the current financial year stood at $81.72 billion, the highest ever.  Though, markets failed to hold recovery and ended lower with losses of over half percent, as some concern remained among traders with data showing that foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold shares worth Rs 763.18 crore on Tuesday. Besides, nervousness ahead of the US Fed outcome and increasing warning calls by the World Health Organisation (WHO) against the Omicron coronavirus variant, which is now spreading faster than the Delta variant, also kept investors on the sidelines. Finally, the BSE Sensex fell 329.06 points or 0.57% to 57,788.03 and the CNX Nifty was down by 103.50 points or 0.60% to 17,221.40.

 

The US markets ended sharply higher after the Fed announced its widely expected decision to accelerate the pace of reductions to its asset purchases program. Citing inflation developments and further improvement in the labor market, the Fed said it has decided to reduce the monthly pace of its net asset purchases by $30 billion per month, double the previously announced $15 billion per month. Beginning in January, the Fed will increase its holdings of Treasury securities by at least $40 billion per month and of agency mortgage-backed securities by at least $20 billion per month. The $60 billion per month in asset purchases is half the $120 billion per month the Fed bought from June 2020 to October 2021. The Fed said it expects similar reductions in the pace of net asset purchases will likely be appropriate each month, pointing to an end to the program next March. Meanwhile, the Fed also announced its widely expected decision to keep the target range for the federal funds rate at zero to 0.25 percent. The Fed noted inflation has exceeded its 2 percent target for some time but predicted interest rates will remain at near-zero levels until labor market conditions have reached levels consistent with its assessments of maximum employment. The central bank's latest projections forecast as many three rate hikes in 2022 compared to the lone rate hike forecast in September. On the sectoral front, Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 3.7 percent. Substantial strength also emerged among networking stocks, as reflected by the 3.1 percent spike by the NYSE Arca Networking Index.

 

Crude oil futures ended higher on Wednesday as Data released by Energy Information Administration (EIA) showed crude inventories in the US dropped by 4.6 million barrels in the week ended December 10. The EIA data also said gasoline stockpiles were down by nearly 720,000 barrels last week, while distillate stocks fell by 2.85 million barrels in the week. However, Oil prices drifted lower earlier in the day, weighed down by virus worries after the World Health Organization Chief stated that 77 countries have reported cases of Omicron and the variant of coronavirus is spreading at an unprecedented rate. Benchmark crude oil futures for January delivery rose $0.14 or about 0.2 percent to settle at $70.87 a barrel on the New York Mercantile Exchange. Brent crude for February delivery gained $0.30 or 0.41 percent to settle at $74.00 a barrel on London's Intercontinental Exchange.   

 

Continuing previous session drubbing, Indian rupee ended significantly weaker against dollar on emergence of demand for the greenback from importers amid muted trend in domestic equities, consistent foreign fund outflows and risk-averse sentiments weighed on the local unit. Nervousness ahead of the US Fed outcome and increasing warning calls by the World Health Organisation (WHO) against the Omicron coronavirus variant, which is now spreading faster than the Delta variant, is keeping investors on the sidelines. Sentiments were also fragile as the Asian Development Bank (ADB) for the second time in three months scaled down India's growth estimate for the fiscal year ending March 2022 due to supply chain issue of industries. On the global front, dollar held firm on Wednesday, with currency markets quiet as investors waited to see if the U.S. Federal Reserve would reinforce market expectations for rate hikes next year. Finally, the rupee ended 76.32 (Provisional), weaker by 44 paise from its previous close of 75.88 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 9504.84 crore against gross selling of Rs 9535.89 crore, while in the debt segment, the gross purchase was of Rs 554.27 crore against gross selling of Rs 1277.90 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.24 crore against gross selling of Rs 4.64 crore.

 

The US markets ended higher on Wednesday after Federal approved plans to more quickly wind down pandemic stimulus efforts. Asian markets are trading mostly in green on Thursday tracked Wall Street higher after the Fed said it would end its pandemic-era bond buys in March and make way for three interest rate hikes next year to tackle inflation. Indian markets extended losses to the fourth session in a row on Wednesday, amid concerns about the Omicron variant of COVID-19. Today, markets are likely to start the session on a positive note mirroring broadly positive cues. Traders will be taking encouragement with a private report showing that the New Year will herald the return of normalcy and witness the growth momentum gaining steam, and pegged the real GDP growth estimate at 8.2 per cent for FY2022-23. Some support will come as preliminary data of the commerce ministry showed that India's exports rose 44.41 per cent to $16.46 billion year-on-year during December 1-14, 2021. Imports too grew 42.57 per cent to $27.53 billion during the period under review. Meanwhile, union minister Nitin Gadkari said the government is working on a scheme to raise funds from the public at 6 per cent annual interest rate for road infrastructure projects. However, there will be some cautiousness as the state of the economy report released with the December bulletin of the Reserve Bank of India (RBI) showed that the Indian economy continues to forge ahead, emerging out of shackles of pandemic, but the rise of the Omicron variant has emerged as the biggest risk factor. Also, IMF Chief Economist Gita Gopinath said that as the global economy recovers from the pandemic, a great deal of uncertainty remains about new COVID-19 variants and increased inflation pressures in many countries. There will be some buzz in banking stocks as the Reserve Bank of India (RBI) will introduce revised norms for banks for setting aside capital for operational risks from April 01, 2023, to ensure robustness in working of banking entities. Auto stocks will be in focus as I&B Minister Anurag Thakur said the Union Cabinet approved a production linked incentive (PLI) scheme for semiconductor and display board production in the country. There will be some reaction in power sector stocks as the government said India's installed nuclear power capacity has grown from 4,780 MW to 6,780 MW, an increase of over 40 per cent, in the last seven years. Passenger vehicles industry stocks will be in limelight as ratings agency ICRA revised downwards growth forecast for the domestic passenger vehicles industry to 8-11 per cent in the ongoing fiscal from the earlier estimate of 14-17 per cent on account of the ongoing semiconductor shortage. Besides, Supriya Lifescience IPO will open for subscription today and will close on December 20. The company plans to raise up to Rs 700 crore by way of fresh issue of shares worth Rs 200 crore and offer for sale worth Rs 500 crore.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,221.40

17,224.34

17,219.94

BSE Sensex

57,788.03

57,788.03

57,788.03

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ITC

346.53

223.95

220.84

229.64

Tata Motors

162.63

489.80

485.46

495.91

Indian oil Corporation

119.57

115.65

114.64

117.54

NTPC

119.16

126.55

125.49

128.04

Power Grid Corporation of India

114.05

208.15

205.41

213.26

 

  • L&T's construction arm -- L&T construction has secured a repeat order for its Water and Effluent Treatment Business from the SWSM, Uttar Pradesh. 
  • Tata Motors has tied up with Bandhan Bank for retail finance for its range of passenger vehicles. 
  • HDFC has invoked 50 lakh shares pledged by Ansal Housing to recover its dues from the company.
  • SBI has received executive committee of central board's approval to offload a 6% stake in its mutual fund subsidiary SBI Funds Management through IPO.
News Analysis