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NSE Intra-day chart (14 October 2022)
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Market Commentary 17 October 2022
Benchmarks likely to open in red on Monday

 

Indian equity benchmarks ended higher with gains over a percent on Friday led by gains in IT, Banking and TECK stocks amid positive cues in the global market. Key gauges made a gap up start and stayed in green for whole day, as traders took some support from Union Finance Minister Nirmala Sitharaman's statement that India is setting the global benchmarks on the digital front and that there is a sense of confidence in the country that it will be able to face geopolitical and economic uncertainties and still perform. Some support also came with S&P Global Ratings' statement that growth in large Asia Pacific economies like China, India and Indonesia will be less affected as their economies are more domestically oriented. Traders took a note of World Bank President David Malpass' statement that India has taken good advantage of digitisation to create social protection programmes that reach the poor, noting that the country can do a lot more on the administrative side to create efficiencies. Sentiments remained up-beat in afternoon deals, after India's inflation based on wholesale price index (WPI) eased further to 10.7% in the month of September 2022 as against 12.41% in August 2022. But, September is the 18th consecutive month of double-digit WPI inflation, primarily contributed by rise in prices of mineral oils, food articles, crude petroleum & natural gas, chemicals & chemical products, basic metals, electricity, textiles etc. as compared to the corresponding month of the previous year. However, key gauges trimmed some gains in late afternoon deals, as some concern came with provisional data available on the NSE showed that foreign institutional investors (FIIs) net sold shares worth Rs 1,636.43 crore on October 13. Some concern also came as India failed to unseat the UK and missed being the fifth-largest economy by $10 billion in 2021-22. It'll have to wait another year before it gets that coveted spot in 2022-23, overtaking the UK by $27 billion. Finally, the BSE Sensex rose 684.64 points or 1.20% to 57,919.97 and the CNX Nifty was up by 171.35 points or 1.01% to 17,185.70.

 

The US markets ended sharply lower on Friday with the tech-heavy Nasdaq plunging to its lowest closing level in over two years. Selling pressure emerged in the markets as traders turned concerned with a report from the University of Michigan showing a rebound in inflation expectations in the month of October. One-year inflation expectations climbed to 5.1 in October after dropping to a one-year low of 4.7 in September, while five-year inflation expectations increased to 2.9 percent in October after falling to 2.7 percent in September. On the sectoral front, Semiconductor stocks moved sharply lower over the course of the session, dragging the Philadelphia Semiconductor Index down by 4.5 percent to a two-year closing low. Substantial weakness was also visible among steel stocks, as reflected by the 4.3 percent nosedive by the NYSE Arca Steel Index. A steep drop by the price of crude oil also weighed on energy stocks. Meanwhile, traders were also reacting to earnings news from several big-name financial companies, with JPMorgan Chase (JPM) posting a strong gain after reporting third quarter results that beat analyst estimates on both the top and bottom lines. Shares of Wells Fargo (WFC) also move to upside after the company reported better than expected third quarter revenues. On the other hand, shares of Morgan Stanley (MS) moved notably lower after the investment bank reported third quarter results that missed street estimates. Investors also remained cautious ahead of reports on industrial production, housing starts, and existing home sales to be out in next week.

 

Crude oil futures closed significantly lower on Friday as worries over global economic downturn continued to plague the demand outlook. A downward revision in the International Energy Agency's (IEA) oil demand forecast and recent data from the U.S. Energy Information Administration that showed crude inventories grew by 9.9 million barrels last week weighted down on the oil prices. The IEA cut its oil demand forecast for this year and next and warned that OPEC and its allies' plan last week to cut output could tip the global economy into recession. A stronger dollar also added pressure on oil prices. Meanwhile, a report from Baker Hughes today said the number of oil rigs increased by 8 to 610 this week. Benchmark crude oil futures for November delivery fell $3.50 or 3.9 percent at $85.61 a barrel on the New York Mercantile Exchange. Brent crude for December delivery declined $2.94 or about 3.1 percent to settle at $91.63 (Provisional) a barrel on London's Intercontinental Exchange.

 

Indian rupee concluded weaker against dollar on Friday on account of continued dollar demand from importers and banks. Domestic sentiments got hit after private equity investments plunged 77.5 per cent to $3.84 billion in the September quarter, reflecting the overall decline in funds flows into startups especially since the Ukraine war. Traders ignored reports that India's inflation based on the Wholesale Price Index (WPI) crashed to an 18-month low of 10.7 percent in September. WPI inflation was 12.41 percent in August. In September 2021, it stood at 11.80 percent.  On the global front, Dollar edged higher on Friday after dropping the previous day despite U.S. inflation accelerating, helping it hit a 32-year peak against Japan's yen. Finally, the rupee ended at 82.35 (Provisional), weaker by 11 paisa from its previous close of 82.24 on Thursday.

 

The FIIs as per Friday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 5134.83 crore against gross selling of Rs 6241.46 crore, while in the debt segment, the gross purchase was of Rs 122.61 crore against gross selling of Rs 152.15 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.85 crore against gross selling of Rs 6.77 crore.

 

The US markets ended lower on Friday, following the short covering in the previous session, as worsening inflation expectations kept intact worries that the Fed's aggressive rate hike path could trigger a recession. Asian markets are trading in red on Monday as recession fears weigh in over expectations of continued tighten monetary policies around the world. Indian markets finished more than one percent higher on Friday led by across-the-board buying. Today, start of new week is likely to be in red tracking sell-off in the global markets. Traders will be concerned as foreign institutional investors (FIIs) have net sold shares worth Rs 1,011.23 crore on October 14, according to the provisional data available on the NSE. However, some respite may come later in the day as Finance Minister Nirmala Sitharaman said the Indian economy will stay on course despite global headwinds and is projected to grow at seven per cent in fiscal 2022-23, and attributed this to the conducive domestic policy environment and focus on key structural reforms. She also reiterated that the inflation rate, which is hovering over 7 per cent in India, is at a manageable level compared to where some other countries are at present. Some suprot may also come with a private report that India's focus on reforms and economic growth will result in foreign direct investment (FDI) of $475 billion in the next five years as most multinational companies (MNCs) see India as an attractive investment destination for their global expansion. Traders may take note of the data released by the commerce ministry showing that the country's exports rose by 4.82% to $35.45 billion in September, even as the trade deficit widened to $25.71 billion. The trade deficit in September 2021 was $22.47 billion. Also, Union minister of commerce and industry Piyush Goyal said India will achieve the target for exports of $2 trillion by 2030 despite global headwinds. Moreover, the Reserve Bank of India's (RBI) weekly statistical supplement showed that India's foreign exchange reserves rose to $532.87 billion in the week through October 7. The country's reserves rose by $204 million from the previous week, the first increase since the week ended July 29. Power industry stocks will be in focus with a private report that aggregate losses of power distribution utilities or discoms increased by 66 per cent to Rs 50,281 crore in 2020-21 as compared to the previous year. There will be some reaction in oil industry stocks as Union Petroleum and Urban Affairs Minister Hardeep Singh Puri said Indian petroleum industry is at the cusp of opportunity and will be able to produce 25 per cent of its crude oil demand by 2030. Coal industry stocks will be in limelight as Union coal minister Pralhad Joshi said that the country will stop import of thermal coal by 2024-25. The minister expressed his concern that that the country has to import coal despite having adequate domestic resource of the fuel. Meanwhile, Electronics Mart will make its debut on the bourses today. Besides, investors awaited more of financial results from India Inc for domestic cues.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,185.70

17,120.79

17,299.59

BSE Sensex

57,919.97

57,700.42

58,287.31

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

324.56

100.10

99.06

101.96

Power Grid Corporation of India

175.23

212.65

210.14

216.59

Infosys

149.90

1474.25

1,463.00

1,489.75

Wipro

139.32

377.30

373.20

384.45

Oil & Natural Gas Corporation

132.05

127.60

125.50

131.25

 

  • Coal India has signed a MoU with the Rajasthan Vidyut Utpadan Nigam to set up a 1,190-MW solar power plant in Bikaner district of Rajasthan. 
  • Infosys has received an approval to purchase assets of Channel Bridge Software Labs. 
  • Bharti Airtel has launched the Always On IoT connectivity solution in India at the Indian Mobile Congress. 
  • Maruti Suzuki India has launched the S-CNG variant of the adventurous and dynamic S-Presso.
News Analysis