Sensex, Nifty end lower by over 0.65%

WPI inflation numbers, new stimulus package fail to cheer the investors

4.05 pm

Closing bell

The 30-share BSE index Sensex closed 261.68 points or 0.70 per cent lower at 37,123.31 and 50-share NSE index Nifty ended 72.40 points or 0.65 per cent lower at 11,003.50. The surge in global oil prices, following the drone attack on Saudi oilfields, dragged the equity indices lower. The WPI inflation numbers released by the government on Monday and the stimulus package announced on Saturday left the investors unhappy.

Wholesale price-based inflation was unchanged at 1.08 per cent in August even as prices of food items rose. Inflation in food articles rose to 7.67 per cent in August from 6.15 per cent in July this year mainly on account of rise in prices of vegetables and protein-rich items.

The top gainers in the Sensex pack were Tech Mahindra, ONGC, Sun Pharma, Hindustan Unilever and TCS while the laggards were Mahindra & Mahindra, State Bank of India, Yes Bank, Asian Paint and HDFC.

The oil & gas index slumped nearly 2 per cent.

In the broader index, the lead stocks that cushioned the index were Titan, Britannia, ONGC, Tech Mahindra, and Coal India while the top losers were BPCL, Mahindra & Mahindra, UPL, Yes Bank and State Bank of India.

In the bullion market, gold climbed ₹460 to ₹38,860 per 10 gram in the national capital on a weak rupee and higher oil prices, which led to investors opting for safe haven commodities, according to HDFC Securities. Gold prices for 24 Karat rose to ₹38,860 per 10 gram from Saturday’s closing price of ₹38,400 per 10 gram, according to the data.

Silver also zoomed ₹1,096 to ₹47,957 per kilogram. In the previous trading, silver closed at ₹46,861 per kilogram. International gold prices rallied on safe haven buying amid geopolitical tensions in the Middle East. - With inputs from PTI

3.50 pm

Saudi assures India of no oil supply shortage

Crude supplies from Iran and Venezuela have already been curtailed significantly amid sanctions from the US. File Photo   -  Reuters

 

A massive drone strike on the world’s largest crude-processing facility operated by Saudi Arabia’s Aramco has driven oil prices to their highest level in nearly four months. The attack has knocked out over half of Saudi Arabia’s production as it cut 5.7 million barrels per day or over 5 per cent of the world’s supply. India, the world’s third-largest oil consumer, will not be hit by a reduction in production at its No 2 supplier Saudi Arabia, the Oil Ministry said on Monday. Click here to read more on Saudi's statement on oil supply to India

3.35 pm

European markets

Airlines lead decliners on STOXX 600. File Photo   -  Bloomberg

 

European shares fell after four straight sessions of gains as attacks on crude facilities in Saudi Arabia and weak Chinese data added to worries over global growth while boosting shares in unaffected oil producers. All other major European sectoral indexes fell, with travel and leisure the worst hit with a 1 per cent slide, dragged down by shares of airlines Ryanair Holdings, Air France KLM SA and EasyJet PLC. More on the European stock markets, read here

3.20 pm

Sensex, Nifty continue to trade lower

The 30-share BSE index Sensex was trading 0.69 per cent or 256.59 points lower at 37,128.40. Similarly, the 50-share NSE index Nifty was trading 0.67 per cent or 73.95 points lower at 11,001.95.  The new stimulus package announced by the government on Saturday, WPI inflation numbers and the surge in oil prices following the drone attack on Saudi Aramco left the investors unhappy.

The top stocks lending support to the BSE Index were Tech Mahindra, ONGC, Sun Pharma, Hindustan Unilever and TCS while the laggards were Mahindra & Mahindra, State Bank of India, Yes Bank, Asian Paints, HDFC and IndusInd Bank.

Among the 50-share index Nifty, the top gainers were Titan, Britannia, ONGC, Tech Mahindra and Coal India while the losers were BPCL, Mahindra & Mahindra, UPL, Yes Bank and State Bank of India

3.05 pm

Air India Assets Holdings’ maiden bond issue

Air India Assets Holdings Ltd Monday raised Rs 7,000 crore through bonds issue.   -  Reuters

 

Air India Assets Holdings Ltd (AIAHL) on Monday raised ₹7,000 crore through bonds issue, which was oversubscribed. AIAHL is a special purpose vehicle of national carrier Air India. “The company received bids worth ₹20,830 crore, which is the highest in the yield based bond market in the history of BSE. The company has decided to accept the entire issue of ₹7,000 crore,” the spokesperson said. Click here to read more on the Air India Asset Holdings maiden bond issue

2.50 pm

New stimulus package

File Photo   -  Reuters

 

Equity markets will take cues from global developments and wholesale inflation data this week, while the third tranche of stimulus measures announced by the government may bolster sentiment, analysts said.

Finance Minister Nirmala Sitharaman on Saturday unveiled over ₹70,000 crore of measures for exporters and the real estate sector, including about ₹30,000 crore new spending in plans such as setting up of a stressed asset fund, as part of efforts to boost economic growth from a six-year low.

However, the stimulus package failed to cheer the investors. Click here to read the analysts expectation

2.35 pm

Sensex, Nifty trade lower

The 30-share BSE index Sensex was trading 0.56 per cent or 210.75 points lower at 37,1714.24 while the Nifty was trading 0.63 per cent lower at 11,006.10.

 

2.20 pm

SIP in small cap funds

If you are one of those old-school investors who thought five years is a long enough time to earn good returns from your SIP investments, then you may just recoil looking at the performance of some of the small-cap funds. Data show that six out of 14 small-cap funds or nearly half the funds have seen their SIP returns erode by 0.1 per cent to 7.6 per cent in the last five years.

SIPs in small-cap funds disappoint big time

SEBI’s new norms, slowdown push 5-year return of almost 50% of funds into red zone

Read More  

2.05 pm

Mutual fund call

 

Equity markets have been in a corrective mode over the past three months. Investors with a long-term perspective can take advantage of the correction and buy the units of DSP Tax Saver which has consistently delivered good returns across market cycles. It is an equity- linked savings scheme (ELSS) with a 12-year track record. DSP Tax Saver has contained the downside well in the recent market correction. Read the performance of DSP Tax Saver here

1.50 pm

Nifty Call

 

The Sensex and the Nifty failed to sustain the intra-day corrective rally and continue to trend down. Both the indices have declined about 0.6 per cent. The market breadth of the Nifty is biased towards declines. The Nifty September month contract commenced the session with a gap-down opening at 11,006. After marking an intra-day high at 11,078 the contact began to decline again. Key support at 11,000 is providing base for the contract. Read the Nifty Call for September futures here

1.35 pm

Sensex slumps over 300 points

The 30-share BSE index Sensex slumped 318.37 points or 0.85 per cent to 37,066.62 and the NSE index dropped 0.90 per cent or 99.75 points to 10,976.15 dragged by oil and gas stocks. Stock markets fell sharply as oil prices jumped nearly 20 per cent following attacks on Saudi Arabia's oil facilities. The country's benchmark 10-year bond yield was trading at 6.71 per cent, after hitting 6.75 per cent earlier, its highest level since July 5. It had closed at 6.64 per cent on Friday.

The top stocks cushioning the BSE index were Tech Mahindra, Sun Pharma, Hindustan Unilever, and ONGC while the laggards were Asian Paints, State Bank of India, IndusInd Bank, Mahindra & Mahindra and Tata Steel.

In the 50-share index, the stocks pulling the index down were BPCL, IOC, Yes Bank, UPL and Asian Paints while the gainers were Titan, GAIL, Hindustan Unilever, Sun Pharma and IBUL Housing Finance.

1.20 pm

WPI inflation remains unchanged

Vegetable inflation too rose   -  Reuters

 

Wholesale price-based inflation was unchanged at 1.08 per cent in August even as prices of food items rose, government data showed. Inflation in food articles rose to 7.67 per cent in August from 6.15 per cent in July this year mainly on account of rise in prices of vegetables and protein-rich items. Click here to read more on the inflation data released by the government

1.05 pm

DLF sells land to American Express

Realty major DLF has sold a 9 acre land parcel in New Gurugram to American Express for about ₹300 crore in one of the costliest land deals in this area, sources said. The selling price comes out to be around ₹32 crore per acre. The stocks of DLF were trading 2.77 per cent lower at ₹161.60.

DLF sells 9 acre land to American Express for ₹300 cr

Realty major DLF has sold a 9 acre land parcel in New Gurugram to American Express for about ₹300 crore in one of the costliest land deals in this ...

Read More  

12.50 pm

Dry spell in IPO

 

The initial public offering (IPO) market is expected to remain challenging for the next few months as well due to volatility in markets on account of global and domestic factors, marketmen said. So far this year, 11 firms have gone public collecting a total of Rs 10,300 crore through IPOs, as compared to 24 companies that raised Rs 30,959 crore in entire 2018, data available with the stock exchanges showed. Read more on the IPO market here

12.35 pm

Sensex slumps 265 points; Nifty down 71 points

The 30-share BSE index Sensex slumped 269.33 points or 0.72 per cent to 37,115.66 dragged lower by oil and gas stocks. The broader index Nifty fell 0.65 per cent or 72.85 points to 11,003.05. The stimulus packaged announced by Finance Minister Nirmala Sitharaman failed to cheer the investors.

The top stocks dragging the BSE index lower were Yes Bank, Asian Paints, HDFC, Mahindra & Mahindra and State Bank of India while the stocks lending support to the index were Hindustan Unilever, Sun Pharma, Tech Mahindra, ONGC and Bajaj Finance.

In the NSE index, the top gainers were Titan, GAIL, Hindustan Unilever, Sun Pharma, IBUL Housing Finance while the laggards were BPCL, IOC, Yes Bank, UPL, Asian Paints.

12.20 pm

China's economy

Earlier, a factory survey showed activity shrank for the fourth straight month as the US trade war dragged on.   -  Reuters

 

The slowdown in China's factory and consumer sectors deepened in August, with industrial production growing at the weakest pace in 17-1/2 years, a sign of increasing weakness in an economy lashed by trade headwinds and soft domestic demand. China is in the midst of a more-than-a-year-long trade war with the US that has upended global supply chains. Click here to read more on the economic data of China

12.05 pm

Gold and precious metals

Gold may retest resistance at $1,524/oz.   -  Getty Images/iStockphoto

 

Gold prices jumped 1 per cent as an attack on Saudi Arabia's oil facilities dented risk appetite, boosting demand for the safe-haven bullion, while investors awaited for clues on monetary easing from major central bank meetings due this week. Spot gold could retest resistance at $1,524 per ounce, as it has temporarily bottomed around a support at $1,480, said Reuters technical analyst Wang Tao. Read more on the gold and other precious metals price here

11.50 am

Stock analysis

 

The long- and medium-term outlook for SAIL (₹33.7) remains weak. The stock finds a crucial support at ₹30. A conclusive close below ₹30 will trigger fresh selling that could take SAIL towards ₹25 level. The stock finds an immediate resistance at ₹37 and the next one at ₹44.5. Only a conclusive close above ₹62.9 will change the medium-term outlook to positive for SAIL. We expect the stock to move in a range with positive bias in the immediate future. Here's the stock analysis of SAIL

11.35 am

Stimulus package fail to cheer markets

Indian government bonds dropped to over two-month lows and the rupee snapped a seven-day winning streak, following a surge in global crude oil prices which clouded the outlook for further interest rate cuts by the Reserve Bank of India.

Stock markets also fell sharply as oil prices jumped nearly 20 per cent following attacks on Saudi Arabia's oil facilities. The country's benchmark 10-year bond yield was trading at 6.71 per cent, after hitting 6.75 per cent earlier, its highest level since July 5. It had closed at 6.64 per cent on Friday.

The partially convertible rupee was at 71.55/56 per dollar versus its previous close of 70.92. The rupee weakened to as much as 71.6950 in opening deals. “Looking at crude, the market has toned down its expectations of a rate cut. Yields may remain at the higher-end of the recent range for the time being,” a senior debt trader at a private bank said.

The Government on Saturday announced a series of measures to revive the housing sector and boost exports as the government tries to kick-start an economy hit by a lending crisis and a slowdown in demand. However, the steps failed to cheer investors as fears of a soaring oil import bill and a spike in inflation pushed most stocks into the red.

The broader NSE index fell 0.34 per cent or 37.70 points to 11,038.20, while the benchmark BSE index slipped 0.36 per cent or 128.05 to 37,256.94.

“While the steps are a move in the right direction, we do not expect a material change in the near-term growth outlook,” economists at Morgan Stanley said in a note. Some traders, however, said the government's decision to refrain from any fiscal slippage was a positive and would continue to provide room for more rate cuts.

A Reuters poll conducted after the last monetary policy decision in August predicted the RBI would cut rates by another 25 basis points at its October review and then by 15 basis points early next year. “RBI will cut some more, even if their job has become admittedly more difficult. The rupee would have to go past 74 for the RBI to get spooked,” Taimur Baig, chief economist and managing director and at DBS Bank in Singapore, told the Reuters Global Markets Forum on Monday. - Reuters

11.20 am

Forex market

Against a basket of currencies the dollar edged lower to 98.162.

 

The dollar fell while safe havens and currencies of oil-producing countries rallied on Monday, following an attack on Saudi Arabian refining facilities that disrupted global oil supply and heightened West Asian tensions.

The Canadian dollar rose 0.4 per cent to 1.3233 per dollar. The Norwegian krone rose 0.5 per cent to 8.9363 per dollar. Both currencies often move together with the oil price because the countries are major oil exporters. More on the forex market report, read here

11.05 am

Weekly Trading Guide - Commodity

MCX Crude (₹3,928)

 

October futures contract of crude oil, which has been trading within a range between ₹3,850 and ₹4,100 for the past two months, seemed to have broken out when the contracted opened at ₹4,100 last Monday and closed the day at ₹4,170. But it could not appreciate further, and faced a hurdle in the form of a resistance band between ₹4,200 and ₹4,230 levels.

Selling pressure increased and the contract dipped towards the lower boundary of its range at ₹3,850, invalidating the breakout. Hence, for the commodity to post a significant recovery, it is not only necessary that it breaks above the upper limit of the range, but also the resistance at ₹4,230.

In the event of the contract breaking above ₹4,230, it will most likely rise towards ₹4,400 in the medium term. But, if it faces further selling pressure and breaks below ₹3,850 , the price may decline to ₹3,650.

MCX Gold (₹37,524)

 

October futures contract of gold declined throughout the week. On Friday, the contract opened and slid through the session, and ended the week at ₹37,524, breaking below an important support level of ₹37,620, which opens the door for the possibility of further depreciation.

The contract also breached the support at ₹37,915 — the 23 per cent Fibonacci retracement level of the previous uptrend extending from May to September. The short-term downtrend that the yellow metal is currently witnessing will drag the price to the dynamic support offered by the 50-day moving average at ₹37,105 levels.

In case the price breaks below that level, it could slump to ₹36,700 in the medium term. However, if weakness is arrested, resulting in an upward movement, the recovery will face a hurdle immediately at ₹37,620, beyond which ₹38,000 will be a psychological level.

MCX Silver (₹45,761)

 

Though the December futures contract of silver stayed flat in the first half of the week, the contract was sold off considerably on Friday where it opened at ₹47,052, and ended the session 2.9 per cent lower at ₹45,761. During this downfall, the contract also closed below the 21-day moving average, indicating a potential extension of the prevailing short-term bearish trend.

Noticeably, it was on Friday that the contract witnessed selling pressure in the past two weeks of trading, wrapping the week with negative sentiments on both the occasions. The existing bear trend is expected to continue, and in all likelihood, the contract can slump to ₹44,860 in the near term.

The 50-day moving average is at ₹44,125, and along with ₹44,000, it will act as a substantial demand zone. In case the contract attempts to recover, it will face a resistance at ₹46,425 levels.

MCX Copper (₹459.95)

 

September expiry futures contract of copper was in a consolidation phase last week until Friday, when it moved up sharply by gaining 1.6 per cent and ended the session at ₹459.95. The contract seems to be building on the momentum it carried over from the previous week, as a result of which the price has moved past the important level of ₹455, increasing the probability of further appreciation.

The daily relative strength index confirms the strength of the bull trend. On the back of renewed buying interest, there is a high chance that the bullish momentum will sustain and the contract will appreciate further towards ₹470 levels in the near term, beyond which the immediate resistance is at ₹475.

In an unlikely event of the price moderating because of an exhaustion in its bullishness, ₹455 will help limit the downside, below which ₹450 is a key support.

NCDEX Guar seed (₹4,189)

 

September futures contract of Guar seed opened the week on a flat note at ₹4,144 against the previous close of ₹4,132. The contract witnessed good buying interest midweek, and the price gained to an intra-week high of ₹4,280, where it was capped by the 21-DMA.

On Friday, the contract gave away some of its gains and closed lower by 1.6 per cent at ₹4,189. The price range between ₹4,270 and ₹4,280 is a strong supply zone where the contract will face considerable selling pressure. Hence, for the commodity contract to reverse its existing downtrend, the price must break out of those levels. It will face a stiff resistance between ₹4,270 and ₹4,280.

If the contract manages to break above those levels, it has the potential to rise towards ₹4,460. Immediate support at ₹4,165 any further weakness may drag the contract lower to ₹4,075.

10.50 am

Oil and gas stocks tank

Domestic equity benchmark BSE Sensex plunged nearly 300 points in early session, dragged by oil and gas stocks, stoked by a massive surge in global crude prices.

After touching a low of 37,111.29, the 30-share index was trading 205.59 points, or 0.55 per cent, lower at 37,179.40, while the broader Nifty fell 61.05 points, or 0.55 per cent, to 11,014.85. In the previous session on Friday, the BSE barometer settled 280.71 points higher at 37,384.99, while the broader NSE Nifty ended 93.10 points up at 11,075.90.

According to experts, domestic equities plunged after global oil benchmark Brent crude price skyrocketed as drones attacked two Saudi Arabian plants on Saturday. The attack by Yemen’s Houthi rebels reportedly shut down six per cent of the global oil supply.

After the drone attack on one of the world’s biggest oil producers Saudi Aramco, global crude prices surge by almost 12 per cent which is the biggest surge since 1988, said Ashish Nanda EVP and Business Head - PCG, Commodities and Currency Business, Kotak Securities. “It would certainly impact emerging countries like India in the medium term as uncertainties will keep market sentiment volatile, he added.

The spike in crude oil rates will affect the fiscal position of net energy importers like India, experts said. Shares of oil and gas companies HPCL, BPCL, IOC, Castrol India and Reliance Industries plunged up to 7 per cent.

A huge depreciation in the rupee against the US dollar too spooked investors here, traders said. The local unit cracked 68 paise to 71.60 against the US currency in early trade.

Top losers in the Sensex pack in early trade on included Asian Paints, RIL, Yes Bank, HDFC, SBI, Tata Motors, Maruti, Tata Steel and Axis Bank, falling up to 2 per cent. On the other hand, ONGC, TCS, HUL, TechM, PowerGrid, Sun Pahrma, Infosys, ITC, HCL Tech and NTPC rose up to 2.45 per cent.

Meanwhile, Finance Minister Nirmala Sitharaman on Saturday unveiled over Rs 70,000 crore of measures for exporters and the real estate sector, including about Rs 30,000 crore new spending in plans such as setting up of a stressed asset fund, as part of efforts to boost economic growth from a six-year low.

Market participants are also eyeing wholesale price index (WPI) inflation data scheduled to be announced later in the day.

The decision on interest rates and the statement from the US Federal Reserve chief after Federal Open Market Committee’s two-day meet (starting on Tuesday) would be most crucial news for global markets, experts said.

Elsewhere in Asia, Shanghai Composite Index and Kospi were trading in the green in their respective late morning sessions, while Hang Seng cracked 1 per cent. On Friday, foreign portfolio investor sold shares worth a net of Rs 405.45 crore, while domestic institutional investors bought equities worth Rs 209.56 crore, provisional data showed. - PTI

10.35 am

Rupee market

At the interbank foreign exchange, the rupee opened at 71.54 then fell to 71.60 against the US dollar.

 

The rupee tumbled by 68 paise to 71.60 against the US currency in early trade, as a sharp jump in global crude oil prices dampened investor sentiments. Forex traders said, market participants were concerned as the drone attack on Saudi Arabia’s oil facilities has stroked fiscal slippage concerns.

Traders said weak opening in domestic equities and sustained foreign fund outflows also weighed on the domestic currency. Click here to read more on the local currency market

10.20 am

Shares tumble

Stocks in India, the world's third-biggest importer of oil, slumped as oil prices surged after attacks on key oil producer Saudi Arabia's crude facilities over the weekend.

After falling as much as 0.79 per cent in the early trade, the broader NSE index is trading 0.39 per cent or 43.61 points  lower at 11,032.30, while the benchmark BSE index slipped 0.38 per cent or 143.08 points  to 37,241.91.

The rupee also tumbled over 1 per cent to 71.69 against the dollar.

The attacks knocked out more than 5 per cent of global oil supply, pushing prices to four-month highs and boosting safe-haven bets. A source close to the matter told Reuters the return to full oil capacity could take “weeks, not days.”

“If crude stays high at $65-$70 per barrel, it could have repercussions (for the Indian economy),” said Neeraj Dewan, director, Quantum Securities. “It could impact inflation, rate cuts may not happen. But indications are that the supply should get restored soon.”

Benchmark Brent crude futures rose by as much as 19.5 per cent to $71.95 per barrel, the biggest intra-day jump since January 14, 1991. The front-month contract was at $66.20 per barrel, up $5.98, or 9.9 per cent, from their previous close, at by 0343 GMT.

Indian oil marketing companies Indian Oil Corporation Ltd , Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd slid between 5 per cent and 7 per cent.

Heavyweight oil-to-retail conglomerate Reliance Industries Ltd was among the top drags, falling as much as 3.22 per cent to its lowest in nearly two weeks. The Nifty Energy index slumped 2.02 per cent.

Aviation stocks also were also hit by the jump in oil prices, with Indigo-owner Interglobe Aviation Ltd falling 3.8 per cent and Spicejet Ltd sliding 7.98 per cent.

Finance Minister Nirmala Sitharaman had announced measures on Saturday to revive the housing sector and boost exports as the government tries to kick-start an economy hit by a lending crisis and a slowdown in demand. The moves, however, failed to cheer investors, with the Nifty Realty index falling as much as 1.10 per cent.

Meanwhile, Bharat Electronics Ltd jumped 4.37 per cent after scoring a Rs. 5,357 crore ($749.49 million) contract to procure missile systems for the Indian Air Force. - Reuters

10.10 am

Will the big bank mergers work - an in-depth analysis

 

The Narasimham Committee had stated that mergers should emanate from bank boards, with the government as the common shareholder, playing a supportive role. Also, it had insisted that mergers should not be seen as a means of bailing out ‘weak banks’ but rather be between strong banks. Above all, such mergers can succeed only if they lead to rationalisation of workforce and branch network.

The mergers announced by the Centre — folding ten PSBs into four — meet none of these yardsticks.

But is the merger between weak banks to create mammoth institutions really the panacea for all the problems plaguing the banking sector? Can the Centre, by creating four gigantic banks, reboot the credit engine to drive the economy? We deep-dive into the balance-sheets of these PSBs to get the answers. Read the analysis here

9.55 am

Commodities market

The attack on Saudi oil facilities has cut Saudi output by 5.7 million bpd

 

Oil prices retreated after hitting their highest since May at the open, on fears over supply disruptions following an attack on Saudi Arabia's oil facilities on Saturday that cut more than 5 per cent of global oil supply.

State oil giant Saudi Aramco said the attack cut output by 5.7 million barrels per day, at a time when Aramco is trying to ready itself for what is expected to be the world's largest share sale. Read the commodities market report here

9.40 am

Global markets

In early Asian trading, futures for US 10-year Treasury notes rose 0.3 per cent, indicating yields may slip when cash trading begins.

 

Moves in Asian share markets were small, however, with Japan shut for a public holiday. MSCI's broadest index of Asia-Pacific shares outside Japan was a tick lower at 515.4. Australian shares were down 0.1 per cent while South Korea's KOSPI was a tad higher.

Oil prices surged to six-month highs on Monday while Wall Street futures fell and safe-haven bets returned after weekend attacks on Saudi Arabia's crude facilities knocked out more than 5 per cent of global oil supply. Read the global stock markets report here

9.25 am

Stocks in focus

ITD Cementation India on Friday said it has won orders worth ₹1,100 crore. The company has received a Letter of Award from Central Public Works Dept, Government of India, for redevelopment of general pool residential colony at Kasturba Nagar, New Delhi, including two-level basement, podium parking and facilities. Shareholders will closely monitor the execution of the project by ITD Cementation, which had reported a profit of ₹16.68 crore for the Q1 of FY20.

The Pollution Control Board of Andhra Pradesh has directed Bhagiradha Chemicals & Industries to stop production at its Cheruvukommupalem facility, (Prakasam district) from September 12. The direction came after an inspection of the manufacturing facility by the APPCB. The company is in the process of complying with the observations and is hopeful of submitting compliance in a short period of time. Shareholders will closely monitor the development.

Shares of Tata Communications will turn ex-date on Tuesday for the proposed demerger. The company will demerge approximately 773.13 acres of surplus land (held by the erstwhile Videsh Sanchar Nigam) into a new entity - Hemisphere Properties India Ltd (HPIL). As per the proposal, HPIL will provide shares to all the shareholders of Tata Communications in the ratio of 1:1. Investors wishing to get HPIL shares need to own Tata Communications by Monday.

9.15 am

Opening bell

The 30-share BSE index Sensex opened 180.43 points lower at 37,204.56 against the previous close of 37,384.99. Similarly, the 50-share NSE index Nifty opened 56.25 points lower at 11,019.65 against the previous close of 11,075.90.

9.10 am

Weekly Trading Guide

SBI (₹291.7)

After trading within a range, SBI began to head north and gained throughout the week, breaking above the critical resistance at ₹280. In fact, it was the biggest weekly gain for the stock in the past 16 weeks, moving up by 6.5 per cent. The weekly chart of SBI shows a morning star candlestick pattern, indicating a potential reversal in the medium-term trend. The stock has also moved past its 21-day moving average, which also indicates strongbuying interest in the past week. The daily relative strength index has crossed the mid-point level of 50 after nearly two months, and the moving average convergence divergence indicator also points upwards, implying considerable strength in the bullish trend. Assuming that the prevailing bullish sentiment will help the stock go up further, breaking a resistance at ₹292 will help the stock move towards the ₹300 levels and beyond in the medium term. But if the stock witnesses profit-booking or reacts to the resistance and slides lower, it might decline to ₹288 levels, below which the support is at ₹280.

 

 

ITC (₹239.9)

ITC continues to be held within the ₹240-247 limits. After testing the upper limit of the range at ₹247 — where the 21-day moving average level too coincides — failed to break above and corrected from that level towards the lower limit of the range at ₹240. Most of the decline was during the last two trading sessions, when the stock lost 1.6 per cent. The daily relative strength index and moving average convergence divergence indicator remains flat, implying a lack of trend. Hence, unless the stock breaks either of the limits of the consolidation range, it is better to stay away from initiating new positions. If the weakness in the latter part of the previous week pulls down the price of the scrip further and it goes below ₹240, the immediate support lies at ₹236. If the stock declines below ₹236, the sell-off could intensify and the price might tumble to ₹224 levels. Alternatively, a bounce from the current level will result in the stock inching up towards ₹247 in the upcoming week, beyond which it will face a resistance in the band between ₹250 and ₹252 levels.

 

 

Infosys (₹829.3)

The stock of Infosys could not continue its uptrend. The stock corrected in the past week when the price dropped to a low of ₹810.85, after opening the week a bit lower at ₹836.80 against ₹840.15 — its previous week close. The stock was supported by 38.2 per cent Fibonacci retracement level of the previous bullish swing at ₹814. And, on Friday, the stock recovered some of its losses as it opened the session at ₹818.65 and closed higher at ₹829.3 levels. The scrip still trades above 21-day moving average, thereby not posing any immediate threat to the prevailing bullish trend. The relative strength index continue to feature in bullish zone. Hence, if the stock regains the momentum and goes up, it will most likely appreciate towards a lifetime high at ₹847 and even to ₹875 levels in medium term. On the other hand, if the stock is weighed down by factors such as profit-booking or a stronger rupee, it is most likely to drift towards the support band between ₹800 and ₹804 — the 50 per cent Fibonacci retracement level of previous swing in the coming week.

 

 

RIL (₹1225.6)

Reliance Industries continues to trade within a tight range — between ₹1,200 and ₹1,240. The upside for the stock is blocked by the 21-day and 50-day moving averages, essentially lying in the same price area, near the ₹1,240 levels. A prolonged consolidation might reduce the significance of both the moving averages, unless the stock moves out of the band. . The relative strength index and moving average convergence divergence indicator plotted on the daily chart of the stock stay direction-less, failing to provide any clue about the upcoming trend. So, until the stock breaks out of the tight price range within which it is oscillating, it might prove costly to make any directional bets. In case the stock moves up buoyed by the positive sentiment in the equity benchmarks and breaches ₹1,240, it is very likely that the price will appreciate to ₹1,300 levels, thereby moving past both the moving average, which may also push RSI above 50. However, if the stock breaks the lower boundary of the range, immediate support is at ₹1,180 and ₹1,140 thereafter.

 

Tata Steel (₹367.35)

Tata Steel edged up last week and closed with a weekly gain of 3.4 per cent. Thus, the share price of the steel major has posted gains for the second consecutive week. The stock has moved beyond the 21-day moving average, as it witnessed some buying interest in the past two weeks. On Friday, the scrip, after opening at ₹367.05, closed the day at ₹367.35 — the 38 per cent Fibonacci retracement level of the previous downtrend. Though the stock made a high of ₹379.5 on Thursday, it could not hold on, declining and closing the session at ₹365.05, witnessing some selling pressure. Daily candle on Thursday is a shooting star pattern, meaning there are chances for reversal in the trend. The relative strength index too is nearing the mid-point of 50, and a decisive break above that level may help the stock appreciate further towards ₹395 levels. On the other hand, if the stock price depreciates from the current levels, it will most probably retest ₹350 — the 21-day moving average — below which it could tumble to ₹330 levels.

 

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Index Outlook

 

In the truncated week , the Sensex and the Nifty began on a choppy note and extended their rallies, taking positive cues from the global markets. On the global front, the ECB stimulus and optimism over US-China talks pushed the global markets higher last week.

This week, the Bank of England (BoE) and the US Federal Reserve are set to hog the limelight and provide direction to the markets.

There is no major change in the medium-term trend that has been down since registering a new high at 12,103 in early June. Read our Index Outlook for the coming week here

Published on September 16, 2019