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NSE Intra-day chart (26 October 2021)
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Market Commentary 27 October 2021
Markets to start session on negative note amid weakness in Asian peers

 

Indian equity benchmarks extended gains to a second straight day on Tuesday, amid broad-based buying across the sectors and positive global cues. Markets staged a gap up opening, as traders got encouragement with 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. Sentiments remained up-beat with Engineering Export Promotion Council (EEPC) chairman Mahesh Desai stating that exports of engineering goods have crossed $9 billion in September 2021, while 22 out of 25 top export destinations such as China, the UK, and UAE have recorded positive growth. It said share of engineering goods in overall merchandise exports stood at 26.65 percent in September. Some support also came with report indicating that hiring activities in the country are rising in the current quarter, reflecting improvement in the job market and signs of resilience. However benchmarks trimmed most of gains in afternoon deals, as traders got anxious 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. Though, steady buying interest in realty and metal shares lifted the benchmarks to close higher. Adding to the optimism, Union Minister for Finance & Corporate Affairs Nirmala Sitharaman held review meetings with the Ministry of Civil Aviation and Department of Telecommunications (DoT) with an aim to give a fillip to capital expenditure (CAPEX) and infrastructure progress in the country. Traders also took a note of report where Power Minister R K Singh has exuded confidence that there will be no power shortage in the country amid the ongoing low coal stocks at power plants and stressed on timely payments by distribution companies to the plants for electricity supplied to them. Finally, the BSE Sensex rose 383.21 points or 0.63% to 61,350.26 and the CNX Nifty was up by 143.00 points or 0.79% to 18,268.40.

 

The US markets ended higher on Tuesday. The strength on markets reflected a largely positive reaction to the latest batch of earnings news from several big-name companies. Shares of UPS (UPS) moved sharply higher after the delivery giant reported third quarter results that exceeded street estimates on both the top and bottom lines. General Electric (GE) also moved to the upside after reporting better than expected third quarter earnings and raising its full-year guidance. Positive sentiment also has been generated in reaction to a report from the Commerce Department showing new home sales in the US skyrocketed in the month of September. The report said new home sales soared by 14.0 percent to an annual rate of 800,000 in September after falling by 1.4 percent to a downwardly revised rate of 702,000 in August. Street had expected new home sales to jump by 2.7 percent to an annual rate of 760,000 from the 740,000 originally reported for the previous month. A separate report from the Conference Board showed consumer confidence reversed a three-month downward trend in October amid easing concerns about the Delta variant of the coronavirus. The Conference Board said its consumer confidence index climbed to 113.8 in October from an upwardly revised 109.8 in September. The rebound surprised participants, who had expected the consumer confidence index to edge down to 109.0 from the 109.3 originally reported for the previous month. On the sectoral front, Tobacco stocks showed a substantial move to the downside, with the NYSE Arca Tobacco Index plunging by 4 percent. Computer hardware stocks also showed a notable move to the downside, as reflected by the 1.5 percent drop by the NYSE Arca Computer Hardware Index.

 

Crude oil futures ended higher on Tuesday amid increasing signs of a supply shortage and higher demand for oil. Oil prices edged up to their highest since 2014, with several countries switching to oil from gas amid power shortages. According to private report, switching to oil from gas may add 1 million barrels per day to oil demand. Meanwhile, traders, who are looking ahead to weekly oil reports from the American Petroleum Institute (API) and US Energy Information Administration (EIA), are also awaiting the outcome of talks between Iran and Western Powers. Benchmark crude oil futures for December delivery rose $0.89 or about 1.1% to settle at $84.65 a barrel on the New York Mercantile Exchange. Brent crude for December delivery gained $0.41 or 0.50 percent to settle at $86.40 a barrel on London's Intercontinental Exchange.

 

Snapping 2-day losing streak, Indian rupee appreciated against dollar on Tuesday owing to dollar sale by exporters and banks. Traders took support with private report stating 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 also took support with Engineering Export Promotion Council (EEPC) chairman Mahesh Desai stating that exports of engineering goods have crossed $9 billion in September 2021, while 22 out of 25 top export destinations such as China, the UK, and UAE have recorded positive growth. On the global front, sterling touched a new 20-month high against the euro on Tuesday, driven by diverging interest rate expectations for Britain and the eurozone, though concerns over economic growth and EU ties kept the currency broadly flat on the day. Finally, the rupee ended 74.96, stronger by 12 paise from its previous close of 75.08 on Monday.

 

The FIIs as per Tuesday's data were net seller equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 7220.60 crore against gross selling of Rs 9119.27 crore, while in the debt segment, the gross purchase was of Rs 1085.31 crore with gross sales of Rs 727.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.77 crore against gross selling of Rs 4.56 crore.

 

The US markets ended tad higher on Tuesday with the Dow Industrials and S&P 500 hitting fresh records, and subdued as Facebook shares fell in the wake of its quarterly earnings. Asian markets are trading mostly in red on Wednesday even as major indices on Wall Street posted record closing highs. Indian markets extended gains for second straight day on Tuesday, led by strength in auto, metal and select financial shares. Today, markets are likely to make cautious start on mixed global cues. There will be some cautiousness as Foreign Institutional Investors (FII) were net sellers of domestic stocks for the sixth day straight. FIIs pulled out Rs 2,368 crore from domestic equities. However, traders may be taking encouragement as a survey by the National Council of Applied Economic Research (NCAER) showed that as the second wave of Covid-19 eased off, business sentiment in the country hit an over two-year high in the September quarter (Q2) of the current financial year (FY22). Some support may come as Finance Minister Nirmala Sitharaman said the government's social protection and economic stimulus packages, along with timely structural reforms in various sectors, have been pivotal in India's economic recovery process. Traders may take note of Chairman of the 15th Finance Commission -- N K Singh's statement that the IMF's decision to revise India's potential growth forecast downwards to 6 per cent citing the coronavirus pandemic is a gross under estimation and observed that calculations of growth potential are always problematic. Meanwhile, the government is planning to come up with a semiconductor design-linked incentive policy to promote domestic manufacturing as well as attract global electronic chip companies to the country. There will be some buzz in the real estate industry stocks as a joint report by Knight Frank, FICCI and Naredco the sentiment in the real estate industry has turned optimistic and touched an all-time high during July-September and the outlook for the next six months also remains positive with recovery in the Indian economy and rapid progress in vaccination. Energy sector stocks will be in focus as Union Minister Jitendra Singh said India-Sweden cooperation in the energy sector will go a long way in achieving the goal of fossil fuel free economy, and underlined that India is looking for technology solutions for clean energy. There will be some reaction in auto stocks as Crisil's report that the ongoing chip shortage is likely to moderate passenger vehicle sales growth to 11-13 per cent this fiscal, down from the earlier volume growth forecast of 16-17 per cent, delaying the industry recovery as the waiting period is increasing amid strong demand due to production curbs. Also, India Ratings and Research (Ind-Ra) has revised downwards the domestic passenger vehicle growth estimates to 15-18 per cent this fiscal, citing semiconductor shortage that could extend to 2022. There will be lots of earnings reaction, especially in banking sector, to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,268.40

18,141.65

18,352.80

BSE Sensex

61,350.26

60,928.47

61,634.89

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

580.18

508.20

490.96

517.71

Oil & Natural Gas Corporation

330.18

163.25

161.05

164.70

State Bank of India

211.06

512.75

507.50

518.10

ITC

189.31

238.75

234.56

240.96

Tech Mahindra

169.77

1564.00

1,528.00

1,615.00

 

  • Kotak Mahindra Bank and IndiGo have inked a strategic partnership for the launch of a co-branded credit card - Ka-ching - under the 6E Rewards program. 
  • Bharti Airtel has decided to opt for four-year payments moratorium -- on AGR and spectrum dues -- being offered by the government as part of a relief package for the telecom sector. 
  • Tech Mahindra has acquired Lodestone, a digital engineering quality assurance provider for new age digital companies, for up to $105 million (about Rs 789 crore). 
  • Infosys has been selected by Posten Norge as a strategic partner to digitally transform its IT Service Management function.
News Analysis