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NSE Intra-day chart (27 October 2021)
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Market Commentary 28 October 2021
Benchmarks to get cautious start amid weak global cues

 

Selling which occurred in late trade mainly dragged Indian equity benchmarks lower on Wednesday. After a cautious start, markets managed to trade mostly in green terrain for the day as traders continued to buy beaten down but fundamentally strong stocks. Sentiments remained upbeat after 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). Adding optimism, 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. 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. However, traders booked profit in last leg of trade which mainly dragged key gauges lower. Traders turned anxious after Chairman of the 15th Finance Commission -- N K Singh has said the International Monetary Fund's (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. He mentioned the issue of our medium term growth potential projected by the IMF last week by recaliberating it from 6.25 per cent to 6 per cent, in my view, is gross under estimation. Finally, the BSE Sensex declined 206.93 points or 0.34% to 61,143.33 and the CNX Nifty was down by 57.45 points or 0.31% to 18,210.95.

 

The US markets ended mostly lower on Wednesday as traders looked to cash in on recent strength in the markets. Some weakness also prevailed in the markets as the momentum from a strong earnings season started to fade. Shares of Twitter (TWTR) moved sharply lower on the day after the social media reported third quarter earnings that beat estimates but weaker than expected user growth. Auto giant General Motors (GM) also came under pressure after reporting third quarter earnings and revenues that fell year-over-year. On the sectoral front, banking stocks showed a significant move to the downside on the day, with the KBW Bank Index slumping by 2.6 percent. The index continued to give back ground after reaching a record intraday high on Monday. Considerable weakness also emerged among steel stocks, as reflected by the 3.2 percent nosedive by the NYSE Arca Steel Index. On the economic data front, the Commerce Department released a report showing durable goods orders pulled back by much less than expected in the month of September. The Commerce Department said durable goods orders fell by 0.4 percent in September after jumping by a downwardly revised 1.3 percent in August. Street had expected durable goods orders to slump by 1.1 percent compared to the 1.8 percent spike that had been reported for the previous month. Excluding a steep drop in orders for transportation equipment, durable goods orders climbed by 0.4 percent in September after rising by 0.3 percent in August. The increase matched street estimates.

 

Crude oil futures ended lower on Wednesday after data showed a larger than expected increase in US crude stockpiles in the week ended October 22nd. Data released by US Energy Information Administration (EIA) showed crude oil inventories increased by about 4.3 million barrels last week, more than twice the expected increase of 1.9 million barrels. The American Petroleum Institute said on Tuesday that crude oil inventories rose 2.3 million barrels in the week ending October 22, while street had expected a 1.9 million barrel gain. Besides, oil prices were also weighed down by prospects of Iran freeing itself from US sanctions and starting to sell oil to major importers again. Benchmark crude oil futures for December delivery fell $1.99 or about 2.35% to settle at $82.66 a barrel on the New York Mercantile Exchange. Brent crude for December delivery declined $1.70 or 2.01 percent to settle at $83.95 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended stronger against dollar on Wednesday due to fresh selling of the American currency by banks and exporters. Traders took support as 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). Meanwhile, Chairman of the 15th Finance Commission -- N K Singh stated that the International Monetary Fund's (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. On the global front, Sterling was little changed on Wednesday ahead of a half-yearly update on the public finances and economic outlook from British finance minister Rishi Sunak. Finally, the rupee ended 74.90, stronger by 6 paise from its previous close of 74.96 on Tuesday.

 

The FIIs as per Wednesday's data were net seller in both equity and debt segments. In equity segment, the gross buying was of Rs 7281.40 crore against gross selling of Rs 9561.79 crore, while in the debt segment, the gross purchase was of Rs 121.76 crore with gross sales of Rs 370.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 13.33 crore against gross selling of Rs 43.74 crore.

 

The US markets ended mostly lower on Wednesday as traders looked to cash in on recent strength in the markets in late-day trading. Asian markets are trading mostly in red on Thursday as investors looked to whether central banks may consider tightening monetary policies earlier than anticipated. Indian markets snapped a two-day winning streak in a choppy session on Wednesday, dragged by weakness in financial and oil & gas shares. However, strength in IT names provided some support. Today, the start the session is likely to be cautious ahead of expiry of the October F&O series coupled with the weakness in global markets. Traders may be concerned with report that cooking gas LPG prices may be hiked next week after under-recovery on the fuel widened to over Rs 100 per cylinder. There will be some cautiousness as a report from the Euro-Mediterranean Center on Climate Change (CMCC) said that in India, the decline in rice and wheat yields due to climate change could lead to economic losses between 43-81 billion EUR (or 1.8-3.4% of GDP) by 2050. Besides, foreign institutional investors (FIIs) net sold shares worth Rs 1913.36 crore, while domestic institutional investors (DIIs) net bought shares worth Rs 472.48 crore in the Indian equity market on October 27, as per provisional data available on the NSE. However, some support may come as the CBDT said refunds of over Rs 1,02,952 crore have been issued to the taxpayers during the current financial year. The Central Board of Direct Taxes (CBDT) frames policy for the Income Tax Department. Meanwhile, The Securities and Exchange Board of India (Sebi) has decided to bring in a two-tiered structure for benchmarking of certain categories to standardize benchmarks of mutual fund schemes. Banking sector stocks will be in focus with a private report that Indian banking sector is set to witness a fresh round of consolidation over the medium term - spread over FY22-24 period - primarily driven by large private sector banks. There will be some reaction in energy stocks as Icra in its report stated that solar energy tariff is likely to go up by 20-25 paise per unit in upcoming bids for projects as compared with rates seen over the past six months. This assumes significance in view of India's ambitious target to achieve 450 GW of renewable energy by 2030. Moreover, four stocks - Indiabulls Housing Finance, Canara Bank, NMDC and Sun TV Network - are under the F&O ban for October 28. Meanwhile, Nykaa's initial public offering (IPO) will open today and Nykaa has priced its IPO at Rs 1,085 to Rs 1,125 per share. The company has raised Rs 2,396 crore from 174 anchor investors ahead of its IPO. There will be some earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,221.40

18,167.61

18,308.61

BSE Sensex

61,143.33

60,896.19

61,483.65

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Axis Bank

371.26

787.10

768.24

823.39

State Bank of India

285.61

519.00

512.21

526.31

Tata Motors

281.39

498.15

494.89

503.99

ITC

244.68

238.55

236.06

241.16

ICICI Bank

216.32

835.00

823.14

847.94

 

  • HDFC and India Post Payments Bank have entered into a strategic alliance to offer home loans to nearly 4.7 crore customers of the payments bank. 
  • Reliance Industries and energy supermajor BP's JV -- Reliance BP Mobility has launched its first Jio-bp branded mobility station at Navde, Navi Mumbai. 
  • Tata Steel has installed new 30-megawatt generator at Tata Steel's Port Talbot site in South Wales. 
  • Axis Bank has reported 84.45% rise in its consolidated net profit at Rs 3,387.70 crore for Q2FY22 as compared to Rs 1,836.66 crore for Q2FY21.
News Analysis