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NSE Intra-day chart (12 January 2022)
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Market Commentary 13 January 2022
Benchmarks to open in green following overnight gains on Wall Street

 

Key benchmark indices extended their winning run into the fourth straight trading session and ended with gains of around a percent on Wednesday backed by solid gains in index heavyweights Mahindra & Mahindra, Bharti Airtel and Reliance Industries. The benchmark indices made a gap-up opening and remained higher throughout the session, as investor sentiments magnified with the World Bank retained its FY22 growth forecast for India at 8.3 per cent but upgraded it to 8.7 per cent for FY23, from 7.5 per cent estimated earlier, citing improving growth prospects, especially a reviving private capex cycle. Some optimism came with former chief economic adviser Arvind Virmani's statement that the Indian economy is likely to register a growth of 9.5 per cent in this financial year. Some support also came in as preliminary data from the commerce ministry showed that the country's exports grew 33.16 per cent to $7.63 billion during January 1-7 period on account of healthy performance by various sectors, including engineering, petroleum and gems and jewellery. The benchmark indices steadily held their strong gains in afternoon trade, as reports suggest the fast-spreading Omicron variant is not virulent and hospitalisation cases are very low. Also, Mumbai Mayor Kishori Pednekar stated that the numbers of COVID-19 cases and its fast spreading variant Omicron were slowing coming down in the city. Domestic sentiments were positive, as the government extended till March 15 the deadline for corporates to file Income Tax returns for the fiscal ended March 2021. The deadline to file tax audit report and transfer pricing audit report for 2020-21 fiscal too has been extended till February 15. Traders overlooked a domestic rating agency ICRA's report stated that lockdowns to contain the spread of the third COVID wave hurt loan collections and new lending by non-banks, and will in turn impact securitization volumes. Finally, the BSE Sensex rose 533.15 points or 0.88% to 61,150.04 and the CNX Nifty was up by 156.60 points or 0.87% to 18,212.35.

                                            

The US markets ended higher on Wednesday after a key inflation report showed a historic gain but largely matched expectations. While the report showed the annual rate of consumer price growth once again reached the highest level in almost 40 years, traders seemed relieved the acceleration was not even more significant. The report showed the annual rate of consumer price growth accelerated to 7.0 percent in December from 6.8 percent in November, showing the biggest yearly jump since June of 1982. Core consumer prices, which exclude food and energy prices, were up by 5.5 percent year-over-year in December compared to the 4.9 percent spike in November. The annual growth reflected the biggest surge since February of 1991. The continued acceleration in the annual rate of consumer price growth came as prices increased by slightly more than expected on a monthly basis, although the pace of growth slowed from November. On the sectoral front, steel stocks moved sharply following data showing easing Chinese inflation, with the NYSE Arca Steel Index spiking by 2.9 percent to its best closing level in almost four months. Significant strength also emerged among gold stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Gold Bugs Index. The strength in the gold sector came as the price of gold for February delivery climbed $8.80 to $1,827.30 an ounce amid a decrease in the value of the US dollar. Natural gas stocks also moved notably higher amid a surge in the price of the commodity, driving the NYSE Arca Natural Gas Index up by 1.5 percent.

 

Crude oil futures ended higher on Wednesday, magnifying the spike seen in the previous session, on tight supply and easing concerns about the potential hit to demand from the Omicron coronavirus variant. The increase in the price of crude oil came after a report from the Energy Information Administration showed US crude oil inventories fell by more than expected in the week ended January 7th. The report showed crude oil inventories tumbled by 4.6 million barrels versus estimates for a decrease of about 1.9 million barrels. Meanwhile, the report showed gasoline inventories jumped by 8.0 million barrels, while distillate fuel inventories increased by 2.5 million barrels. Benchmark crude oil futures for February delivery rose $1.42 or 1.7 percent to settle at $82.64 a barrel on the New York Mercantile Exchange. Brent crude for March delivery gained $1.24 or 1.5 percent to settle at $84.96 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally higher against dollar on persistent selling of the American currency by exporters. Traders got solace as World Bank retained its FY22 growth forecast for India at 8.3 per cent but upgraded it to 8.7 per cent for FY23, from 7.5 per cent estimated earlier, citing improving growth prospects, especially a reviving private capex cycle. However, upside remain capped as domestic rating agency ICRA in its latest report has said that lockdowns to contain the spread of the third COVID wave hurt loan collections and new lending by non-banks, and will in turn impact securitization volumes. On the global front, dollar steadied above almost two-month lows against its major peers on Wednesday, ahead of data expected to show a fresh surge in U.S inflation that could seal the case for an early rise in interest rates. Finally, the rupee ended 73.93, stronger by 1 paisa from its previous close of 73.94 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 7964.60 crore against gross selling of Rs 7561.29 crore, while in the debt segment, the gross purchase was of Rs 506.07 crore against gross selling of Rs 235.97 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.12 crore against gross selling of Rs 8.59 crore.

 

The US markets ended higher on Wednesday after retail inflation jumped to a 40-year high of 7 per cent in December but within the forecasts, thus suggesting that the Federal Reserve will not have to hike interest rates too aggressively. Asian markets are trading mixed on Thursday as traders digested the latest US inflation data and remained concerned about the resurging coronavirus cases in the country. Indian markets rose for the fourth straight session on Wednesday, with strong global cues underpinning sentiment. Today, the start of session is likely to be in green following overnight gains on Wall Street. Traders will be taking encouragement as the World Bank said Narendra Modi government's Production-Linked Incentive (PLI) Scheme will likely help India's economy grow at 8.7% in the next financial year 2022-23, beating emerging market peers including China. However, traders may be concerned on account of subdued macro-economic data. India's industrial production growth remained subdued for the third straight month and expanded by 1.4 per cent in November, mainly due to the waning low base effect, while the mining sector showed good performance. Also, rising prices of essential kitchen items pushed the retail inflation to a six-month high of 5.59 per cent in December, close to the Reserve Bank's upper tolerance limit of 6 per cent. Also, food inflation was at 4.05 per cent in December this fiscal compared to 1.87 per cent in the preceding month. There may be some cautiousness as rating agency ICRA said it expects a miss in the disinvestment target to cause the government's fiscal deficit to print at Rs 16.6 lakh crore or 7.1 per cent of the GDP in FY2022, overshooting the budgeted target. IT stocks will be in limelight reacting to their third quarter results. Textile industry stocks will be in focus with a report that the country's exports of textiles and apparel, including handicrafts, rose to $29.8 billion during April-December this fiscal as compared to $21.2 billion in the same period last year. There will be some reaction in edible oil industry stocks as Solvent Extractors Association (SEA) said India's imports of palm oils declined by 29.15 per cent to 5.44 lakh tonnes in December 2021, but the rise in shipments of RBD palmolein is threatening the survival of domestic refineries. Telecom stocks will be under watch after the communications ministry said telecom operators Vodafone Idea (VIL), Tata Teleservices and Tata Teleservices (Maharashtra) (TTML) will not become public sector undertakings after their interest payable on dues are converted into government equity.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

18,212.35

18,151.45

18,250.60

BSE Sensex

61,150.04

60,927.91

61,295.17

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil & Natural Gas Corporation

212.20

164.20

161.84

166.14

Tata Motors

162.55

506.30

502.59

510.94

State Bank of India

144.89

509.95

507.80

512.80

ITC

131.58

222.50

221.51

223.56

ICICI Bank

130.34

823.30

815.09

828.49

 

  • UltraTech Cement has commissioned Line II of the Bara Grinding Unit in Uttar Pradesh, India, having cement capacity of 2 mtpa. 
  • Tech Mahindra has entered into collaboration with Nokia, to drive 5G private wireless adoption globally. 
  • L&T's wholly owned subsidiary -- L&T Hydrocarbon Engineering has secured two offshore packages from a prestigious overseas client. 
  • Tata Motors' wholly owned subsidiary -- Jaguar Land Rover has commenced bookings for the all-new Range Rover in the country.
News Analysis