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NSE Intra-day chart (18 October 2022)
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Market Commentary 19 October 2022
Markets likely to get slightly positive start on frim global cues

 

Continuing their gaining streak for the third straight session, Indian equity benchmarks closed higher on Tuesday helped by the strength in Asian peers. Key gauges made positive start and stayed in green for whole day, as traders took support with RBI Monetary Policy Committee (MPC) member Jayanth R Varma's statement that No doubt inflation will come down. Because we have done monetary policy tightening. That tightening will have its impact. The monetary policy takes, you know, five to six quarters to have its impact and cool prices. Some support also came in as a new Multidimensional Poverty Index (MPI) released jointly by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford showed that the number of people living below the poverty line in India decreased by 415 million between 2005-06 and 2019-21. Sentiments remained up-beat in late afternoon session, taking support from the Reserve Bank of India's (RBI) monthly bulletin stating that India is poised to consolidate and accelerate the economic recovery over the rest of the year and the fight against inflation will be dogged and prolonged. The bulletin said that the momentum of real GDP growth is expected to shed the drag embedded in the NSO's estimates for the first quarter of 2022-23 and move into positive territory in the remaining quarters. Traders overlooked Prime Minister Narendra Modi expressed concern over the huge edible oil and fertilisers import bill, which is putting pressure on the exchequer, saying it is time to work in mission mode to make India self-reliant and reduce import dependence. Modi said it was necessary to become AatmaNirbhar or self-reliant because problems in the exporting countries directly hit import prices for India as happened after the outbreak of the Russia-Ukraine war. Finally, the BSE Sensex rose 549.62 points or 0.94% to 58,960.60 and the CNX Nifty was up by 175.15 points or 1.01% to 17,486.95.

 

The US markets ended higher on Tuesday on positive reaction to upbeat earnings news from companies like Goldman Sachs and Johnson & Johnson. Shares of Goldman Sachs jumped 2.3 percent after the financial giant reported third quarter results that beat street estimates on both the top and bottom lines. Johnson & Johnson also reported better than expected third quarter results, although the healthcare giant moved modestly lower over the course of the session. The upbeat results from Goldman Sachs and J&J have helped ease concerns about the strength of the earnings season. On the sectoral front, Housing stocks turned in some of the market's best performances on the day, resulting in a 2.7 percent spike by the Philadelphia Housing Sector Index. The strength among housing stocks came even though the National Association of Home Builders released a report showing a continued deterioration in homebuilder confidence in the month of October. Substantial strength was also visible among networking stocks, as reflected by the 2.6 percent surge by the NYSE Arca Networking Index. Chemical stocks also saw considerable strength on the day, driving the S&P Chemical Sector Index up by 2.2 percent. On the economic data front, the Federal Reserve released a report showing industrial production increased by more than expected in the month of September. The Fed said industrial production rose by 0.4 percent in September after edging down by a revised 0.1 percent in August. Street had expected industrial production to inch up by 0.1 percent compared to the 0.2 percent dip originally reported for the previous month.

 

Crude oil futures ended deeply in red on Tuesday on fears of higher US supply combined with an economic slowdown and lower Chinese fuel demand. Reports stated that the US government would continue releasing crude oil from reserves. The Biden administration plans to sell oil from the Strategic Petroleum Reserve in an effort to cool fuel prices before next month's congressional elections. Meanwhile, China, the world's top crude oil importer, indefinitely delayed release of economic indicators originally scheduled to be published on Tuesday, indicating to the market that fuel demand is significantly depressed in the region. It is not a good sign when China decides not to publish economic figures. Benchmark crude oil futures for November delivery fell $2.64 or 3.1 percent at $82.82 a barrel on the New York Mercantile Exchange. Brent crude for December delivery declined $1.59 or about 1.7 percent to settle at $90.03 a barrel on London's Intercontinental Exchange.

 

Rupee ended weaker against dollar on Tuesday on account of continued dollar demand from importers and banks. Traders were worried after Prime Minister Narendra Modi expressed concern over the huge edible oil and fertilisers import bill, which is putting pressure on the exchequer, saying it is time to work in mission mode to make India self-reliant and reduce import dependence. Modi said it was necessary to become AatmaNirbhar or self-reliant because problems in the exporting countries directly hit import prices for India as happened after the outbreak of the Russia-Ukraine war. Traders overlooked RBI Monetary Policy Committee (MPC) member Jayanth R Varma's statement that No doubt inflation will come down. Because we have done monetary policy tightening. That tightening will have its impact. The monetary policy takes, you know, five to six quarters to have its impact and cool prices. On the global front, Sterling paused on Tuesday, after surging almost 2% the day before, as improved investor sentiment sent the safe haven U.S. dollar lower against major peers following the UK's dramatic U-turn on its fiscal plans.  Finally, the rupee ended at 82.37 (Provisional), weaker by 7 paisa from its previous close of 82.30 on Monday.

 

The FIIs as per Tuesday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 18282.45 crore against gross selling of Rs 18466.49 crore, while in the debt segment, the gross purchase was of Rs 1314.79 crore against gross selling of Rs 640.54 crore. Besides, in the hybrid segment, the gross buying was of Rs 26.64 crore against gross selling of Rs 32.33 crore.

 

The US markets ended higher on Tuesday as strong corporate earnings reports helped extend a rally to start the week. Asian markets were trading mostly higher in early deals on Wednesday following the broadly positive cues from US markets overnight, as traders picked up battered stocks at a bargain following the recent market weakness. Indian equity markets settled higher for third straight day on Tuesday with Nifty and Sensex settling above the psychological 17450 and 58900 levels respectively. Today, markets are likely to make slightly positive start on firm global cues and falling crude oil prices. Support may come as Icra Ratings said that the cost of market borrowing for states declined sharply on Tuesday with the weighted average cut-off falling by 11 basis points to 7.72 per cent from 7.83 per cent last week. Nine states raised Rs 16,900 crore through state government securities (SGS) on Tuesday -- 10 per cent lower than the Rs 18,700 crore indicated for this week in the third quarter auction calendar. Meanwhile, kickstarting stakeholder consultation for 2023-24 Budget, the finance ministry has sought suggestions from industry and trade associations regarding direct and indirect taxes. Along with the suggestions, the industry has to submit justification for their demand which, if found with merit, could become part of the Union Budget for 2023-24 (April-March), to be tabled in Parliament on February 1, 2023. Traders may take note of report that Tuhin Kanta Pandey, secretary in the Department of Investment and Public Asset Management, said the Indian government should focus on privatisation of state-run companies instead of chasing high divestment targets, pointing to market volatility and investors' shaky appetite for risk. There will be some action in agriculture related stocks as government said the hike in the minimum support price of several Rabi crops will further energise the agriculture sector. The government hiked the minimum support price (MSP) of six Rabi crops by up to 9 per cent, with Rs 110 per quintal increase for wheat crop to boost domestic production and farmers' income. Wheat MSP has been raised by 5.45 per cent to Rs 2,125 per quintal from Rs 2,015 per quintal to encourage more area under the crop amid tight government stock position owing to low procurement, fall in production and higher exports. There may be some buzz in FMCG stocks as private report stated that India is examining whether there is a need to raise palm oil import taxes as part of efforts by the world's biggest vegetable oil importer to help millions of its farmers reeling from lower oilseed prices.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,486.95

17,438.06

17,531.81

BSE Sensex

58,960.60

58,755.26

59,154.79

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

307.22

100.70

100.00

101.20

ITC

208.87

340.85

335.94

343.39

NTPC

206.35

167.00

165.79

168.84

State Bank of India

204.40

562.40

551.60

568.35

Tata Motors

142.15

404.55

401.26

407.26

  •  Tata Motors has won the tender of 200 electric buses, floated by Jammu Smart City, for Jammu and Srinagar.
  •  State Bank of India has reduced the interest rate on savings accounts by a marginal 5 basis points to 2.70% with effect from October 15.
  •  Wipro and Outokumpu have entered into strategic partnership to accelerate Outokumpu's cloud transformation for applications.
  •  Reliance Industries' telecom arm -- Reliance Jio Infocomm has selected Nokia and Ericsson as major suppliers for 5G radio access network equipment in a multi-year deal.
News Analysis