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Market Commentary 24 January 2024
Benchmarks likely to open in green on Wednesday

A Tuesday turned out to be terrible for Indian equity markets, as both Sensex and Nifty witnessed a sharp fall during the trading session, impacted by heavy selling at Realty and PSU counters. Selling by FIIs due to reasons like high valuation and mixed results for the earnings season so far, along with recent escalations in tensions in the Middle East and Red Sea, prompted the investors to book profit. The start of the day was on a strong note, as traders got encouragement after the commerce ministry data showed that India's exports of goods and services rose marginally by 0.4 per cent to $765.6 billion in 2023 despite global economic uncertainties. However, markets failed to hold gains and soon turned negative, as Fitch Group said South Asian economies would be most affected, amid rising hostilities in the Red Sea due to Houthi attacks. They will experience the largest relative increase in maritime trade distance, shipping time, and costs as the crucial trade route remains inaccessible. It added that India's economic forecast faces a significant risk in the event of a prolonged spell of disruptions. Losses got intensified during the second half, on the back of negative cues from European markets. Traders remained cautious ahead of the release of some key U.S. economic data as well as a slew of major central bank meetings later this week, including the Bank of Japan, the European Central Bank, the Bank of Canada and the Norges Bank. Finally, the BSE Sensex fell 1053.10 points or 1.47% to 70,370.55 and the CNX Nifty was down by 333.00 points or 1.54% to 21,238.80.

The US markets ended mostly in green on Tuesday with S&P 500 climbing to a record high close as investors digested a mixed bag of early quarterly results and awaited a slew of additional reports from Tesla and other companies later this week. However, the Dow pulled back off yesterday's record closing high amid a steep drop by shares of 3M (MMM), with the conglomerate plunging by 11.0 percent after reporting better than expected fourth quarter earnings but providing disappointing guidance. Healthcare giant Johnson & Johnson (JNJ) also moved to the downside despite reporting better than expected fourth quarter results. On the sectoral front, Most of the major sectors ended the day showing only modest moves on the day, contributing to the lackluster close by the broader markets. Airline stocks showed a substantial move to the upside, however, with the NYSE Arca Airline Index soaring by 3.0 percent. United Airlines (UAL) helped lead the sector higher, spiking by 5.3 percent after reporting fourth quarter results that exceeded analyst estimates on both the top and bottom lines. Gold stocks also turned in a strong performance amid a modest increase by the price of the precious metal, as reflected by the 2.3 percent jump by the NYSE Arca Gold Bugs Index. On the other hand, housing stocks moved sharply lower on the day, dragging the Philadelphia Housing Sector Index down by 4.4 percent.

Crude oil futures ended lower on Tuesday as Libya has restarted production at the Sharara oilfield, which remained shut for about two weeks due to protests. Meanwhile, geopolitical tensions remained in focus after U.S. and British forces conducted a fresh series of joint air strikes against Houthi targets in Yemen in a bid to protect the free flow of commerce. The Iran-backed Houthis, who control the most populous parts of Yemen, have been targeting ships they say are linked to Israel and the West. Benchmark crude oil futures for February delivery fell $0.39 or 0.5 percent to settle at $74.37 a barrel on the New York Mercantile Exchange. Brent crude for March delivery dropped $0.51 or 0.65 percent to settle at $79.55 a barrel on London's Intercontinental Exchange.  

Indian rupee ended lower against the US dollar on Tuesday as elevated crude oil prices and weak domestic equities weighed on investor sentiments. Foreign fund outflows also put pressure on the rupee. Traders were cautious after Fitch Group said South Asian economies would be most affected amid rising hostilities in the Red Sea due to Houthi attacks. They will experience the largest relative increase in maritime trade distance, shipping time, and costs as the crucial trade route remains inaccessible. It added that India's economic forecast faces a significant risk in the event of a prolonged spell of disruptions. On the global front, the yen languished near a two-month low on Tuesday ahead of a closely-watched policy decision by the Bank of Japan (BOJ) where expectations are for the central bank to stand pat on its ultra-loose monetary policy settings. Finally, the rupee ended at 83.15 (Provisional), weaker by 8 paise from its previous close of 83.07 on Friday.

The FIIs as per Tuesday'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 19475.54 crore against gross selling of Rs 23029.44 crore, while in the debt segment, the gross purchase was of Rs 1917.03 crore with gross sales of Rs 1332.07 crore. Besides, in the hybrid segment, the gross buying was of Rs 19.23 crore against gross selling of Rs 17.56 crore.

The US markets ended mostly in green on Tuesday as investors digested a mixed bag of early quarterly results and awaited a slew of additional reports from Tesla and other companies later this week. Asian markets are trading mixed on Wednesday as investors monitor economic data out of Japan as well as factory activity data from Australia. Indian markets ended significantly lower with cut of around one and half a percent on Tuesday as selling in financial, and FMCG shares dent the sentiment. Today, markets are likely to open in green amid mixed global cues. Traders will be taking encouragement as Union Petroleum Minister Hardeep Puri said the Indian economy is poised to touch $5 trillion next financial year - 2024-25 - and capitalise to double to $10 trillion by the end of this decade. At present, the Indian economy is estimated to be about $3.7 trillion. Some support will come as data released by the Central Board of Direct Taxes showed that the government's direct tax-to-GDP ratio stood at a 23-year high of 6.11% in FY23. The Centre's direct tax collections rose 17.8% year-on-year at Rs 16.6 trillion in FY23. Corporate tax collections during the year stood at Rs 8.26 trillion, up 16% on year, and income tax collections stood at Rs 8.33 trillion, 19.6% higher on year. However, persistent foreign fund outflows likely to dent sentiments. provisional data from the NSE showed that foreign institutional investors (FIIs) continued to be net sellers for five days in a row, selling shares worth Rs 3,115.39 crore on January 23. Sugar stocks will be in focus as industry body Indian Sugar Mills Association (ISMA) said India's year-on sugar production till January 15 in the ongoing 2023-24 sugar year (October-November) is lagging by 5.28%. The sugar production in Maharashtra, which was the top sugar producing state last year, is lagging by 16%. There will be some reaction in infrastructure related stocks with a private report that the ratio of cost overrun in central government infrastructure projects rose to a three-month high of 18.65% in December. The anticipated completion cost at Rs 30.7 lakh crore was higher than the original cost of Rs 25.9 lakh crore for 1,820 projects each worth Rs 150 crore and above. Edible oil industry stocks will be in limelight with report that the government has asked cooking oil companies to reduce prices of their products in line with the fall in international rates, but manufacturers said an immediate reduction may not be possible. Investors continue to keep eye on earnings of many companies to be out later in the day.

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

Index

Previous close

Support

Resistance

NSE Nifty

21,238.80

21,037.51

21,595.16

BSE Sensex

70,370.55

69,723.66

71,528.31

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

HDFC Bank

577.35

1430.95

1412.40

1462.10

ICICI Bank

507.97

1027.90

1012.94

1051.14

Tata Steel

353.74

130.05

127.84

133.74

State Bank of India

309.54

606.00

592.80

627.05

Power Grid

274.92

236.75

233.06

243.61

  • Tata Consultancy Services has enabled Euroclear Finland, the National Central Securities Depository of Finland, to integrate its core platform with the European securities settlement engine.
  • Hero MotoCorp has planned to set up a facility for assembling products in Nepal in partnership with CG Motors, its newly appointed distributor in the country.
  • Larsen & Toubro's heavy engineering arm has won multiple orders in the domestic and international markets.
  • Cipla's wholly owned subsidiaries -- Cipla (EU), UK and Cipla Holding BV, Netherlands, have jointly incorporated Mexicip S.A. de C.V., a wholly owned subsidiary in Mexico.

News Analysis