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NSE Intra-day chart (23 September 2022)
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Market Commentary 26 September 2022
Markets to get negative start amid weak global cues

 

Extending their decline for the third day, Indian equity benchmarks ended with heavy losses of over one and half percent on Friday, amid an overall bearish trend in global markets after the Fed announced a widely-expected rate hike and reiterated its commitment to keep up increases into 2023 to fight red-hot inflation. US Fed's aggressive stance has increased recessionary fears on global front and created nervousness on domestic markets as well. Markets started the session on pessimistic note and extended their fall later on after ASSOCHAM said India Inc is bracing itself for yet another policy rate hike by the RBI Monetary Policy Committee in the range of 35-50 basis points as the move seems unavoidable in the wake of the global monetary tightening to limit the impact of inflation. Besides, weakening of the domestic currency makes investments into Indian securities less attractive for foreign portfolio investors (FPIs). They sold equities worth Rs 2,509 crore on Thursday, and Rs 461 crore on Wednesday. Market participants overlooked Union Finance Minister Nirmala Sitharaman's statement that the government was making efforts to keep inflation under 4 per cent and steps were being taken to ensure people get essential goods at fair price and on time.  Meanwhile, Capital markets regulator Sebi has allowed emerging investment vehicles, Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT), to issue commercial papers. Selling got intensified in afternoon session after Russian President Vladimir Putin signaled annexation of parts of Ukraine adding to geopolitical concerns. In last trading hour, markets touched their intraday low point as traders remained unenthusiastic amidst unpleasant economic outlook and a surging dollar. This was because of increase in policy rate by the US Fed and Bank of England, and escalation in geopolitical tensions between Russia and Ukraine. Finally, the BSE Sensex fell 1020.80 points or 1.73% to 58,098.92 and the CNX Nifty was down by 302.45 points or 1.72% to 17,327.35.

 

Extending their previous session's losses, the US markets ended significantly lower on Friday. The Dow dropped to its lowest closing level in over a year, while the Nasdaq and the S&P 500 hit three-month closing lows. Concerns about the outlook for the global economy continued to weigh on Wall Street following aggressive interest rate hikes by central banks around the world. Traders remain concerned the central banks' efforts to combat elevated inflation will push the global economy into a recession. The Federal Reserve raised interest rates by another 75 basis points earlier this week and signaled more significant rate hikes later this year. While the Fed's projections pointed to an eventually tapering of rate hikes by next year, traders worry about the outlook for the global economy in the months ahead. On the sectoral front, energy stocks turned in some of the market's worst performances on the day amid a steep drop by the price of crude oil. Reflecting the sell-off in the energy sector, the Philadelphia Oil Service Index plummeted by 8.3 percent, the NYSE Arca Oil Index tumbled by 7.3 percent and the NYSE Arca Natural Gas Index dove by 6.4 percent. Gold stocks also moved sharply lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 5.1 percent. Concerns about a global recession also contributed to substantial weakness among steel stocks, as reflected by the 4.4 percent nosedive by the NYSE Arca Steel Index. Airline, networking, and financial stocks also saw considerable weakness, moving lower along with most of the other major sectors.

 

Crude oil futures ended sharply lower on Friday, pushing the most active crude futures contract to their lowest close in about seven months. Weak outlook for energy demand due to a possible global recession outweighed concerns about tight supplies. The dollar's strong uptick weighed as well on oil prices. A report from Baker Hughes said the number of oil rigs in the U.S. increased by three to 602 in the week ending September 23. The number of US gas rigs fell by two to 160 during the week. The total number of rigs in the U.S. now stand at 764, up 181, compared to the same period a year earlier. Benchmark crude oil futures for November delivery fell $4.75 or about 5.7 percent at $78.74 a barrel on the New York Mercantile Exchange. Brent crude for November delivery declined $4.28 or about 4.73 percent to settle at $86.18 (Provisional) a barrel on London's Intercontinental Exchange.

 

Continuing previous session drubbing, Indian rupee concluded substantially weaker against dollar to a record new low on Friday on account of continued dollar demand from importers and banks. Sentiments were fragile after Russian President Vladimir Putin signaled annexation of parts of Ukraine adding to geopolitical concerns. Traders were also cautious with ASSOCHAM's statement that India Inc is bracing itself for yet another policy rate hike by the RBI Monetary Policy Committee in the range of 35-50 basis points as the move seems unavoidable in the wake of the global monetary tightening to limit the impact of inflation. On the global front, euro and sterling slumped against the dollar on Friday after surveys showed the downturn in business activity across the euro zone and Britain deepened this month and the economies were likely entering a recession. Finally, the rupee ended at 81.09 (Provisional), weaker by 30 paisa from its previous close of 80.79 on Thursday.

 

The FIIs as per Friday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 6103.71 crore against gross selling of Rs 8331.15 crore, while in the debt segment, the gross purchase was of Rs 278.96 crore against gross selling of Rs 741.02 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.65 crore against gross selling of Rs 31.22 crore.

 

The US markets ended lower on Friday as fears grew that a central bank prescription of raising interest rates to tame inflation will drag major economies into recession. Asian markets are trading mostly in red on Monday as negative sentiment continues to weigh in on markets. Indian markets tumbled for a third consecutive session on Friday on fears of a possible global recession. Today, the start of the crucial F&O series expiry week is likely to be negative, continuing their losing streak, amid weakness in global peers. Deprecation in rupee likely to dent sentiments in domestic markets. The rupee slipped below the 81-mark against the dollar for the first time, adding to concerns over a slowdown in portfolio inflows. Traders will be concerned after infusing more than Rs 51,000 crore last month, foreign investors have slowed down the pace of equity buying in India in September so far, as they invested a little over Rs 8,600 crore, on sharp depreciation in rupee. However, some respite may come later in the day as Finance Minister Nirmala Sitharaman said the rupee has held back very well when compared to other currencies against the US Dollar. She added that the Reserve Bank and the Finance Ministry are keeping a very close watch over the developments. Some support will come as the government said India is on track to attract $100 billion foreign direct investment (FDI) in the current fiscal on account of economic reforms and ease of doing business. In 2021-22, the country received the highest ever foreign inflows of $83.6 billion. Besides, the latest data released by the Reserve Bank of India (RBI) showed credit growth in the banking system was at a multi-year high of 16.2 per cent year-on-year (YoY), for the fortnight ended September 9. There will be some buzz in defence industry stocks as the government said defence exports have grown by 334 per cent in the last five years and India is now exporting to over 75 countries due to collaborative efforts. Insurance industry stocks will be in focus as data from insurance sector regulator Irdai showed non-life insurers registered a 12 per cent yearly growth in their gross direct premium income during August this fiscal at Rs 24,471.95 crore. There will be some reaction in agriculture industry stocks as according to the agriculture ministry, paddy planting continued to lag behind as sown area under this crop fell 5.51 per cent from last year to 401.56 lakh hectare so far, as sowing of kharif (summer) crops almost comes to an end. Telecom stocks will be in limelight as raising concerns regarding the 5G rollout, the Directorate General of Civil Aviation (DGCA) has written to the Department of Telecom (DoT) on likely interference of the spectrum with aircraft, a media reported on Friday. A radio altimeter provides direct-height-above-terrain information to several aircraft systems. Meanwhile, Harsha Engineers will debut on stock exchanges on Monday. The Rs 755-crore public issue was bought 74.7 times by participants, and despite uncertainty in the equity markets.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,327.35

17,198.61

17,549.11

BSE Sensex

58,098.92

57,672.80

58,834.17

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

1,097.65

104.40

102.80

106.95

Power Grid Corporation

653.72

202.35

193.71

215.36

ITC

228.38

347.00

343.69

349.94

ICICI Bank

159.27

883.90

873.46

899.61

Tata Motors

134.41

423.50

418.74

430.09

 

  • Tata Steel has received approval for a scheme of amalgamation, the company will merge its seven step-down subsidiaries with itself. 
  • Tata Motors' electric SUV - Nexon EV MAX has made a landmark entry into the India Book of Records.
  • ICICI Bank has launched Festive Bonanza, a wide variety of offers for all its customers at the onset of the festive season.
  • Hero MotoCorp has increased prices of its two-wheelers by up to Rs 1,000 to partially offset the impact of cost inflation.
News Analysis