Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities:
Markets witnessed profit taking on the back of weak Asian market cues. After the 17,775 support breakdown, selling intensified in Nifty stocks. On daily charts, the index has formed a long bearish candle which indicates further weakness from the current levels. However, as long as the index is trading above the 20 day SMA, the uptrend texture is intact.
We are of the view that the market has completed one leg of correction and now the 20 day SMA and 17600 would act as a sacrosanct support zone.
For day traders, 17750-17815 would be the intraday resistance level. On the flip side, 17600-17540 would be the key support area. The texture of the market is volatile hence quick intraday correction from the resistance levels is not ruled out.
S Hariharan, Head- Sales Trading, Emkay Global Financial Services:
A number of macro indicators are close to technically critical levels – potential upside breakouts in Dollar index, Crude and Developed Market bond yields could get confirmed this week. The global backdrop is indeed a somewhat worrisome one with surging energy prices meeting slowing demand conditions, and a global supply chain crunch across basic materials. Should global central banks respond to rising inflation expectations by paring bond purchases & tightening monetary conditions, that could act as a trigger for sudden re-pricing of risk assets across the board.
Domestically, the valuation premium of mid & small caps over Nifty stocks at levels similar to early 2018 imply that incremental money flow is likely to be directed towards large caps; the earnings season coming up is expected to be strong for IT, Banks & Chemicals companies, while Consumer-facing companies (Autos, Discretionary & Staples) are expected to face margin pressure.
Sachin Gupta, AVP, Research at Choice Broking:
After a positive opening, the Nifty index wiped out its early gains and traded lower for the day, settling at 17,646 levels with a loss of 176.30 points, while Bank Nifty ended at 37,521.55 levels with a 0.5% fall. All the sectoral indices settled on a negative note wherein Nifty Metal was the prime laggards for the day.
Technically, on the daily chart, the index has formed a Bearish Engulfing candlestick pattern, which suggests some weakness for the coming day. Moreover, a momentum indicator Stochastic witnessed a negative crossover. In addition, on a four hourly chart the index has sustained below Middle Bollinger Band formation, which indicates further correction but the overall trend is still looking bullish, so every dip would be a buying opportunity for the fresh entry. At present, the index has immediate support at 17,500 while resistance at the 17,800 level.
Rahul Sharma, Co-Founder. Equity99:
Profit booking was seen in Indian markets along with weak global clues with Dow Futures down 340 points. Investors are advised to keep strict stop loss to positions and avoid any fresh buying at current levels.
Nifty today witnessed a sharp decline in the second half of the session. On hourly charts, we can see a reversal which crossed 89 WMA & 50 DEMA but has taken support by its 100 DEMA. Support further is placed at 17,595 followed by 17,490 & 17,375 & similarly on upside 17,750 will act as immediate hurdle and cross-over will again test 17,850-17,900 levels.
Bank Nifty which was much stable than the main Index but showed us a similar signal, the second half of the session was filled with supply. Now going forward support for Bank Nifty is placed at 37,300-37,100-36,900 & resistance is placed at 37,800 - 38,100 levels.
Selling is quite visible on higher levels for both indices. Sectors are in focus tomorrow – Chemicals, Textiles, Banks & Logistics.
Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities
Nifty50 continues to remain in a medium-term uptrend – we expect 18,500 to be conquered going ahead. For the short term well data parameters suggesting positive bias to hold. Immediate support for the index is seen at 17,640, while 18,000/18,200 is expected on the higher side; buying on dips is advisable.
Metals are showing early signs of reversal, while the NBFC space is expected to remain in action; midcap also remains in momentum with outperformance expected to continue.
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities:
The USDINR spot closed near 75.00, the highest level since 23rd April of this year. A combination of rising oil prices, fear of liquidity ebbing due to central bank rolling back easing measures, rising bond yields, and weakness in stocks, all have had a negative impact on Rupee.
Carry traders were forced to cover shorts once USDINR broke above 74.65 levels. Bias remains upward. USDINR can trade within a range of 74.80 and 75.40 on spot over the near term.
Ashis Biswas, Head of Technical Research at CapitalVia Global Research:
The market witnessed a correction and an attempt to hold the level above 17,600 for the Nifty 50 Index. Market is going to be crucial for the short-term scenario to sustain above the 17,450-17,550 support zone.
If the market is unable to sustain the level of 17,450-17,550, and market can witness further corrections till the levels of 17,250-17,300.
Rohit Singre, Senior Technical Analyst at LKP Securities:
Strong pressure has been witnessed in the Nifty since the start of the day, resulting index managed to close a day at 17,646 with loss of more than one percent and formed a bearish candle after forming two consecutive bullish candle previously.
The index has decisively breached majority support zone, now going ahead immediate support zone is coming near 17,600-17,500 zone and if it managed to sustain above-said levels, one can expect a swift pullback. Now the good resistance is formed near 17,700-17,770 zone, where again we may see some sort of profit taking.
Vinod Nair, Head of Research at Geojit Financial Services:
Weak global markets which resulted in profit booking in metals and IT stocks led domestic indices to trade in red, trimming its early gains. Spike in crude prices is spooking the Indian market while inflation is affecting US bond yields.
RBI commenced its three-day MPC meeting in which the central bank is expected to keep rates unchanged, however, it is likely to announce measures to gradually pump out liquidity from the economy.
Market Close:
Benchmark indices fell 1 percent on October 6 amid weak global cues.
At close, the Sensex was down 555.15 points or 0.93% at 59,189.73, and the Nifty was down 176.30 points or 0.99% at 17,646. About 1291 shares have advanced, 1754 shares declined, and 115 shares are unchanged.
Hindalco Industries, SBI Life Insurance, IndusInd Bank, JSW Steel and Tata Steel were among the major losers on the Nifty. Tata Consumer Products, ONGC, UPL, Britannia Industries and HDFC Bank were among major gainers.
All sectoral indices ended in the red with capital goods, IT, metal, pharma, auto, realty and PSU Bank indices fall 1-3 percent. BSE midcap and smallcap indices fell 0.5-1.2 percent.
US futures slide 1% over inflation concerns
US stock index futures fell about 1% in early New York hours on Wednesday as soaring oil prices fed into fears of higher inflation, while a stalemate continued in the US Congress over the government debt ceiling.
Asian and European stocks fell earlier in the day as oil hit a multi-year high above $83 a barrel amid a rally in global energy prices, fuelling concerns that major central banks will tighten monetary policy to counter sharp price rises.
Satish Kumar, Research Analyst at Choice Broking
Inflation at 5.3% in August came within the target range of the RBI for the second consecutive month. While the high fuel inflation and coal shortage indicated price risk, the impact is largely to offset by low food inflation. Alternatively, GDP growth at 20.1% in Q1FY22 came below the RBI’s own estimate of 21.4%.
Given moderation in headline and core inflation and below estimated Q1 GDP growth, we expect RBI to maintain status quo in next monetary policy with accommodative policy stance.
BSE Auto index slips 1 percent dragged by the TVS Motor, Tata Motors, Tube Investments of India##BSE Auto index slipped 1 percent dragged by the TVS Motor, Tata Motors, Tube Investments of India
Market at 3 PM
Indian benchmark indices extended the fall ad trading at day's low point with Nifty around 17,650.
At 15:01 IST, the Sensex was down 506.91 points or 0.85% at 59,237.97, and the Nifty was down 163.30 points or 0.92% at 17,659. About 1276 shares have advanced, 1744 shares declined, and 118 shares are unchanged.
Churchil Bhatt, EVP Debt Investments, Kotak Mahindra Life Insurance Company:
The MPC in the October policy is expected to signal the end of ‘excessive’ Covid-era accommodation amidst a steady pick-up in economic activity and progress in vaccination. The unrelenting build-up in inflationary pressures, even if deemed transitory, is likely to elicit a measured central bank response – especially on the surplus banking system liquidity.
Going forward, we expect the repo rate, which ceased to be the operating rate since the pandemic, to regain its status as the Key policy rate through a gradual and guided transition.
The MPC may however continue to emphasize its intent to maintain what would still be an otherwise accommodative monetary policy. Hence, we expect that an emphasis on a dovish, gradual Taper, coupled with expected G-SAP 3.0 announcement, should keep any undue bond market volatility under check.
Nifty Pharma index shed 1 percent dragged by the Abbot India, Ipca Laboratories, Gland Pharma
Market update
Sensex is down 464.19 points or 0.78% at 59280.69, and the Nifty fell 143.20 points or 0.80% at 17679.10. IndusInd Bank, Hindalco Industries and SBI Life Insurance are the top losers, down 2-3 percent each while IRCTC, Tata Power and ONGC are the most active stocks.
Among the sectors, metal, pharma, auto, realty and PSU Bank index shed 1-2 percent each.
Way2Wealth Research on Borosil Renewables
: THe company has shown strong performance and is likely to witness good traction in the medium to long term with government impetus on solar energy to achieve 100GW of solar power production (including 40 GW from rooftop solar) by 2022 (57% share) and 300 GW by 2030 (67% share). Government designed programs like SECI scheme, KUSUM (26 GW by 2022 with an incentive for farmers to install Solar Pumps/Grid Connected Projects etc.) and CPSU (12 GW of Solar Projects proposed for Captive Power Consumption) to support domestic panel manufacturers will also provide the additional impetus for better performance in coming years. The overhang for the company is the non-Anti-dumping duty (ADD) against import of solar glass from Vietnam and the further extension of the current ADD to further years. Considering the mentioned factors, we view it as a value buy with target range of Rs 380-400.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
: Crude oil prices traded firm with benchmark NYMEX WTI crude oil prices were trading 0.11% up near $79.02 per barrel for the day. MCX Crude oil October futures were trading 0.37% up near Rs 5,917 per barrel by noon.
Crude oil prices are expected to trade sideways to up with resistance at $80 and support at $76 per barrel. MCX Crude oil October has support at Rs 5,820 and resistance at Rs 5,980.
European markets are trading in the red with FTSE, CAC and DAX down over a percent each
Tata Steel Q2 business update:
India business production was up 2.2% (QoQ) and grew 3% (YoY). Europe business production was down 4% (QoQ) and grew 19% (YoY). South-East Asia production was down 17% (QoQ) and was down 4% (YoY). India business sales was up 11.8% (QoQ) and was down 8.1% (YoY). Europe business sales fell 7.3% (QoQ) and slipped 4.8% (YoY). South-East Asia business sales slipped 4.7% (QoQ) and grew 9.1% (YoY).
Market update at 2 PM: Sensex is down 158.47 points or 0.27% at 59586.41, and the Nifty shed 53.80 points or 0.30% at 17768.50.
Tata Steel BSL achieves highest ever crude steel production in 2QFY22
Tata Steel BSL has achieved highest ever crude steel production of 1.20 mn tons in 2QFY22.
Tata Steel BSL was quoting at Rs 85.00, down Rs 1.25, or 1.45 percent on the BSE.
Cyient appoints Rajaneesh Kini as Senior VP and Chief Technology Officer
Cyient announced the appointment of Rajaneesh Kini as Senior Vice President & Chief Technology Officer.
Cyient was quoting at Rs 1,072.90, up Rs 19.85, or 1.89 percent on the BSE.
JPMorgan on Reliance Industries
Brokerage firm JPMorgan has kept neutral rating on Reliance Industries and raised the target price to Rs 2,465 from Rs 2,250 per share.
According to firm, the earnings downgrade cycle is likely over for now and telecom tariff hikes around the corner, however we do not yet see an upgrade cycle.
In a market awash with flows, positive news cycle should keep stock supported, however our earnings estimates are unchanged and increase multiples across business.
Reliance Industries touched a 52-week high of Rs 2,623 and was quoting at Rs 2,591, down Rs 18.10, or 0.69 percent on the BSE.
Market at 1 PM
Benchmark indices were trading lower with Nifty below 17,800 with selling seen in the metal and pharma stocks.
At 13:08 hrs IST, the Sensex is down 40.88 points or 0.07% at 59,704, and the Nifty down 24.80 points or 0.14% at 17,797.50. About 1682 shares have advanced, 1279 shares declined, and 120 shares are unchanged.
Rahul Bajoria, Chief India Economist at Barclays
We expect CPI inflation to moderate to 4.62% y/y in September, on corrections to prices of perishables in food basket. One-off shocks could see rising core inflation, although the overall inflation trajectory should continue to moderate in the near term.
Nikkei hits over six-week low
Japan’s Nikkei reversed course on Wednesday to close at a more than six-week low, dragged down by concerns over higher interest rates, China’s slowdown and modest approval ratings for the country’s new prime minister.
Asian shares fall with oil at multi-year highs, US yields surge
Asian shares dropped on Wednesday and US benchmark yields rose to a three-and-a-half month top as investors stayed jittery about inflation with oil prices reaching new multi-year highs.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%, while Japan's Nikkei lost 0.69%.
Market at 12 PM
Benchmark indices were trading with marginal gains in the afternoon session with Nifty around 17850.
At 12:03 IST, the Sensex was up 87.76 points or 0.15% at 59832.64, and the Nifty was up 24 points or 0.13% at 17846.30. About 1768 shares have advanced, 1145 shares declined, and 122 shares are unchanged.
TCS extends partnership with SBI for another 5 years:
Tata Consultancy Services has announced that its long-standing partnership with State Bank of India (SBI) has been extended for another five years as the bank embarks on its next leg of growth based on the three pillars of technology, resilience and people.
Tata Consultancy Services was quoting at Rs 3,836.65, up Rs 2.95, or 0.08 percent on the BSE.
AU Small Finance Bank total deposits up 45% at Rs 39,034 crore
The AU Small Finance Bank share price edged higher in the morning session on October 6 as the lender's total deposits grew 45 percent over the last year to Rs 39,034 crore in the second quarter of 2021-22.
AU Small Finance Bank had deposits of Rs 26,980 crore in the September quarter last year. Its CASA Ratio came in at 30 percent as against 20 percent between the corresponding periods.
Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities:
The monetary policy meetings seem to have reached a stage where decisions from the RBI will be more keenly watched than what the MPC delivers. In the October meeting, the markets will be watching for RBI’s signals on addressing the liquidity glut along with the normalization of reverse repo rates. The MPC will likely continue to stick with the accommodative stance, for now, while keeping the repo rate unchanged.
With a mixed bag in terms of both growth and inflation outlook, the RBI and MPC will want to wait for a clearer picture. But as the economy recovers, and given the financial stability perspective, it is also essential to gradually withdraw the excess liquidity and reverse an ultra-low interest rate regime with likely incipient asset price dislocations.
The RBI needs to telegraph a path of normalization rather than let market expectations anchor unsuitably. The RBI has rightly focused on the near-term till now, and the October policy will be the perfect window to outline its thoughts on normalization, especially since the RBI will certainly want to avoid any sudden tightening.
Market update at 11 AM:
Sensex is up 40.11 points or 0.07% at 59784.99, and the Nifty added 9 points or 0.05% at 17831.30.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services:
Dalal street's one-way movement has been bewildering for seasoned investors. Nifty's rise from below 7600 in March 2020 to close to 18000 now, without any serious correction of even 5 percent is without parallels in India's market history. While seasoned investors have been skeptical about this rally, particularly in recent months, the newbie retail investors continue to be exuberant. At least for the present, valuation concerns have taken a back seat. Every positive news is being projected and negative news ignored. We don't know how long this exuberance lasts.
Moody's upgrading India's rating outlook to stable has come as a shot in the arm for bulls.
The major headwind for the economy and markets is likely to come from imminent inflation. With sustained rise in petrol and diesel prices, cost-push inflation will soon become a macro headwind. The MPC will be forced to withdraw from its accommodative stance. But how far this is going to impact the bullish sentiments remains to be seen. The newbie retail investors have become a powerful market force now. But exuberance alone cannot drive markets for long.
Tata Motors September Auto Sales:
Tata Motors' JLR UK sales declined 53.4% at 7,196 units in the month of September 2021 versus 15,450 units in the same month last year.
Jaguar UK sales were down 54% at 1,844 units versus 4,006 units and Land Rover UK sales were down 53% at 5,352 units against 11,444 units, YoY.
Tata Motors was quoting at Rs 341.60, down Rs 3.45, or 1.00 percent on the BSE.
Nifty Metal index fell 1 percent dragged by the Nalco, Hindalco, Coal India
Vijay Kalantri, Chairman, MVIRDC World Trade Center on Moody’s India outlook revision:
We hope this favourable revision will bolster the confidence of foreign investors in India growth story, boost further foreign direct investment into the country, reduce government bond yields (as foreign investors purchase more of rupee denominated bonds).
We want the 10-year bond yield to fall below the 6% mark so that interest rate in the country declines meaningfully for private sector.
This may also prompt other rating agencies (S&P and Fitch) to review their India’s rating outlook.
Rupee Opens:
Indian rupee opened 18 paise lower at 74.63 per dollar on Wednesday against previous close of 74.45.
Force Motors September production, sales data:
Force Motors has reported total production at 2,159 units for the month of September 2021 against 2,148 in the August 2021, Force said in its press release.
Its sales during September 2021 were at 1,968 units versus 1,487 units in August 2021.
However, its export declined to 272 units versus 500 units, MoM.
Force Motors was quoting at Rs 1,525.45, up Rs 43.95, or 2.97 percent on the BSE.
Market at 10 AM
Benchmark indices were holding on the opening gains supported by the realty, oil & gas, power, FMCG and energy stocks
At 10:00 IST, the Sensex was up 149.96 points or 0.25% at 59894.84, and the Nifty was up 40.90 points or 0.23% at 17863.20. About 1873 shares have advanced, 825 shares declined, and 124 shares are unchanged.
Citi on Godrej Consumer Products
Foreign broking house Citi has maintained buy rating on GodrejConsumer Productswith a target at Rs 1,200 per share.
The revenue trend was stable overall, while inflation and mix affected the margin. However, we still see scope for the valuation discount to narrow versus peers.
Godrej Consumer Products was quoting at Rs 1,036.35, down Rs 7.60, or 0.73 percent on the BSE.
Lakshmi Iyer, CIO (Debt) & Head Products, Kotak Mutual Fund:
Central bankers across the world are the cusp of easy money giving way to a normalising process. India policy makers too will have to weigh in data ranging from manufacturing PMI, tax collections, balance of payments etc which are recovering, to inflation which may continue to surprise on the downside for next few months.
The central banker may want to follow Zor ka jhatka dheere se, hence make amends to VRRR amount and tenor (increase) and also announce Operation twist (OT) in place of outright bond purchases. This seems in sync with their ‘orderly evolution’ of the yield curve narrative. Hence we expect a status quo in rates for now, with guidance towards narrowing the repo and reverse repo corridor going forward.
BSE Oil & Gas index rose 1 percent led by the ONGC, Gail India, IOC, Castrol:
Mohit Nigam, Head - PMS, Hem Securities:
After opening on a negative note, Nifty managed to recover and closed with the gain of 131.05 points or 0.74% at 17,822.3 points while creating a bullish candle on daily time frame.
Nifty closing above 17,800 can be seen as a positive sign as result season is also round the corner, which can act as positive trigger for Nifty to move towards creating a new all time high.
If Nifty continues its uptrend, then the level of 17,750 can act as a good support level and can go till the next resistance level which is at 17,935. But on the other hand, if Nifty slip below 17,750 then can show a move till 17,620 level.
