Dear readers, wish you all a very happy new year.
It is likely to be a day of low volumes on account of holiday season around New Year. However, there are a few cues that the Street could take a note of. Global trends, including SGX Nifty’s move, indicate a possible flat start to the market on January 1, 2018.
The market closed the last session of the year on a flat note on December 31 with Nifty holding 10,850 levels amid rangebound trade. The benchmark indices also ended flat in December.
The 30-share BSE Sensex was down 8.39 points at 36,068.33 while the 50-share NSE Nifty gained 2.60 points at 10,862.50, forming formed bearish candle on the daily charts as it closed lower than its opening levels.
The Nifty opened higher but remained sideways throughout the trading session amid thin volumes. The index breached above the 78.6 percent retracement level of 10,889 shortly, before closing below this level.
“In the near term, 10,778-10,765 is a crucial support zone on the way down. The bears will gain momentum once the index breaks and sustains below 10,765,” Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas, told Moneycontrol.
The broader markets outperformed frontliners as the Nifty Midcap index gained 0.5 percent and Smallcap 0.77 percent. All sectoral indices closed in the green barring FMCG and realty.
The coming few sessions are expected to be volatile amid thin volumes but the year 2019 is expected to be volatile amid elections, earnings and macro factors, experts said.
“We expect low volumes during the week, as worldwide financial markets are closed on Tuesday,” said Hemang Jani, Head – Advisory, Sharekhan by BNP Paribas said.
Back home, investors will closely track December auto sales data, to be released on January 1, macro data like Nikkei Manufacturing PMI & services PMI and Q3FY19 earnings starting next week, he added.
Here is a look at multiple factors from India and around the world that could play up on the markets.
Wall Street rises, limps across the finish line of a turbulent year
Wall Street advanced in low-volume trading on Monday as revelers gathered to ring in 2019, marking the end of the worst year for U.S. stocks since 2008, the height of the financial crisis, Reuters reported.
Wall Street entered correction territory in late January and was challenged for much of 2018 by tariff jitters, rising interest rates, and fears of diminishing corporate profits.
“Investors got complacent,” said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta. “People were positioned for the lack of volatility, and when that changed because of trade concerns and interest rates, people started repositioning and that started the cascade.”
Asian markets are shut today on account of New Year.
Nifty futures on the Singaporean Exchange indicate a flat start to indices here. The index futures were trading at 10,922.5, up 1 point on the SGX.
The Indian rupee on December 31 signed off the last trading session of 2018 with 18 paise gains at 69.77 per dollar but clocked a 9.23 percent fall during the year after witnessing its one of the tumultuous years in the recent past, PTI reported.
On year-over-year basis, the rupee depreciated by a whopping 509 paise, or 9.23 percent, as compared to 2017-end level of 63.87.
Forex traders, however, said fundamentals are supportive for the rupee over the next 6-12 months amid supportive growth momentum, robust forex reserves.
Core sector growth at one-year low of 3.5% in November
Crude oil, cement and fertilizer sector output growth pulled the eight core sector growth to a one-year low of 3.5 percent in November from 4.8 percent in September.
Core sector growth was 6.9 percent in November, 2017.
Cumulative growth of the eight sectors—coal, steel, natural gas, cement, crude oil, fertilisers, refinery products and electricity during April to November was 5.1 percent, data released by commerce ministry showed.
Subsidised LPG price cut by Rs 5.91; non-subsidised rate reduced by Rs 120.50
Domestic cooking gas (LPG) price was cut by Rs 5.91 per cylinder Monday, the second straight reduction in a month’s time due to tax impact on reduced market rate of the fuel.
A 14.2-kg subsidised LPG cylinder will cost Rs 494.99 in the national capital from midnight tonight as against Rs 500.90 currently, Indian Oil Corp (IOC), the country’s largest fuel retailer, said in a statement.
This is the second straight monthly reduction in LPG rate. On December 1, subsidised LPG price was cut by Rs 6.52 per bottle.
Govt not seeking RBI reserves to meet fiscal deficit: Arun Jaitley
Finance Minister Arun Jaitley on December 31 said the government was not seeking Reserve Bank surplus to meet fiscal deficit but to utilise them for accelerating poverty alleviation programmes and recapitalising the state-owned banks.
Replying to a debate on the second batch of supplementary demands for grants in the Lok Sabha, the Minister said that the Modi government has the best track record of keeping fiscal deficit under check.
The House later passed supplementary demand for grants for the current fiscal to provide additional expenditure of Rs 85,948.86 crore, about half of which is for capital infusion in public sector banks.
Banks’ bilateral exposure to financial system at 46.5%: RBI
Banks lending to and borrowing from all other entities in the financial system stood at 46.5 percent of total lending and borrowings in the financial system, as on September 2018, RBI report showed.
Financial institutions establish links with other financial institutions for efficiency gains and risk diversification, but these same links lead to risk transmission in case of a crisis, RBI said in its Financial Stability Report released on December 31.
The total outstanding bilateral exposures among the entities in the financial system increased to Rs 32.4 trillion as on September-end 2018, a year-on-year increase of 13.1 percent, from Rs 28.7 trillion as on September-end 2017.
RIL raises ₹5,500 crore via debentures in two tranches
Reliance Industries (RIL) has raised ₹5,500 crore through a private placement of non-convertible debentures (NCDs), Mint reported citing officials.
The company raised the capital in December across two tranches of 25,000 partly-paid redeemable non-convertible debentures aggregating to ₹2,500 crore and 30,000 unsecured redeemable non-convertible debentures aggregating to ₹3,000 crore worth of debentures at a coupon rate of 8.7% and 8.65%, respectively.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Govt exempts rupee payments for Iran oil from hefty taxes
Finance ministry has exempted rupee payments made to the National Iranian Oil Co (NIOC) for crude oil imports from a steep withholding tax, according to a government order reviewed by Reuters.
The exemption, put in place December 28 but backdated to November 5, will allow Indian refiners to settle about $1.5 billion of outstanding payments to NIOC. Those have been building up since Tehran was put under stringent US sanctions in early November.
The two countries on November 2 signed a bilateral agreement to settle oil trades through an Indian government-owned bank, UCO Bank, in the Indian currency, which is not freely traded on international markets.
Government infuses Rs 10,882 crore capital in four PSU banks
The government infused Rs 10,882 crore in four public sector banks, including UCO Bank and Syndicate Bank, as part of Rs 28,615 crore capital infusion to be done in about half a dozen public sector lenders, PTI reported. The bank has received Rs 3,074 crore in the equity by way of preferential allotment on Monday, UCO Bank said in a regulatory filing.
Besides, Bank of Maharashtra got Rs 4,498 crore, Syndicate Bank Rs 1,632 crore and Central Bank of India Rs 1,678 crore.
The government has already announced infusion of Rs 10,086 crore in Bank of India, Rs 5,500 crore in Oriental Bank of Commerce and Rs 2,159 in United Bank of India. The government pumped in Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds.
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