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Market Commentary 20 January 2024
Markets likely to get positive start on Saturday

Snapping 3-days losing run, Indian equity benchmarks rebounded sharply on Friday driven by strong buying interest across sectors. Markets made a positive start and stayed in green for whole day, as traders took encouragement with Reserve Bank of India Governor Shaktikanta Das' statement that slowing global growth is reason for concern, a cause of worry but India is better placed to deal with various geopolitical challenges. Some support also came in with a private report that Covid-19 cases are seeing a downward trend in India, with active cases falling to their lowest since December 21, 2023. Traders took a note of NITI Aayog Vice Chairman Suman Bery's statement that the cooperation between India and Singapore in the field of green finance has a promising future and asserted that the two countries can work within the framework laid out in the G20 New Delhi Leaders' Declaration on sustainable finance. Adding to the optimism, the Government approved an outlay of Rs 235 crore for revamped Scheme for Administrative Reforms of Department of Administrative Reforms and Public Grievances (DARPG) to be implemented in next two years (2024-25 and 2025-26) of the 15th Finance Commission Cycle. Traders overlooked provisional data from the NSE showing that Foreign institutional investors (FIIs) sold shares worth Rs 9,901.56 crore on January 18. Traders also paid no heed towards report by rating agency ICRA which projected the GDP growth rate to slow down to below 6 per cent in the December quarter, mainly account of sharp fall in kharif crop output, and weak progress in rabi sowing for some crops. India had registered a Gross Domestic Product (GDP) growth rate of 7.6 per cent in the July to September period. Finally, the BSE Sensex rose 496.37 points or 0.70% to 71,683.23 and the CNX Nifty was up by 160.15 points or 0.75% to 21,622.40.

The US markets ended sharply higher on Friday with Nasdaq settling over 1.50 percent. The run to record highs on markets partly reflected continued strength among tech stocks, which helped lead the advance on Thursday. Optimism about the outlook for earnings have contributed to the continued strength in the tech sector ahead of next week's release of quarterly results from companies like Intel (INTC), IBM Corp. (IBM) and Netflix (NFLX). Computer hardware stocks saw substantial strength on the day, driving the NYSE Arca Computer Hardware Index up by 5.1percent to a record closing high. Supermicro (SMCI) led the sector higher, skyrocketing by 35.9 percent after raising its fiscal second quarter guidance amid strong market and end customer demand for its rack-scale, AI and Total IT Solutions. Meanwhile, the Dow received a boost from a surge by shares of Travelers (TRV), with the insurance giant spiking by 6.7 percent. Travelers moved sharply higher after the company reported fourth quarter earnings that exceeded street estimates. The rally on Wall Street also came after the University of Michigan released a report showing a significant improvement in U.S. consumer sentiment as well as a continued decrease in inflation expectations. The University of Michigan said its consumer sentiment index surged to 78.8 in January after jumping to 69.7 in December. Street had expected the index to inch up to 70.0. With the much bigger than expected increase, the consumer sentiment index reached its highest level since hitting 81.2 in July 2021.

Crude oil futures ended lower on Friday, paring their gain for the week as traders assessed growing supplies, the demand outlook, weather-related U.S. production challenges, and continued tensions in the Middle East. The downturn by the price of crude oil reflected profit taking after the front-month contract spiked on Thursday. Benchmark crude oil futures for February delivery fell 67 cents or 0.9 percent to settle at $73.41 a barrel on the New York Mercantile Exchange. Brent crude for March delivery dropped 54 cents or 0.7 percent to settle at $78.56 a barrel on London's Intercontinental Exchange.  

Indian rupee ended higher against the U.S. dollar on Friday, tracking robust buying in domestic equity markets and weak American currency overseas. Traders got encouragement after Reserve Bank of India Governor Shaktikanta Das said slowing global growth is reason for concern, a cause of worry but India is better placed to deal with various geopolitical challenges. Meanwhile, the government approved an outlay of Rs 235 crore for revamped Scheme for Administrative Reforms of Department of Administrative Reforms and Public Grievances (DARPG) to be implemented in next two years (2024-25 and 2025-26) of the 15th Finance Commission Cycle. On the global front, the dollar was on track to rise for a second straight week on Friday as signs of resilience in the U.S. economy and pushback from central bankers has caused traders to dial down expectations of swift and sharp falls in interest rates. Finally, the rupee ended at 83.07 (Provisional), stronger by 6 paise from its previous close of 83.13 on Thursday.

The FIIs as per Friday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 15587.05 crore against gross selling of Rs 24781.70 crore, while in the debt segment, the gross purchase was of Rs 1832.01 crore with gross sales of Rs 634.45 crore. Besides, in the hybrid segment, the gross buying was of Rs 33.63 crore against gross selling of Rs 23.29 crore.

The US markets ended higher on Friday, with the S&P 500 settling at record high for the first time in two years, fuelled by a rally in chipmakers and other heavyweight technology stocks on optimism around artificial intelligence. Indian markets snapped their three-day losing run and ended notably higher on Friday amid firm cues across global equities. Today, markets are likely to open in green tracking overnight gains on Wall Street. The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) will conduct a full regular session from 9:15 am to 3:30 pm. Earlier, both exchanges were to conduct a special live trading session on Saturday from the disaster recovery site. This has now been postponed. Indian equity markets will remain shut on January 22 (Monday), on the occasion of the Ram Temple consecration ceremony in Ayodhya. The development comes after Maharashtra declared a public holiday on Monday. Some support will come as the Reserve Bank of India (RBI) said India's forex reserves jumped $1.634 billion to $618.937 billion for the week ended January 12. In the previous reporting week, the overall reserves had declined sharply by $5.89 billion to $617.3 billion. Traders may take note of a private report stating that digitization-led formalization has aided the fiscal math through tax buoyancy on one side and reducing wasteful expenditure (subsidy leakage) on the other. The government had earlier committed to reduce the fiscal deficit to 4.5 per cent by FY26 as part of its glide path to gradually reduce the gap, which is seen as a major factor influencing macroeconomic position. However, foreign fund outflows likely to cap upside. Foreign institutional investors (FIIs) sold shares worth Rs 3,689.68 crore on January 19, provisional data from the NSE showed. There may be some cautiousness with report that retail inflation for farm workers and rural labourers increased marginally to 7.71 per cent and 7.46 per cent in December compared to 7.37 per cent and 7.13 per cent, respectively, in November due to higher prices of certain food items. Food inflation stood at 9.95 per cent and 9.80 per cent in December 2023, compared to 9.38 per cent and 9.14 per cent, respectively, in November 2023.Food inflation for farm workers and rural labourers was 5.89 per cent and 5.76 per cent, respectively, in December 2022. Defence industry stocks will be in focus as Defence Minister Rajnath Singh inaugurated 35 infrastructure projects constructed by the Border Roads Organisation (BRO), valued at Rs 670 crore. In his address, the defence minister emphasised the importance of connecting remote areas with the rest of the nation. Investors will continue to track the Q3 results of key index heavyweights like ICICI Bank and Kotak Bank.

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

Index

Previous close

Support

Resistance

NSE Nifty

21,622.40

21,574.74

21,670.34

BSE Sensex

71,683.23

71,518.76

71,871.66

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

HDFC Bank

548.00

1474.90

1458.79

1500.64

Tata Steel

326.53

134.10

132.24

135.34

NTPC

286.51

308.85

303.89

311.64

ONGC

263.92

241.85

237.05

244.60

ICICI Bank

232.71

1000.00

988.06

1011.41

  • Mahindra & Mahindra has launched the new Supro Profit Truck Excel series, available in both Diesel and CNG Duo variants.
  • HCL Technologies' 5G Open RAN traffic steering xApp software has received the Telecom Infra Project's silver badge.
  • UltraTech Cement has reported 67.03% rise in its consolidated net profit at Rs 1774.78 crore for Q3FY24 as compared to Rs 1062.58 crore for the same quarter in the previous year.
  • Hindustan Unilever has reported 1.09% rise in its consolidated net profit at Rs 2,508 crore for Q3FY24 as compared to Rs 2,481 crore for the same quarter in the previous year.

News Analysis