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NSE Intra-day chart (28 December 2021)
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Market Commentary 29 December 2021
Benchmarks likely to make flat-to-negative start amid weak global cues

 

Bulls strengthened grip on Dalal Street on Tuesday with Nifty reclaiming its crucial 17,200 mark, while Sensex ending near 57,900 mark. Markets started the day on an optimistic note as India's exports in the first three weeks of December rose 36.20% on-year at $23.82 billion. Outbound shipments were 27.7% higher than the same period of 2019-20. Export excluding petroleum, oil and lubricants increased 28.08% over the corresponding period last year. Traders took note of a private report that spiralling prices pinched the pocket of consumer as edible oil, fuel and many other commodities turned dearer this year amid pandemic-induced disruptions but the inflationary pressure is anticipated to ease, though marginally, in the coming months. Markets extended gains as traders took support with private report stating that the Indian economy is likely to maintain a real GDP growth of 9 percent each in FY2022 and FY2023 amid uncertainty triggered by the Omicron variant of corona virus. In last leg of trade market witnessed a sudden fall and markets pares some of their profit after Delhi chief minister Arvind Kejriwal's statement that yellow alert has been sounded in Delhi and some restrictions imposed under the Graded Response Action Plan (GRAP) in view of rising number of Covid cases in the city. But, the selling was short and markets fully recovered in dying hour of trade as traders continued to buy fundamentally strong stocks. Some support came with report that the Centre has extended the existing Covid-related restrictions in the country till January 31, 2022, in view of the rising cases of Covid-19 and Omicron variant in the country. On December 27th, the number of Omicron cases in India rose to 578. Meanwhile, foreign portfolio investors (FPIs) pumped in a record $10.8 billion (Rs 79,851 crore) in the Indian primary market so far this year. FPIs surpassed the previous high of $9.7 billion in 2020, despite continued withdrawal from Indian equities and bonds amid fears of a rapid spread of the Omicron variant of COVID-19. Finally, the BSE Sensex surged 477.24 points or 0.83% to 57,897.48 and the CNX Nifty was up by 147.00 points or 0.86% to 17,233.25.

 

The US markets ended mostly lower on Tuesday as traders seemed somewhat reluctant to continue making significant moves following the recent strength in the markets. A lack of major US economic data also kept some traders on the sidelines ahead of the release of reports on weekly jobless claims, pending home sales and Chicago-area business activity in the coming days. However, downside remained capped as the Centers for Disease Control and Prevention (CDC) has shortened the recommended isolation time for asymptomatic people with Covid-19 to 5 days from 10 days. The CDC said the change is motivated by science demonstrating that the majority of Covid transmission occurs early in the course of illness, generally in the 1-2 days prior to onset of symptoms and the 2-3 days after. A new study from South Africa also indicated that those infected with the Omicron variant have increased immune protection against the Delta strain. On the sectoral front, Most of the major sectors ended the day showing only modest moves, contributing to the lackluster performance by the broader markets.  Semiconductor stocks gave back some ground, however, with the Philadelphia Semiconductor Index falling by 1.2 percent after reaching a record intraday high in early trading. Tobacco, biotechnology and steel stocks also moved to the downside, while some strength was visible among utilities and airline stocks.

 

Crude oil futures ended higher for fifth straight session on Tuesday as the outlook for energy demand turned a bit positive amid hopes the Omicron variant of the coronavirus is unlikely to any significantly impact global economic recovery. Worries about the impact of the Omicron variant have eased a bit. According to reports, the most common symptoms appear to be sore throats, mild headaches and congestion, and in some cases, the loss of taste or smell. Many patients are showing only mild symptoms, helping ease concerns about flight cancellations over the weekend. Meanwhile, the UK government has ruled out introducing stricter Covid-19 restrictions in England before the end of the year. Benchmark crude oil futures for February delivery rose $0.41 or 0.5 percent to settle at $75.98 a barrel on the New York Mercantile Exchange. Brent crude for February delivery surged $0.34 or 0.4 percent to settle at $78.94 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended stronger against dollar on Tuesday due to fresh selling of the American currency by banks and exporters. Besides, healthy gains in equity markets also supported the rupee. The domestic currency was trading strong from the start as traders' sentiments were upbeat as India's exports in the first three weeks of December rose 36.20% on-year at $23.82 billion. Outbound shipments were 27.7% higher than the same period of 2019-20. Export excluding petroleum, oil and lubricants increased 28.08% over the corresponding period last year. On the global front, euro eased on the back of interest rate hikes, with other central and east European currencies edging higher in holiday-thinned trading. Finally, the rupee ended 74.70 (Provisional), stronger by 30 paise from its previous close of 75.00 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 1986.32 crore against gross selling of Rs 2704.90 crore, while in the debt segment, the gross purchase was of Rs 13.47 crore with gross sales of Rs 426.80 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.23 crore against gross selling of Rs 9.57 crore.

 

The US markets ended mostly lower on Tuesday as a four-day rally lost steam in thin trading and investors weighed Omicron-driven travel disruptions and store closures. Asian markets are trading mostly in red on Wednesday as investors assessed the impact of the Omicron Covid variant. Indian markets extended gains for the second straight session on Tuesday on positive global cues and buying across sectors. Today, the start of session is likely to be flat-to-negative amid weakness in global markets coupled with rising corona cases in the country. Traders will be concerned as India reported 6,358 new coronavirus cases on Tuesday, according to the health ministry. The active caseload of the country now stands at 75,456. Omicron cases have risen to 653. There will be some cautiousness as the government's total liabilities rose to Rs 125.71 lakh crore in the September quarter from Rs 120.91 lakh crore in the three months ended June, according to the latest public debt management report. The increase reflects a quarter-on-quarter increase of 3.97 per cent in the July-September period of 2021-22. However, some respite may come later in the day as ICRA said the Indian economy is likely to maintain a real GDP growth of 9 percent each in FY2022 and FY2023 amid uncertainty triggered by the Omicron variant of corona virus. The Indian economy grew at 8.4 per cent in the second quarter of the current fiscal, as against a growth of 20.1 per cent in the April-June quarter. Traders may take note of report that Finance Minister Nirmala Sitharaman will hold a meeting with finance ministers of states on Thursday as part of customary pre-Budget consultations with various stakeholders. Meanwhile, the Central Board of Direct Taxes (CBDT) has constituted a task force to restructure the Income Tax (I-T) Department. Besides, Markets regulator Sebi has decided to put a cap on IPO proceeds earmarked for making future acquisition of unspecified targets and will bring under monitoring the funds reserved for general corporate purposes. Banking stocks will be in limelight with the RBI report that the Indian financial system's asset quality improved despite the pandemic, but it could be due to special dispensations by the regulator, and banks would likely see increased stress on their books once the schemes expire. Textile industry stocks will be in focus as the Centre released the operational guidelines for the production-linked incentive (PLI) scheme for textiles. Under this, companies can begin the registration process from January 1-31, 2022, on the government's online portal. There will be some reaction in NBFCs stocks with report that the asset quality of non-banking financial companies (NBFCs) deteriorated in April-September 2021 (H1FY22) owing to the second wave of the pandemic. Their gross non-performing assets (NPAs) rose to 6.8 per cent in September 2021 from 6 per cent in March 2021.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,233.25

17,179.51

17,268.61

BSE Sensex

57,897.48

57,714.36

58,016.55

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

228.60

480.35

474.40

484.55

ICICI Bank

178.33

736.50

731.85

741.80

Power Grid Corporation of India

118.02

205.40

202.91

208.26

ITC

115.68

219.80

218.34

220.94

State Bank of India

88.32

460.55

458.76

462.61

 

  • Grasim Industries has successfully commissioned projects in Rehla in Jharkhand and Balabhadrapuram in the state of Andhra Pradesh. 
  • HDFC Life Insurance Company has entered into bancassurance tie-up with South Indian Bank. 
  • Cipla has been granted EUA permission by the Drug Controller General of India for the launch of Molnupiravir in the country. 
  • Bharti Airtel and TCS have joined hands to build a 5G-based remote working technology using robotics.
News Analysis