HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Markets snap three week winning streak; Sensex breaches 35k level
Nov-22-2018

Snapping three weeks of winning streak, Indian equity benchmarks ended the passing week on pessimistic note with frontline gauges settling below their crucial 35,000 (Sensex) and 10,550 (Nifty) levels. Markets started the holiday truncated week on optimistic note with former Niti Aayog Vice Chairman Arvind Panagariya’s statement that the government has made a huge progress in implementing reforms including some difficult structural ones such as the Goods and Services Tax (GST) and Insolvency and Bankruptcy Code (IBC) that previous governments had difficulty in introducing. He also said that the Centre should stick to the fiscal deficit target for 2018-19. Afterwards, traders turned pessimistic and markets ended in red for rest of the session during the week, as SEBI asked listed companies to disclose detailed reasons for delay in submission of financial results to the stock exchanges within one working day of the stipulated deadline. Anxiety spread among traders with domestic rating agency ICRA’s report that after the strong upswing in April-June quarter of current financial year (FY19), GDP growth for July-September quarter is expected to dip to 7.2 percent on account of sluggishness in agriculture and industry. The GDP had grown by a higher than expected 8.2 per cent in the first quarter of FY19 as compared to the year-ago period. Traders remained cautious with Reserve Bank of India (RBI) has revealing that the top 20 defaulters of public sector banks account for Rs 2.36 lakh crore, or 20%, of total bad loans in India, though it is yet to reveal their names. The total bad loans in the Indian banking system are Rs 10.2 lakh crore as of March 31, 2018. Selling further crept in with private reports that India could see two rate hikes in the initial monetary policies of next financial year.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex slipped 476.14 points or 1.34% to 34,981.02 during the week ended November 22, 2018. The BSE Midcap index losses 117.47 points or 0.78% to 14,880.34, while Smallcap index slipped 135.05 points or 0.93% to 14,350.83. On the sectoral front, S&P BSE Metal was down by 535.59 points or 4.26% to 12031.52, S&P BSE Information Technology was down by 575.86 points or 4.11% to 13443.54, S&P BSE TECK was down by 254.28 points or 3.60% to 6808.97, S&P BSE Power was down by 51.78 points or 2.64% to 1912.69 and S&P BSE PSU was down by 166.99 points or 2.32% to 7025.26 were the top losers on the BSE sectoral front, while S&P BSE Realty was up by 28.38 points or 1.64% to 1756.52 and S&P BSE Capital Goods was up by 19.24 points or 0.10% to 18431.21 were the only gainers on the BSE sectoral front.

NSE movement for the week

The Nifty slipped 155.45 or 1.46% to 10,526.75. On the National Stock Exchange (NSE), Bank Nifty was down by 246.10 points or 0.94% to 25,999.45, Nifty IT was down by 637.45 points or 4.40% to 13,835.70, Nifty Mid Cap 100 decreased 160.65 points or 0.92% to 17,347.20 and Nifty Next 50 lost 171.90 points or 0.63% to 27,187.45.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 14515.38 crore and gross sales of Rs 17454.24 crore, leading to a net outflow of Rs 2938.86 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 3164.45 crore against gross sales of Rs 2201.38 crore, resulting in a net inflow of Rs 963.07 crore. In hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 13.70 crore and gross sales of Rs 15.55 crore, leading to a net outflow of Rs 1.85 crore.

Industry and Economy

Domestic rating agency Icra in its latest report has said that GDP growth for second quarter of current financial (Q2FY19) is expected to dip to 7.2% on account sluggishness in agriculture and industry. The fall in the growth number will be mainly due to a pull down from industry where growth is expected to slow down to 7.1% in the in second quarter as compared to 10.3% in first quarter and the farm sector, which may slow down to 3.5% from 5.3%.

Outlook for the coming week

In the passing holiday truncated week, Indian markets ended in red terrain with Nifty and Sensex posting losses of more than 150 and 470 points, respectively.

The next week, is expected to be a volatile one as traders will adjust their positions on account of monthly derivatives expiry, which is scheduled to take place on November 29, Thursday. In the coming week, on the economy front, investors will be eyeing the core sector data and Q2GDP data on November 30.

In the next week, there may be some buzz in the industrial sector as the maiden Indo-Russian Strategic Economic Dialogue at St Petersburg to be held on November 25-26 to explore new areas of partnership including artificial intelligence (AI), transport and small and medium enterprises (SMEs) that would further bolster strategic partnership.

Telecom sector would be in focus as the telecom department will hold a meeting with mobile operators in the next week to discuss several issues like quality of service and find a solution to the problem of call drops.

Transportation sector will also be in focus as investors would keep an eye on the meeting between India, Russia and Iran on the International North South Transport Corridor (INSTC) on November 23. This meeting is being held to make the 7,200-km-long ship, road, and rail route operational soon.

Additionally, traders would keep an eye on the G20 Summit in Argentina which is scheduled from November 30 to December 1.

On the global front from the US, investors will be looking for positive trade news or a jump in upcoming retail earnings that includes the largest shopping day of the year, Black Friday. Further global market-participants will first be eyeing Consumer Confidence on November 27, GDP, International Trade in Goods, New Home Sales and FOMC Minutes on November 28, Jobless Claims, Pending Home Sales Index, Fed Balance Sheet, Money Supply and Farm Prices on November 29, and finally Chicago PMI and Baker-Hughes Rig Count on November 30.

Top Gainers

  • Bharti Airtel up by 8.81% was the top gainer on Nifty for the week - Bharti Airtel gained traction with report that it has signed two-and three-year bilateral loans with 10 to 12 lenders. The company is raising more than $2 billion in loans from banks as it is facing increased competition at home and the threat of a ratings downgrade to junk. Meanwhile, Bharti Airtel International (Netherlands) B.V., a company unit, signed for separate bilateral loans totaling over 1.75 billion euros ($2 billion) with more than 10 lenders.
  • Dr. Reddys Lab up by 6.51% was another top gainer on Nifty for the week - Dr. Reddys Lab gained traction during the week, as the US Food and Drug Administration (USFDA) has completed the audit of the company’s Formulations Srikakulum Plant (SEZ) Unit II, Andhra Pradesh on November 16, 2018 with zero observations. Meanwhile, The US Court of Appeals has lifted the preliminary injunction that had blocked Dr Reddy’s from selling generic version of Suboxone, which is used to counter opioid addiction and aid in pain management. The company can resume at-risk launch of Suboxone with favourable ruling from the appeals court.

Top Losers

  • Yes Bank down by 12.07% was the top loser of the week on Nifty - Yes Bank came under selling pressure after its independent (non-executive) director Rentala Chandrashekhar resigned from the bank’s board with immediate effect, citing personal reasons. Earlier, the bank’s Non-Executive Chairman Ashok Chawla stepped down with immediate effect. As per the reports, Chawla offered to quit as controversy was being generated on his continuance on the board of directors following his name appearing in the CBI charge-sheet in the Aircel-Maxis case.
  • Tata Steel down by 8.39% was another top loser of the week on Nifty - Tata Steel witnessed profit booking during the passing week. The company witnessed a decent rally during the previous week after reporting around 4 fold jump in its consolidated net profit of Rs 3,604.21 crore for the quarter under review as compared to Rs 975.87 crore for the same quarter in the previous year. Total consolidated income of the company increased by 34.35% at Rs 43,898.53 crore for Q2FY19 as compared Rs 32,675.55 crore for the corresponding quarter previous year.

Technical viewpoints

During the week, CNX Nifty touched the highest level of 10,774.70 on November 19 and lowest level of 10,512.00 on November 22. On the last trading day, the Nifty closed at 10,526.75 with weekly loss of 155.45 points or 1.46 percent. For the coming week, 10,434.27 followed by 10,341.78 are likely to be good support levels for the Nifty, while the index may face resistance at 10,696.97 and further at 10,867.18 levels.

US Market

The US markets ended lower during the passing week on account of lingering concerns about the outlook for the global economy along with uncertainty about the potential for a trade deal between the US and China. Vice President Mike Pence said the US would not back down until China changes its ways. The stark warning dampened investor hopes for a thaw in US-Chinese trade relations ahead of the G20 summit later this month in Argentina.  Negative sentiment also generated in the markets after a report released by the Commerce Department which showed a much steeper than expected drop in new orders for US durable goods in the month of October, with the sharp decline largely reflecting a substantial decrease in orders for transportation equipment. The Commerce Department said durable goods orders plunged by 4.4 percent in October following a revised 0.1 percent dip in September. Street had expected orders to slump by 2.5 percent compared to the 0.7 percent increase that had been reported for the previous month.

Meanwhile, the Labor Department released a report showing first-time claims for US unemployment benefits unexpectedly edged higher in the week ended November 17. The report said initial jobless claims rose to 224,000, an increase of 3,000 from the previous week's upwardly revised level of 221,000. Street had expected jobless claims to slip to 215,000 from the 216,000 originally reported for the previous week. With the unexpected uptick, jobless claims reached their highest level since hitting 232,000 in the week ended June 30. The Labor Department said the less volatile four-week moving average also crept up to 218,500, an increase of 2,000 from the previous week's revised average of 216,500. Besides, sentiments too dampened on report which showed that home-builders’ confidence plummeted in November.

However, the National Association of Realtors (NAR) released a report which showed that existing home sales in the US rebounded by more than anticipated in the month October. NAR said existing home sales surged up by 1.4 percent to an annual rate of 5.22 million in October after plunging by 3.4 percent to a rate of 5.15 million in September. Street had expected existing home sales to jump by 1.0 percent. NAR chief economist Lawrence Yun has said after six consecutive months of decline, buyers are finally stepping back into the housing market. He further added that gains in the Northeast, South and West - a reversal from last month's steep decline or plateau in all regions - helped overall sales activity rise for the first time since March 2018. Existing home sales in the West spiked by 2.8 percent, while existing home sales in the South and Northeast shot up by 1.9 percent and 1.5 percent, respectively.

European Market

European markets ended the passing week on cautious note, after the European Commission warned Italy of financial sanctions over its budget. The start of week was lackluster, as Eurozone's current account surplus decreased in September. The figures from the European Central Bank showed that the current account surplus fell to EUR 17 billion from EUR 24 billion in August. In the same month last year, the surplus was EUR 40 billion. Adding some worries, Eurozone inflation accelerated in October at the fastest pace in almost six years, as estimated initially. The final figures from Eurostat showed that the consumer price index rose 2.2 percent year-on-year after a 2.1 percent increase in September. Inflation was the highest since December 2012.

Domestic sentiments also got hit after Germany's wholesale prices climbed at a faster pace in October. As per data from Destatis, wholesale price inflation improved to 4 percent from 3.5 percent in the previous month. While Germany's industrial producer prices rose at the fastest pace in 18 months during October. The figures from the Federal Statistical Office showed that producer prices rose 3.3 percent year-on-year following a 3.2 percent increase in September. Separately, the UK budget deficit in October far exceeded expectations and was the biggest for the month in three years, raising the likelihood of the government missing its borrowing target for the fiscal year. The public sector net borrowing, or PSNB, excluding state banks was GBP 8.8 billion in October, which was the highest for the month since 2015. In September, the deficit was GBP 2.84 billion and the shortfall was GBP 7.23 billion in October 2017.

Meanwhile, France's jobless rate was unchanged in the third quarter from the previous three months. As per preliminary data from INSEE, the ILO unemployment rate for the metropolitan France was 8.8 percent, unchanged from the second quarter, but was 0.5 points lower than a year ago. The number of unemployed rose by 22,000 sequentially to 2.6 million persons. Besides, UK house prices declined sharply in November at the fastest monthly pace in seven years. The figures from the property market data website Rightmove showed that average asking prices dropped GBP 5,222 or 1.7 percent month-on-month to GBP 302,023 in November. That was biggest November drop since 2012. However, Eurozone construction output increased in September after declining in the previous month, but the pace of growth nearly halved sequentially in the third quarter. The figures from Eurostat showed that construction output grew 2 percent from August, when it declined 0.6 percent, revised from 0.5 percent.

Asian market

All the Asian equity indices snapped the week’s trade in the negative terrain, following a plunge on Wall Street as disappointing corporate earnings results, the weak crude oil prices and United States-China trade dispute added worries about global economic growth and dampened investor sentiment.

Chinese Shanghai tumbled by over a percent, as investors looked ahead to a crucial meeting between Chinese President Xi Jinping and his US counterpart Donald Trump at a G20 meeting in Argentina. Sentiment was also dented with the OECD warned that  an escalation in the trade war between the US and China could take a heavy toll on global growth by 2021, creating price pressures that would force the Federal Reserve to step up monetary tightening.

Japanese Nikkei too edged marginally lower, as the yen's strength pressured exporters. However, losses were limited, as traders found support from data showing that Japan's exports rebounded in the year to October, reversing from the prior month's surprise drop as U.S.-bound car shipments grew, although slowing global demand and the intensifying U.S.-China trade war cloud the outlook for export-reliant Japan. Besides, Japan's core consumer prices increased in October from a year earlier, owing to a rise in energy costs.
  RELATED NEWS >>
Most Viewed >>
April 22 , 2024
Invest lumpsum through systematic transfer pla
April 22 , 2024
FPIs mount bearish bets as risk aversion grows
April 23 , 2024
Sensex climbs 560 points, Nifty closes above 2
April 22 , 2024
FPIs withdraw over Rs 5,200 crore in April so
EXPLORE
© CITRUS INTERACTIVE
Designed & Developed Accord Fintech Pvt. Ltd.