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NSE Intra-day chart (21 December 2021)
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Market Commentary 22 December 2021
Markets likely to open in green on firm global cues

 

Snapping two day losing streak, Indian equity benchmarks ended the Monday's trade with a gain of around a percent, setline above their crucial 56,300 (Sensex) and 16,750 (Nifty) levels, as traders went for bargain hunting after a worldwide slump for financial markets spurred by worries about how badly the omicron variant, inflation and other forces will hit the world economy. Markets started the day on an optimistic note as sentiments remained up-beat as a Commerce Ministry official said Indian exports showed a turnaround after December last year and are still going strong. Traders also took some support as Prime Minister Narendra Modi assured India Inc that the government would focus on reducing the compliance burden while exhorting the top companies to make full use of the production-linked incentive (PLI) scheme. Markets extended gains as additional optimism came with report that the Asian Development Bank (ADB) will provide $350 million loan to improve access to urban services in India by accelerating policy actions and reforms to enhance service delivery and promote performance-based central fiscal transfers to urban local bodies (ULBs). However, market participants booked half of their early gains in last leg of trade as traders remained watchful amid report that India has recorded 200 cases of the Omicron coronavirus variant across 12 states, mostly in the western state of Maharashtra and the nation's capital New Delhi. Some cautiousness came with report that Formal job creation in the country slowed down in October with 1.27 million new jobs added under the Employees' Provident Fund Organisation. This is the lowest after July when 1.23 million subscribers were added. Net new additions under EPFO stood at 1.36 million in August and 1.54 million in September. Despite profit booking in later part of the day, local bourses managed to end with a decent gains as traders continued looking for beaten down but fundamentally strong stocks. Finally, the BSE Sensex gained 497.00 points or 0.89% to 56,319.01 and the CNX Nifty was up by 156.65 points or 0.94% to 16,770.85.

 

The US markets settled sharply higher on Tuesday as traders picked up stocks at somewhat reduced levels on the heels of recent weakness. The rebound on markets also came after a report from Moderna (MRNA) about the effectiveness of a booster dose of its Covid-19 vaccine against the Omicron variant. Moderna announced that a booster dose of its Covid-19 vaccine increased antibody levels against Omicron. The currently authorized 50 microgram booster dose increased neutralizing antibody levels against Omicron approximately 37-fold compared to pre-boost levels. On the sectoral front, Airline stocks turned in some of the market's best performances on the day, with the NYSE Arca Airline Index soaring by 5.3 percent. Substantial strength was also visible among energy stocks, which benefited from a significant rebound by the price of crude oil. Crude for February delivery spiked $2.51 to $71.12 a barrel after plunging $2.11 to $68.61 a barrel on Monday. Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged up by 5.2 percent and the NYSE Arca Oil Index shot up by 3.5 percent. Micro helped lead a rally by semiconductor stocks, resulting in a 3.4 percent jump by the Philadelphia Semiconductor Index.

 

Crude oil futures ended higher with gains of over three and half percent on Tuesday as prices rebounded from losses in the previous session. An announcement from Moderna Inc. that a booster dose of its Covid-19 vaccine appeared to be protective against the Omicron variant in laboratory testing contributed to the uptick in oil prices. However, omicron accounted for 73% of new infections in the US last week, a nearly six-fold increase in only seven days. Meanwhile, WHO director-general Tedros Adhanom Ghebreyesus said there is now consistent evidence that Omicron is spreading significantly faster than the Delta variant. Benchmark crude oil futures for January delivery rose $2.51 or 3.7 percent to settle at $71.12 a barrel on the New York Mercantile Exchange. Brent crude for February delivery surged $2.64 or 3.68 percent to settle at $74.16 a barrel on London's Intercontinental Exchange. 

 

Indian rupee ended higher against dollar on Tuesday as banks persistently sold the greenback on behalf of corporate entities and possibly for overseas investors looking to participate in Indian firms' fund-raising plans. Dollar-selling interventions by the Reserve Bank of India in the wake of recent volatility in the rupee also boosted the traders' sentiments. Additional support came in with Joint Secretary in the Department of Commerce Amitabh Kumar's statement that Indian exports showed a turnaround after December last year and are still going strong, while global trade took a hit during the COVID-19 pandemic. Healthy gains in Indian equity markets also supported rupee. On the global front, a rebound in global risk appetite pushed the British pound slightly higher versus the dollar on Tuesday, after UK Prime Minister Boris Johnson cautioned that further lockdown measures may be needed. Finally, the rupee ended 75.59 (Provisional), stronger by 30 paise from its previous close of 75.90 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 7064.05 crore against gross selling of Rs 10127.72 crore, while in the debt segment, the gross purchase was of Rs 274.55 crore against gross selling of Rs 2734.17 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.90 crore against gross selling of Rs 31.26 crore.

 

The US markets ended higher on Tuesday following strong earnings by Nike and Micron. Asian markets are trading in green on Wednesday tracking overnight gains on Wall Street, despite the increasing number of Omicron cases around the globe. Indian markets snapped a two-day losing streak on Tuesday tracking a rebound in other Asian markets. Gains across most sectors, led by IT, metal, healthcare and consumer stocks, pushed the headline indices higher. Today, the start of session is likely to be positive mirroring firm global cues. Some support will come as the Finance Ministry in a report said the government has initiated various measures to provide relief and financial support to various sectors of the Covid-19 hit economy, at the same time, fiscal consolidation is also under focus. Traders may take note of newly-elected president of Federation of Indian Chambers of Commerce and Industry (Ficci) Sanjiv Mehta's statement that high inflation has impacted consumption and market volumes have gone down, especially in the rural economy, but it is likely to start easing from mid-2022 as it is largely due to supply side constraints or speculation. However, there may be some concern as foreign portfolio investors (FPIs) remained net sellers of debt worth $587.01 million so far in December, on weak sentiments due to rising cases of the Omicron variant of Covid-19, ahead of the Federal Reserve's tapering and rate hikes. There may be some cautiousness with report showing that India's production of crude oil, which is refined to produce petrol and diesel, continued to decline in November, with lower output from state-owned firms leading to an over 2 per cent drop. Crude oil production in November was 2.43 million tonnes, down from 2.48 million tonnes a year back and 2.5 million tonnes in October 2021. Meanwhile, the GST Council has not recommended bringing petroleum products under the reformed taxation regime even as certain representations have been made to the government to include petrol and diesel in GST. IT and auto stocks will be in limelight as the Government notified the semiconductor policy which was cleared by the Cabinet last week. According to the gazette notification, the government will provide up to 50% of Project cost for two semiconductor and two display fabs in the country. Gem, jewellery industry stocks will be in focus as the Gem and Jewellery Export Promotion Council (GJEPC) said India's overall gem and jewellery exports in November declined by 4.21 per cent to Rs 17,784.92 crore (USD 2,384 million) compared to the same month last year due to break in manufacturing activity during Diwali. There will be some reaction in power stocks with a private report that India's rooftop solar capacity addition tripled to 1.3 GW during January-September 2021 as compared to the same period a year ago. Metro Brands shares will start trading on the stock exchanges today.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,770.85

16,660.60

16,908.75

BSE Sensex

56,319.01

55,943.90

56,797.42

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ITC

193.95

212.50

210.55

214.95

Tata Motors

188.38

453.50

448.60

459.65

State Bank of India

166.17

447.30

441.79

455.54

ICICI Bank

145.63

721.00

715.11

727.91

Wipro

136.81

691.15

675.74

701.84

 

  • L&T's wholly owned subsidiary -- Larsen & Toubro International FZE has entered into a SPA on December 20, 2021 to acquire, stake in Intelliflux Controls Inc., a Delaware Corporation. 
  • IOC has received approval for investment proposal of new crude oil pipeline system with nameplate capacity of 17.5 MMTPA from Mundra to Panipat along with augmentation of crude oil tank farm at Mundra, at an estimated cost of Rs 9,028 crore. 
  • SBI has acquired a minority stake in JSW Cement with an investment of Rs 100 crore via compulsorily convertible preference shares. 
  • Bharti Airtel has lost 4,89,709 customers in October 2021.
News Analysis