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NSE Intra-day chart (20 October 2022)
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Market Commentary 21 October 2022
Benchmarks likely to get cautious start amid weak global cues

 

Indian equity benchmarks erased their initial losses and managed to end in green on Thursday helped by gains in Oil & Gas, Utilities and Power stocks. Key gauges made negative start following weak global market trends and continuous foreign fund outflow. As per exchange data, foreign institutional investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 453.91 crore. Some pessimism also came as private report stated that India's economy will grow well below its potential over the next two years, with inflation staying above the mid-point of the Reserve Bank of India's tolerance band despite recent interest rate rises. Traders got anxious as Fitch Ratings said that India's external finances are becoming 'less of a strength' but continue to be sufficient to cushion risks emanating from abroad. The comments by Fitch, which rates India at BBB-with a stable outlook, come amid a sharp decline in the country's foreign exchange reserves, which have been deployed by the Reserve Bank of India (RBI) to stem a rapid fall in the rupee. However, bargain buying at the fag-end of the session helped benchmark indices erase losses and end higher. Traders also found some solace with RBI Monetary Policy Committee (MPC) member Ashima Goyal's statement that the efforts of the Reserve Bank to contain price rise by repeatedly increasing interest rates will help in containing inflation, which is likely to fall below 6 per cent next year. Goyal further said that the policy rate hikes have largely reversed pandemic-time cuts but the real rate remains low enough not to hurt the growth recovery. Additional support also came with Subhrakant Panda, senior vice president of the Federation of Indian Chambers and Commerce and Industries (FICCI) stating that the Indian industry is ready to catch the momentum of the country's growth story and be a part of its march to 2047 to become a developed nation. He said India has emerged as a bright spot in the world economy. Traders took note of report that negotiations for the proposed trade pact between India and the UK are moving in the right direction, and both sides are expected to reach an agreement soon. India and the UK are negotiating the pact to boost trade and investments between the countries. Finally, the BSE Sensex rose 95.71 points or 0.16% to 59,202.90 and the CNX Nifty was up by 51.70 points or 0.30% to 17,563.95.

 

The US markets ended in red on Thursday as Treasury yields continued march to new highs. The benchmark 10-year Treasury yield reached a high of 4.239%, trading at levels not seen since 2008. Rising rates have been a headwind for stocks all year, as the Federal Reserve continues to try and cool off inflationary pressures not seen in decades. Further, weakness also prevailed in the markets as a report released by the National Association of Realtors (NAR) showed a continued decrease in US existing home sales in the month of September. NAR said existing home sales slid 1.5 percent to an annual rate of 4.71 million in September after falling by 0.8 percent to a revised rate of 4.78 million in August. Street had expected existing home sales to slump by 2.1 percent to a rate of 4.70 million from the 4.80 million originally reported for the previous month. Existing home sales declined for the eighth consecutive month, falling to their lowest level since spring of 2020. The report showed decreases in existing home sales in the Northeast, Midwest and South, while existing home sales in the West were unchanged from the previous month. On the sectoral front, Interest rate-sensitive utilities stocks have shown a significant move to the downside on the day, dragging the Dow Jones Utility Average down by 2.0 percent. Considerable weakness has also emerged among transportation stocks, as reflected by the 1.8 percent drop by the Dow Jones Transportation Average. Shares of American Airlines (AAL) have come under pressure even though the airline reported third quarter results that beat analyst estimates on both the top and bottom lines.

 

Crude oil futures ended higher on Thursday. Private reports stated that China is looking to relax quarantine duration for visitors into the country helped raise hopes oil demand will see an uptick in the world's second largest economy. However, upside remained capped as worries about inflation dampening demand for oil. Meanwhile, Federal Reserve Bank of Philadelphia President Patrick Harkerhas said to fight inflation, the US Federal Reserve is trying to slow the economy and will keep raising its short-term rate target. Benchmark crude oil futures for November delivery rose $0.43 or 0.5 percent at $85.98 a barrel on the New York Mercantile Exchange. Brent crude for December delivery added $0.20 or about 0.22 percent to settle at $92.61 (provisional) a barrel on London's Intercontinental Exchange. 

 

After opening at record low level, Indian rupee staged recovery and ended higher against dollar on Thursday after persistent selling of the American currency by exporters. Domestic sentiment improved after RBI Monetary Policy Committee (MPC) member Ashima Goyal said that the efforts of the Reserve Bank to contain price rise by repeatedly increasing interest rates will help in containing inflation, which is likely to fall below 6 per cent next year. On the global front, dollar hit the symbolic level of 150 yen for the first time since 1990 on Thursday as the greenback was supported by Treasury yields trading at multi-year highs, keeping markets on high alert for intervention from Japanese authorities. Finally, the rupee ended at 82.76 (Provisional), stronger by 24 paisa from its previous close of 83.00 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 5671.89 crore against gross selling of Rs 6052.52 crore, while in the debt segment, the gross purchase was of Rs 339.60 crore against gross selling of Rs 206.69 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.10 crore against gross selling of Rs 8.19 crore.

 

The US markets ended lower on Thursday after investors weighed generally upbeat earnings against the prospect that the Federal Reserve could hold firm on its aggressive policy for longer than they had hoped. Asian markets are trading mostly in red on Friday as investors awaited inflation data from several economies. Indian markets ticked higher for the fifth straight session on Thursday, buoyed by fag-end buying in IT stocks despite a largely downbeat trend overseas. A recovery in the rupee also boosted investor confidence. Today, markets are likely to get cautious start amid weak global cues. Traders will be concerned as Labour Ministry data shows retail inflation for farm and rural workers increased to 7.69 percent and 7.9 percent respectively in September this year. The hike was attributed to higher prices of certain food items. There will be some cautiousness as the latest payroll data released by the Employees' Provident Fund Organisation showed that the number of fresh formal jobs created in August fell below the 1-million mark for the first time in five months, declining 11.9 per cent from July levels. However, some support may come later in the day as foreign institutional investors (FIIs) net bought equities worth Rs 1,864.79 crore on 20 October, according to the provisional data available on the NSE. Traders may take note of a report that the Centre has exuded confidence that the prices of pulses and onions - the two main commodities which seasonally show a spike with the advent of winter - wouldn't rise much this year, assuring it has adequate stocks in the event of a market intervention. Meanwhile, industry body CII has suggested the government a number of measures, including lowering freight and power costs for exporters and setting up a shipping regulator, to promote outbound shipments. Banking stocks will be in limelight as data from the Reserve Bank of India (RBI) showed that bank credit rose by 17.94 per cent year-on-year (YoY) to Rs 128.6 trillion as of October 7 to reflect festive and quarter-end demand. Deposits at banks increased 9.62 per cent YoY to Rs 172.72 trillion as of October 7. There will be some buzz in telecom industry stocks with a private report that telecom companies are expected to witness steady revenue growth in Q2FY23 with slight sequential uptick in average revenue per user albeit softer net additions, while SUC (spectrum usage charges) savings are seen lifting margins. Defence industry stocks will be in focus as terming exports as a key pillar for long-term sustainability of the domestic defence industry, Defence Minister Rajnath Singh said the government has set itself a target of achieving defence exports of $5 billion by 2025. He also said the government was eyeing overall turnover of USD 22 billion in defence production in the same timeframe. There will be some reaction in coal industry stocks as Coal minister Pralhad Joshi said that the import of dry fuel which has declined considerably will be stopped by 2024. Investors will continue to track the quarterly earnings season. Index heavyweights, Reliance Industries and Hindustan Unilever are due to report July-September quarter (Q2FY23) results today.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,563.95

17,461.91

17,625.06

BSE Sensex

59,202.90

58,904.83

59,387.40

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

380.91

101.10

99.54

101.94

Oil & Natural Gas Corporation

187.48

129.35

126.44

131.64

ITC

184.74

350.60

346.61

352.76

Power Grid Corporation of India

122.78

217.75

214.06

219.71

NTPC

120.20

167.40

163.30

169.70

 

  • Infosys has collaborated with CIRCOR International to transform its IT infrastructure, service desk, and user support applications. 
  • IndusInd Bank has reported rise of 57.43% in its consolidated net profit at Rs 1805.22 crore for Q2FY23 as compared to Rs 1146.67 crore for Q2FY22. 
  • Tata Motors has signed an agreement with Evera, one of the earliest EV only - ride hailing platform in Delhi NCR region, for delivering 2,000 XPRES T EVs.
  • Asian Paints has reported rise of 32.83% in its consolidated net profit at Rs 803.83 crore for Q2FY23 as compared to Rs 605.17 crore for Q2FY22.
News Analysis