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NSE Intra-day chart (30 December 2021)
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Market Commentary 31 December 2021
Markets to start last trading session of CY2021 on cautious note

 

Indian equity benchmarks witnessed yet another range bound trading session and ended the December series on a flat note on Thursday, as investors remained cautious amid surging Omicron cases. The headline indices opened on a quite note but soon slightly inched up in early morning trade. Traders took some support with private report stated that employment opportunities in the e-commerce and allied industries witnessed a 28 per cent surge in 2021, and recruitment activities in this segment will gain further momentum driven by economic recovery and aggressive vaccination drive. Some solace also came with the Federation of Indian Export Organisations (FIEO) stating that the country's exports are expected to register healthy growth rate in the next financial year (FY23) might touch $530 billion as exporters are flushed with orders. FIEO further stated that additional exports will come from some of the PLI (production-linked incentive) sectors in the next fiscal. Traders also took a note of the Reserve Bank of India's (RBI) second Financial Stability Report (FSR) stated that the Omicron variant of coronavirus remains the major challenge along with rising inflation pressures, though the economy has steadily gained momentum and remained resilient since the second quarter of the current fiscal. However, key gauges failed to hold positive momentum and ended flat, as investors remained anxious as authorities in various parts of India said the third wave of infections has begun. Virus cases more than doubled in Delhi and Mumbai in a single day, forcing the governments to enforce more restrictions.  Some concern also came as the Reserve Bank of India (RBI) has flagged concerns on the deteriorating credit quality in the retail books of lenders and warned that the retail-led model of selling credit, led by housing loans, is confronting headwinds now. According to the financial stability report, between April and the first week of December, credit disbursal grew to 7.1 per cent as against 5.4 per cent growth a year ago and 5.2 per cent in March 2021. Meanwhile, the GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on December 31 and discuss, among other things, report of the panel of state ministers on rate rationalisation. Finally, the BSE Sensex fell 12.17 points or 0.02% to 57,794.32 and the CNX Nifty was down by 9.65 points or 0.06% to 17,203.95.

 

The US markets settled lower on Thursday on profit taking after the Dow and the S&P 500 reached new record intraday highs in early trading. Stocks initially benefited from recent upward momentum, which has helped the markets largely offset the pullback seen in reaction to initial reports about the Omicron variant of the coronavirus. With early indications that the Omicron variant causes milder symptoms, traders seem optimistic the new strain will not derail the economic recovery. However, trading activity remained somewhat subdued as some traders looked to get a head start on New Year's festivities. On the economic data front, the Labor Department released a report unexpectedly showing a modest drop in first-time claims for US unemployment benefits in the week ended December 25th. The report said initial jobless claims dipped to 198,000, a decrease of 8,000 from the previous week's revised level of 206,000. The slight pullback surprised participants, who had expected jobless claims to inch up to 208,000 from the 205,000 originally reported for the previous week. A separate report from MNI Indicators growth in Chicago-area business activity picked back up in the month of December. MNI Indicators said its Chicago business barometer rose to 63.1 in December from 61.8 in November, with a reading above 50 indicating growth. Street had expected the business barometer to inch up to 62.0.

 

Crude oil futures ended higher on Thursday, extending the upward trend seen over the past several sessions, on expectations that fuel demand held up despite soaring Omicron coronavirus infections and that OPEC and its allies would continue to increase imports only incrementally. Further supporting sentiment, governments around the world were trying to limit the impact of record numbers of new Covid-19 infections on economic growth by easing testing rules and narrowing who needs to isolate as close contacts of positive cases. Meanwhile, China, the world's biggest oil importer, reported 207 new confirmed coronavirus cases and 27 new asymptomatic cases on Thursday, but no new deaths. Australian cases hit a new record of more than 19,000 daily infections. Benchmark crude oil futures for February delivery rose $0.43 or 0.6 percent to settle at $76.99 a barrel on the New York Mercantile Exchange. Brent crude for February delivery surged $0.09 or 0.11 percent to settle at $79.32 a barrel on London's Intercontinental Exchange.

 

Indian rupee strengthened substantially against dollar on Thursday as banks and exporters continued to sell the US currency amid persistent capital inflows. Sentiments were upbeat as Federation of Indian Export Organisations (FIEO) stated that the country's exports are expected to register healthy growth rate in the next financial year (FY23) might touch $530 billion as exporters are flushed with orders. FIEO further stated that additional exports will come from some of the PLI (production-linked incentive) sectors in the next fiscal. On the global front, dollar rose against major rival currencies in holiday-thinned trading on Thursday, as investors remained cautiously optimistic about the economic consequences of a surge in cases of the Omicron coronavirus variant. Finally, the rupee ended 74.42 (Provisional), stronger by 29 paise from its previous close of 74.71 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 3629.23 crore against gross selling of Rs 4375.99 crore, while in the debt segment, the gross purchase was of Rs 687.39 crore with gross sales of Rs 948.73 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.03 crore against gross selling of Rs 17.66 crore.

 

The US markets ended lower on Thursday retreating late in thin holiday volume from record highs set early in the session on strong US data, including a drop in weekly claims for US unemployment benefits. Asian markets are trading in green on Friday amid thin trade as several regions were closed for the New Year. Indian markets ended flat on the day of monthly F&O expiry on Thursday amid persisting volatility. Gains in IT and financial stocks were offset by losses in oil & gas, auto and metal shares. Today, the markets are likely to make cautious start on last trading session of calendar year 2021 amid thin trade across Asia. Traders will be concerned as India's tally of the highly contagious Omicron variant of coronvirus (COVID-19) on Thursday crossed 1,000 on the back of Maharashtra reporting its highest single-day infection with the new strain, as states further tightened measures to deal with the surge in coronavirus cases. There will be some cautiousness as India Ratings and Research (Ind-Ra) said higher tax and non-tax revenue collections this fiscal are expected to more than offset the shortfall in disinvestment revenue, leading to the fiscal deficit coming in at 6.6 per cent of GDP in FY22, or 20 basis points lower than the budgeted target. Traders may take note of Food Secretary Sudhansu Pandey's statement that the government's food subsidy is expected to be a little less than Rs 4 lakh crore in the financial year 2021-22 as against Rs 5.29 lakh crore in the previous fiscal. Investor will be eyeing the 46th meeting of the GST Council chaired by Union Finance Minister Nirmala Sitharaman, to be held later in the day. This meeting holds importance ahead of the Union Budget which is presented on the first day of February by the Finance Minister in Parliament. Meanwhile, Tax authorities have detected goods and services tax evasion of Rs 40,000 crore in over a year, largely on account of fake invoices and fraud input tax credit claims. Textile industry stocks will be in focus as several states flagged higher tax rate on textile products from January 1 and demanded that the rate hike be put on hold, ahead of the GST Council meeting. Besides, CMS Info Systems shares were scheduled to list on BSE and NSE on December 31, 2021. The Rs 1,100 crore CMS Info Systems IPO is purely an offer for sale (OFS) by promoter Sion Investment Holdings, an affiliate of Baring Private Equity Asia; and was subscribed 1.95 times from December 21-23, 2021.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,203.95

17,145.51

17,263.21

BSE Sensex

57,794.32

57,578.87

58,009.91

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Power Grid Corporation of India

656.10

204.05

200.00

209.75

NTPC

323.94

126.45

123.19

128.79

State Bank of India

288.79

453.05

449.40

455.80

Coal India

247.82

146.05

143.64

148.74

ICICI Bank

143.26

736.00

729.84

741.34

 

  • HCL Technologies' wholly owned step-down subsidiary -- HCL America Inc., has acquired the balance 19.6% stake in HCL Technologies SEP Holdings Inc. 
  • Reliance Industries is planning to raise funds through issuance of senior unsecured US$ denominated fixed rate notes. 
  • ITC has teamed up with Invest India to crowdsource innovative ideas for single-use plastic substitution and automate waste segregation. 
  • NTPC's clean energy arm -- NREL is all set to float a global engineering procurement and construction tender to set up a 3GW renewable energy project with a battery storage system worth around Rs 15,000 crore by February 2022.
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