Indian equity benchmarks extended
their losing run to the 4th straight session and ended with heavy losses on
Monday, tracking a risk-off mood among investors leading to unrelenting
pressure on global stocks as worries of elevated inflation and global recession
continued to rise. Key gauges made
gap-down opening and remained under selling pressure throughout the day, amid
foreign fund outflows. Foreign institutional investors offloaded shares worth a
net Rs 2,899.68 crore on Friday, according to data available with BSE. Traders
were concerned as infusing more than Rs 51,000 crore last month, foreign
investors have slowed down the pace of equity buying in India in September so
far, as they invested a little over Rs 8,600 crore, on sharp depreciation in
rupee. Some concern also came as S&P Global Ratings projected India's
economic growth at 7.3 percent in the current fiscal with downside risks and
said inflation is likely to remain above RBI's upper tolerance threshold of 6
percent till the end of 2022. Sentiments also remain dampened on report that
the Reserve Bank of India is set to raise interest rates again this week on
September 30 with a slim majority expecting a half-point hike and some others
expecting a smaller 35 basis point rise. The RBI has lagged many of its global
peers, despite inflation sticking above the top end of its target range of 2-6
percent all year. Traders also took a note of the Asian Development Bank's
(ADB) report stating that with economic activity still to reach pre-pandemic
levels, the RBI may slow down the pace of rate hikes until next year to quell
soaring inflation while supporting growth. Traders overlooked the commerce and
industry ministry's statement that the country is on track to attract $100
billion foreign direct investment (FDI) in the current fiscal on account of
economic reforms and ease of doing business in recent years. Finally, the BSE
Sensex fell 953.70 points or 1.64% to 57,145.22 and the CNX Nifty was down by
311.05 points or 1.80% to 17,016.30.
The US markets ended in red on
Monday. A continued surge in the value of the US dollar contributed to the
weakness on Markets, with the greenback hitting a record high versus the
British pound. Aggressive interest rate hikes by the Federal Reserve continue
to contribute to the increase by the dollar along with Britain's new chancellor
Kwasi Kwarteng's announcement of a sweeping package of tax cuts. The British
pound dropped to a record low against the US dollar on Monday, falling 4% at
one point to an all-time low of $1.0382. The pound has since come off its worst
levels on speculation that the Bank of England may have to raise rates more
aggressively to tamp down inflation. The Fed and other central banks have
indicated they plan to continue raising rates in an effort to combat stubbornly
elevated inflation. On the sectoral front, Airline stocks extended their recent
sell-off amid concerns about the outlook for demand, resulting in a 4.5 percent
nosedive by the NYSE Arca Airline Index. The index plummeted to a two-year
closing low. Substantial weakness was also visible among natural gas stocks,
which saw further downside despite an increase by the price of the commodity.
The NYSE Arca Natural Gas Index plunged by 3.2 percent to its lowest closing
level in well over two months. Interest rate-sensitive housing, commercial real
estate and utilities stocks also saw considerable weakness due to worries out
the impact of higher rates.
Crude oil futures ended deeply in
red on Monday on rising concerns about the outlook for fuel demand due to increasing
possibility of a global recession. Further, the dollar's continued strength
weighed significantly on oil prices. The dollar index surged to a fresh
two-decade high today, climbing to 114.53. Besides, last week's announcement of
the biggest package of unfunded tax cuts by British Chancellor of the Exchequer
Kwasi Kwarteng has raised fears about the stability of U.K. government
finances. The Pound Sterling tanked against the U.S. dollar, falling to a
record low of $1.0382. Benchmark crude oil futures for November delivery fell
$2.03 or about 2.6 percent at $76.71 a barrel on the New York Mercantile
Exchange. Brent crude for November delivery declined $2.05 or about 2.41
percent to settle at $82.98 (Provisional) a barrel on London's Intercontinental
Exchange.
Continuing previous session
drubbing, Indian rupee closed at all-time low against dollar on Monday on
account of continued dollar demand from importers and banks. Escalation of
geopolitical risks due to conflict in Ukraine, a negative trend in domestic
equities and significant foreign fund outflows weighed investor's sentiments.
This is the fourth straight session when the rupee is ended lower against
greenback. Traders ignored Finance Minister Nirmala Sitharaman's statement that
the rupee has held back very well when compared to other currencies against the
US Dollar. She added that the Reserve Bank and the Finance Ministry are keeping
a very close watch over the developments. On the global front, Sterling crashed
to a record low early on Monday as traders rushed for the exits on mounting
concern that the new government's economic plan will stretch Britain's finances
to the limit. Finally, the rupee ended at 81.67 (Provisional), weaker by 58
paisa from its previous close of 81.09 on Friday.
The FIIs as per Monday's data
were net sellers in both equity and debt segment. In equity segment, the gross
buying was of Rs 6283.47 crore against gross selling of Rs 8883.51 crore, while
in the debt segment, the gross purchase was of Rs 234.56 crore against gross
selling of Rs 472.82 crore. Besides, in the hybrid segment, the gross buying
was of Rs 5.73 crore against gross selling of Rs 10.61 crore.
The US markets ended lower on
Monday as investors fretted that the Federal Reserve's aggressive campaign
against inflation could throw the US economy into a sharp downturn. Asian
markets are trading mostly in red on Tuesday following broadly negative cues
from global markets overnight. Indian markets fell for a fourth consecutive
session on Monday as investors fretted about faster inflation, aggressive
central bank action and a possible global recession. Today, markets are likely
to open in green even as global markets remained lower on economic growth
concerns. Investors will be tracking movements on the rupee, oil prices and
foreign inflows. The rupee closed at a record low of 81.63 versus the dollar on
Monday. Sentiments will get a boost as Chief Economic Advisor (CEA) V Anantha
Nageswaran said the Indian economy is showing resilience and on the path to
recovery. Private demand and the services sector are doing better than
expected. He also said all sectors of the economy such as agriculture,
manufacturing and construction are doing well. Traders may take note of report
that economic grouping OECD in a report retained the GDP growth projections for
India at 6.9 per cent for the current financial year despite the global economy
losing momentum in wake of the Russia-Ukraine war. However, traders may be some
cautiousness as Finance minister Nirmala Sitharaman said some people do also
speak that a falling rupee also helps exports. Whether it does or doesn't, theoretically
it may, but in today's condition, with recession outside and demand not really
as adequately as it should be, even a fall in the rupee may or may not help our
exports. We are conscious about these basic facts. Besides, foreign
institutional investors (FIIs) have net sold shares worth Rs 5,101.30 crore on
September 26, as per provisional data available on the NSE. Meanwhile, days
ahead of unveiling the much-awaited new foreign trade policy (FTP) document,
the Centre has announced extension of the existing policy by another six months
due to global headwinds. There will be some reaction in ITeS sector stocks as
crisil said that the information technology-enabled services (ITeS) sector is
set to sustain its growth momentum in the current fiscal year (FY23) - a good
augury for small and medium enterprises (SMEs), which account for 20-40 per
cent of the sector's revenue.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
17,016.30
|
16,930.94
|
17,149.04
|
BSE
Sensex
|
57,145.22
|
56,886.18
|
57,556.32
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Power Grid Corporation
|
1,256.60
|
200.35
|
188.01
|
211.01
|
Tata Steel
|
1,012.91
|
99.90
|
97.45
|
103.40
|
Tata Motors
|
332.30
|
398.00
|
388.14
|
412.89
|
NTPC
|
219.51
|
158.75
|
155.61
|
162.86
|
ITC
|
162.05
|
332.50
|
327.51
|
341.71
|
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