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NSE Intra-day chart (25 October 2021)
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Market Commentary 26 October 2021
Benchmarks likely to open in green on positive global cues

 

Snapping four day losing streak, Indian equity benchmarks ended the volatile day of trade in green terrain on Monday, as traders opted to buy beaten-down but fundamentally strong stocks. Markets started the session with weakness and extended losses in first half of the trade as traders remained anxious, as in its recent Regional Economic Outlook (REO), the IMF noted that the pandemic has taken a turn for the worse in Asia since the spring, along with the region's growth outlook. The growth projection for the Asia and Pacific region is downgraded by more than 1 percent to 6.5 percent compared to the April 2021 forecasts--more than for any other region. Valuation concerns coupled with persistent selling by FIIs also kept traders on sidelines. Foreign portfolio investors (FPIs) have turned net sellers in Indian market by pulling out Rs 3,825 crore in October so far. However, local bourses staged smart recovery in second half of the trade as traders went for bargain hunting. Some support also came after industry chamber PHDCCI said it expects strong GDP growth in the coming quarters with the economic recovery gaining momentum. Out of the 12 lead economic and business indicators of QET (Quick Economic Trends), tracked by the industry body, nine have shown an uptick in the sequential growth for the month of September 2021 as compared to six showing the uptrend in August 2021. Traders also found some solace with India Ratings & Research's report stating that the recently-concluded normal monsoon season will provide a much-needed cushion to both India's agriculture and inflation in 2021-22. Finally, the BSE Sensex rose 145.43 points or 0.24% to 60,967.05 and the CNX Nifty was up by 10.50 points or 0.06% to 18,125.40.

 

The US markets ended higher on Monday on optimism about more upbeat earnings reports, with a slew of big-name companies due to report their quarterly results this week. Facebook, General Electric, UPS, Alphabet (GOOGL), Coca-Cola, General Motors, McDonald's, Ford, Amazon, Apple and Exxon Mobil are just a few of the companies due to report their results in the coming days. Upbeat earnings reports contributed to a recent upward trend on markets, as most companies have reported better than expected results. Of the 117 companies in the S&P 500 that have reported earnings to date, 84% posted numbers that beat expectations. S&P 500 companies are expected to grow profit by about 35% in the third quarter. However, trading activity was somewhat subdued as a lack of major US economic data kept some traders on the sidelines. Some traders also have been reluctant to make more significant moves ahead of the Federal Reserve's monetary policy meeting next week. The Fed is likely to leave interest rates unchanged but could announce plans to begin scaling back its asset purchase program. On the sectoral front, steel stocks showed a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 3.5 percent. Considerable strength was also visible among gold stocks, as reflected by the 1.6 percent gain posted by the NYSE Arca Gold Bugs Index. The strength in the gold sector came amid an increase by the price of the precious metal, with gold for December delivery rising $10.50 to $1,806.80 an ounce.

 

Crude oil futures ended unchanged on Monday as prices fell sharply from the day's high during the fag end of the session, with traders weighing global energy demand and supply positions. Oil prices rose higher early on in the session, and US oil contract hit multi-year high, lifted by tight global supply and surging demand for oil in several countries across the world. Oil prices also found support as the OPEC+ alliance sticks to an existing pact for a gradual increase in oil output. Benchmark crude oil futures for December delivery settled unchanged at $83.76 a barrel on the New York Mercantile Exchange. However, Brent crude for December delivery gained 46 cents or 0.5 percent to settle at $85.99 a barrel on London's Intercontinental Exchange.

 

Indian rupee concluded substantially weaker against dollar on Monday on account of continued dollar demand from importers and banks. Sentiments were dampened in its recent Regional Economic Outlook (REO), the IMF notes that the pandemic has taken a turn for the worse in Asia since the spring, along with the region's growth outlook. The growth projection for the Asia and Pacific region is downgraded by more than 1 percent to 6.5 percent compared to the April 2021 forecasts--more than for any other region. Adding more pessimism foreign portfolio investors (FPIs) have turned net sellers in Indian market by pulling out Rs 3,825 crore in October so far. On the global front, dollar fell on Monday back towards a one-month low as traders continued to focus on the prospect of interest rate hikes and tightening outside of the United States. Finally, the rupee ended 75.08, weaker by 18 paise from its previous close of 74.90 on Friday.

 

The FIIs as per Monday's data were net seller equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 6099.04 crore against gross selling of Rs 8883.78 crore, while in the debt segment, the gross purchase was of Rs 2720.67 crore with gross sales of Rs 523.73 crore. Besides, in the hybrid segment, the gross buying was of Rs 28.69 crore against gross selling of Rs 21.27 crore.

 

The US markets ended mostly higher on Monday buoyed by a robust start to the U.S. corporate earnings season and an improving economic outlook. Asian markets are trading mostly in green on Tuesday as corporate earnings and progress on President Joe Biden's economic agenda helped sentiment even as the debate over inflation risks intensified. Indian markets closed higher for the first time in last five consecutive sessions, with minor gains on Monday. Today, benchmarks are likely to start the session on a positive note tracking gains across global markets. Some support will come as a private report stated that the economy is likely to register a 9.5 per cent growth this fiscal over 7.3 per cent contraction last year, as the ongoing recovery is faster and more credible than earlier foreseen. Traders may take note of Defence Minister Rajnath Singh's statement that India's defence exports have grown by 334 per cent in the last five years and the country is exporting to more than 75 countries. Singh said that India's export performance is a strong indicator of the quality and competitiveness of defence products. Meanwhile, batting for green hydrogen as a transport fuel, Union Minister Nitin Gadkari has said there is a need to make India a country that will not be dependent on imports of petrol and diesel. However, some cautiousness may come with report that Foreign Institutional Investors (FII) have been net sellers of domestic stocks for 5 consecutive days now. FIIs sold Rs 2,459 crore worth of equities on Monday. Domestic Institutional Investors, however, were net buyers of stocks worth Rs 2,390 crore. There will be some buzz in power stocks as a press release by CRISIL Ratings stated that solar tariffs might rise to Rs 2.6 per unit to Rs 2.7 per unit from an all-time low of Rs 2 unit over next fiscal year in the wake of the recent increase in the goods and services tax (GST) on renewable energy equipment, and the proposed customs duty on imported solar modules. Telecom stocks will be in focus as the government amended the telecom licence norms to reduce the tax burden on telecom operators by exempting all non-telecom revenues, income from dividends, interest, property sale and rent, among others, for calculation of levies like licence fees and spectrum usage charges. There will be some reaction in the hotel industry stocks as a report by the National Restaurant Association of India (NRAI) said the restaurant business worldwide was one of the hardest hit by the Covid-19 pandemic. The Indian food services market was no exception, as it witnessed 53 per cent degrowth in FY2021 compared to the previous fiscal. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,125.40

17,982.14

18,255.04

BSE Sensex

60,967.05

60,476.15

61,431.46

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ICICI Bank

961.23

846.75

807.76

876.36

State Bank of India

356.16

507.10

498.15

515.75

Oil & Natural Gas Corporation

345.59

161.30

159.15

163.20

Tata Motors

331.00

478.80

469.36

492.11

Axis Bank

291.91

845.00

824.66

866.11

 

  • ICICI Bank has reported 24.77% rise in its consolidated net profit of Rs 6,091.84 crore for Q2FY22 as against net profit of Rs 4,882.33 crore for Q2FY21. 
  • UltraTech Cement's parent organization -- Aditya Birla group is planning to set up a paint unit in West Bengal at an investment of around Rs 1,000 crore, and it will be commissioned in the next 18-24 months. 
  • JSW Steel is planning to levy a surcharge on the sale of its steel products to its long-term OEM (original equipment manufacturer) customers to offset the rising input cost. 
  • NTPC has floated a tender to procure 1 MT of imported coal after a gap of more than two years amid the ongoing shortage of dry fuel at electricity generating projects across the country.
News Analysis