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NSE Intra-day chart (20 December 2022)
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Market Commentary 21 December 2022
Benchmarks to get positive start tracking global peers

 

Indian equity benchmarks recovered sharply from morning lows to end the Tuesday's session with marginal losses amid buying in index majors Tata Consultancy Services and Reliance Industries. Markets made a gap down opening and languished deep in the red for the most part of the day, tracking heavy losses in Asian peers. Traders got anxious with provisional data available on the NSE showing that foreign institutional investors (FIIs) have net-sold shares worth Rs 538.10 crore on December 19, 2022. Some concern also came amid a private report stating that liquidity in the banking system has slipped into a deficit for the first time in three weeks, prompting banks to borrow the largest quantum of funds from the Reserve Bank of India (RBI) in around a month and a half. However, key gauges managed to recoup most of early losses in late afternoon deals, as traders found some solace with Union Finance Minister Nirmala Sitharaman's statement that scheduled commercial banks have written off loans amounting to Rs 10,09,511 crore in the last five financial years and the process of recovery of dues from the borrowers continues. Some support also came with Minister of state for Micro, Small and Medium Enterprises (MSMEs) Bhanu Pratap Singh Verma's statement that 1.31 crore people were employed in the MSMEs incorporated in the financial year 2021-22 (FY22), up by 16% as against 1.13 crore employees in the MSMEs incorporated in FY21. Finally, the BSE Sensex fell 103.90 points or 0.17% to 61,702.29 and the CNX Nifty was down by 35.15 points or 0.19% to 18,385.30.

 

The US markets ended marginally higher on Tuesday as some traders looked to pick up stocks at relatively reduced levels following recent weakness. However, buying interest remained somewhat subdued with some traders reluctant to get back into the markets amid lingering concerns the Federal Reserve's aggressive interest rate hikes will tip the economy into a recession. On Friday, the Commerce Department is due to release its report on personal income and spending, which includes a reading on inflation said to be preferred by the Fed. With Fed Chair Jerome Powell saying the central bank will require substantially more evidence inflation is on a sustained downward trend before halting its rate hikes, traders are likely to keep a close eye on the inflation reading. On the sectoral front, gold stocks moved sharply higher on the day, resulting in a 4.6 percent spike by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid a notable increase by the price of the precious metal, with gold for February delivery jumping $27.70 to $1,825.40 an ounce. An increase by the price of crude oil also contributed to considerable strength among oil service stocks, driving the Philadelphia Oil Service Index up by 3.1. On the economic data front, the Commerce Department released a report showing a decrease in new residential construction in the U.S. in the month of November. The report said housing starts fell by 0.5 percent to an annual rate of 1.427 million in November after tumbling by 2.1 percent to a revised rate of 1.434 million in October. Street had expected housing starts to decline by 0.7 percent to a rate of 1.415 million from the 1.425 million originally reported for the previous month. The Commerce Department also said building permits plunged by 11.2 percent to an annual rate of 1.342 million in November after slumping by 3.3 percent to a revised rate of 1.512 million in October.

 

Crude oil futures ended higher on Tuesday on account of softer dollar and a U.S. plan to restock petroleum reserves. The US announced a plan to buy up to 3 million barrels of oil for the Strategic Petroleum Reserve following this year's record release of 180 million barrels from the stockpile. However, upside remained capped as a worsening outlook for a major U.S. winter storm sparked fears that millions of Americans might curb travel plans during the holiday season. Benchmark crude oil futures for January delivery gained $0.89 or 1.18 percent at $76.9 a barrel on the New York Mercantile Exchange. Brent crude for February added $0. 19 or 0.2 percent to settle at $79.99 a barrel on London's Intercontinental Exchange.

 

Rupee ended weaker against dollar on Tuesday on the back of negative trend in domestic equities and rising crude prices in the global markets. Traders were worried amid a private report stating that liquidity in the banking system has slipped into a deficit for the first time in three weeks, prompting banks to borrow the largest quantum of funds from the Reserve Bank of India (RBI) in around a month and a half. On the global front, the yen surged to a four-month peak against the dollar on Tuesday after the Bank of Japan stunned markets by deciding to review its yield curve control policy and widen the trading band for the 10-year government bond yield. While it kept broad policy settings unchanged - pinning short-term JGB yields at -0.1% and the 10-year yield around zero - the BOJ decided to let long-term yields to move 50 basis points either side of its 0% target, wider than the 25 basis point band previously. Finally, the rupee ended at 82.75 (Provisional), weaker by 13 paise from its previous close of 82.62 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 5362.33 crore against gross selling of Rs 5499.90 crore, while in the debt segment, the gross purchase was of Rs 132.29 crore against gross selling of Rs 723.14 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.41 crore against gross selling of Rs 10.66 crore.

 

The US markets ended slightly higher on Tuesday after four sessions of declines, but investors fretted about weak holiday shopping and rising bond yields added pressure after the Bank of Japan's (BoJ) surprise tweak of monetary policy. Asian markets are trading mostly in green on Wednesday tracking overnight gains on Wall Street. Indian markets recovered most of their intraday losses to close marginally lower on Tuesday amid buying in index majors Reliance Industries and Tata Consultancy Services despite lacklustre global cues. Today, the benchmark indices are likely to start session in green amid positive global cues. Sentiments will get a boost as the Reserve Bank of India (RBI) in its monthly bulletin for December said waning input cost pressures, buoyant corporate sales, and a turn-up in investments in fixed assets suggest the beginning of an upturn in India's capital expenditure cycle, which could help improve earnings in the coming quarters and speed up the momentum of growth in the Indian economy. Traders will be taking encouragement as a finance ministry report said that the government remains committed towards strong macroeconomic fundamentals and financial stability despite global headwinds. The report added despite hurdles, the Indian economy has performed reasonably well as compared to other major economies and shown its resilience amidst the global slowdown and global uncertainties. Some support will come as the Fitch Ratings affirmed India's sovereign rating at the lowest investment grade (BBB minus) with stable outlook holding that the country's robust medium-term growth outlook is a key supporting factor. Also, foreign institutional investors (FIIs) net bought shares worth Rs 455.94 crore on December 20, as per provisional data available on the NSE. Meanwhile, investors will keep an eye on RBI MPC minutes to be released today. Sugar stocks will be in focus as trade body AISTA said India has exported 5.62 lakh tonne of sugar so far in the current 2022-23 marketing year that began in October. There will be some reaction in textile industry stocks as the Cotton Association of India (CAI) reduced the cotton crop estimate by 4.25 lakh bales to 339.75 lakh bales for the 2022-23 season, beginning from October 2022, as the production in Haryana, Andhra Pradesh and Karnataka is expected to decline. Power stocks will be in limelight as Fitch Ratings in a report said growth in the country's power demand is likely to slow down in the second half of the financial year ending March 2023 (H2FY23), after a robust 11.3 per cent year-on-year (YoY) growth in the first half of the year (H1FY23).

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,385.30

18,257.00

18,459.25

BSE Sensex

61,702.29

61,276.53

61,954.22

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

348.36

111.00

109.50

112.00

Tata Motors

123.41

409.95

405.96

415.96

Axis Bank

95.11

952.15

944.15

956.45

Hindalco Industries

75.80

457.75

448.25

463.25

Infosys

73.96

1505.90

1,486.90

1,520.45

 

  • Dr. Reddy's Laboratories has successfully completed the Phase 1 study of its proposed biosimilar of Tocilizumab to be used in the treatment of rheumatoid arthritis in adults. 
  • NTPC has started commercial operation of first part capacity of 100 MW out of 300 MW Nokhra Solar PV Project at Bikaner, Rajasthan, with effect from December 12, 2022. 
  • Bharti Airtel has acquired a strategic stake in Lemnisk under Airtel's Startup Accelerator Program. The deal is subject to all applicable statutory approvals.
  • UltraTech Cement has signed a memorandum of understanding with IRM India Affiliate.
News Analysis