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NSE Intra-day chart (21 December 2022)
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Market Commentary 22 December 2022
Benchmarks likely to get optimistic start on firm global cues

 

Indian equity benchmarks fell for the second consecutive day and ended with losses of over a percent on Wednesday ahead of the release of the minutes of the Reserve Bank of India's latest monetary policy meet and key macroeconomic data from the US, while fears of a recession linger. Markets made a positive start as traders took some support with the Reserve Bank of India (RBI) stating that 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 also took note of report that 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. However soon, benchmarks erased initial gains and slipped into red in morning deals, as traders turned cautious with a labour bureau's statement that retail inflation for farm and rural workers rose to 6.87 per cent and 6.99 per cent, respectively, in November on annual basis. Selling further crept in after Reserve Bank Governor Shaktikanta Das said underlying economic activity in India continues to be strong, but external factors will cause some dent to the economy. Some concern also came with a private report stating that mergers and acquisitions (M&A) activity globally fell well short of the high-water mark set last year as debt financing markets collapsed and stock market volatility decimated valuations, and dealmakers are predicting a slow path to recovery in 2023. Finally, the BSE Sensex fell 635.05 points or 1.03% to 61,067.24 and the CNX Nifty was down by 186.20 points or 1.01% to 18,199.10.

 

The US markets settled higher on Wednesday after upbeat earnings reports from two bellwethers raised hopes that corporate earnings may be better than feared even with a potential recession. Nike surged 12% after beating street expectations for quarterly earnings and revenue. The results lifted other retail stocks. The sports apparel maker also showed progress in its attempt to clear through inventory, posting a decline over the previous quarter. Meanwhile, FedEx gained 3.4% after reporting earnings per share that beat estimates. The company also shared a slew of cost-cutting plans. Adding to the positive sentiment, the Conference Board released a report showing a significant improvement in US consumer confidence in the month of December. The Conference Board said its consumer confidence index spiked to 108.3 in December from an upwardly revised 101.4 in November. Street had expected the index to inch up to 101.0 from the 100.2 originally reported for the previous month. With the much bigger than expected surge, the consumer confidence index reached its highest level since April 2022. On the sectoral front, Semiconductor stocks turned in some of the best performances on the day, with the Philadelphia Semiconductor Index surging by 2.4 percent after ending Tuesday's trading at its lowest closing level in well over a month. Significant strength was also visible among energy stocks, which moved sharply higher along with the price of crude oil.

 

Crude oil futures sharply higher on Wednesday after data showed a larger than expected drop in US crude inventories in the week ended December 16. Data from Energy Information Administration (EIA) showed crude inventories in the U.S. fell by 5.89 million barrels last week, more than 3.5 times the estimated decline of 1.66 million barrels. The American Petroleum Institute's report on Tuesday showed a decrease of 3.1 million barrels of crude oil in US inventories last week versus an expected drop of 1.7 million barrels. Besides, hopes about China relaxing some of its Covid-19 curbs also contributed to the jump in oil prices. Benchmark crude oil futures for February delivery gained $2.06 or 2.7 percent at $78.29 a barrel on the New York Mercantile Exchange. Brent crude for February surged $2.21 or 2.76 percent to settle at $82.20 a barrel on London's Intercontinental Exchange.

 

Indian rupee tumbled against dollar on Wednesday on the back of massive losses in domestic equities. Sentiments remained negative with Reserve Bank Governor Shaktikanta Das' statement that the underlying economic activity in India continues to be strong, but external factors will cause some dent to the economy. On the global front, yen traded flat on Wednesday after surging almost 4% in the previous session, when the Bank of Japan (BOJ) unexpectedly tweaked a key policy, allowing government bond yields more room to move. Besides, the rouble plunged to its weakest level since early May past 70 against the dollar on Wednesday, extending weekly losses with fears over sanctions on Russian oil and gas spooking the market. Finally, the rupee ended at 82.80 (Provisional), weaker by 10 paise from its previous close of 82.70 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 5793.52 crore against gross selling of Rs 4575.28 crore, while in the debt segment, the gross purchase was of Rs 810.21 crore against gross selling of Rs 817.56 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.21 crore against gross selling of Rs 10.30 crore.

 

The US markets ended higher on Wednesday with help from upbeat Nike and FedEx quarterly earnings, as well as improving consumer confidence and easing inflation expectations from investors. Asian markets are trading mostly in green on Thursday carrying on the optimism on Wall Street. Indian markets ended lower on Wednesday as surging COVID cases in China and concerns over renewed outbreaks in other countries sapped risk appetite. Today, markets are likely to get optimistic start tracking firm global cues. Sentiments will get a boost as former Niti Aayog vice chairman Arvind Panagariya said the Indian economy is likely to grow at over 7 per cent in the current fiscal year, and observed that the growth rate should sustain next year too provided the forthcoming Budget does not have any negative surprises. Panagariya further said recessionary fears have been around for a while but so far neither the US nor the EU has gone into recession. Some optimism will come as Union Finance Minister Nirmala Sitharaman exuded confidence that tax revenue generation in the current fiscal year (FY23) would be sufficient to fund the additional spending of Rs 3.26 trillion, for which her ministry has sought Parliamentary approval. Traders may take note of report that India, which has already been in talks with Russia for a rupee-rouble payment system, is now looking at expanding the rupee trade with other nations as well, including several countries in Africa, UAE and Saudi Arabia among others. Meanwhile, Union minister Anupriya Patel said India has signed 13 free trade agreements (FTAs) and six preferential pacts so far with its trading partners for ensuring greater market access for domestic goods and promoting exports. However, renewed fears of covid-19, tepid foreign flows, and rising crude oil prices may weigh indices. As per provisional data available on the NSE, foreign institutional investors (FIIs) sold shares worth Rs 1,119.11 crore on December 21. Metal stocks will be in focus as rating agency Icra said the demand for finished steel in India is expected to grow eight per cent this year compared to 2021. It said supported by the government's infrastructure-led growth model, domestic finished steel demand has registered a double-digit growth of 11.9 per cent in the first eight months of the current fiscal. There will be some reaction in auto components industry stocks as the Automotive Component Manufacturers Association of India said India's auto components industry witnessed a 34.8 per cent growth to Rs 2.65 lakh crore in first-half of 2022-23, riding on domestic demand, particularly from the passenger vehicles segment. Besides, shares of Sula Vineyards will debut on the bourses today.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,199.10

18,083.45

18,394.05

BSE Sensex

61,067.24

60,668.26

61,736.34

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

323.03

109.60

108.20

111.50

Tata Motors

116.06

402.15

397.30

410.70

ICICI Bank

113.41

893.60

881.79

910.64

Oil & Natural Gas Corporation

100.11

143.50

141.86

145.96

State Bank of India

92.17

594.30

586.21

605.76

 

  • Bharti Airtel has launched its cutting edge 5G services in Ahmedabad and Gandhinagar. 
  • Axis Bank has received regulatory nod to act as a pension fund manager and has already crossed Rs 100 crore in assets under management for its retirement business.
  • Maruti Suzuki India is all set to showcase a range of futuristic products and technology at Auto Expo 2023. 
  • BPCL has received the Board of Directors' approval for the financial plan and capital expenditure for laying the piped gas network, building, and operating of 8 CGD Projects.
News Analysis