Nifty 8243/Sensex 26759/ Bank Nifty 18264
22 Advances /29 Declines/ 0 Unchanged
Indian benchmarks erase all early gains on Friday
Indian equity markets showed a volte-face on the last day of the week as what started on a cheerful note ended as a dismal show. The optimism in local markets petered out completely by the end of trade and the indices even drifted in to the negative territory, despite getting off to a gap-up opening.
Sentiments got a hit after President Pranab Mukherjee issued a note of caution that the Narendra Modi government’s demonetization decision could likely lead to a temporary slowdown in the economy and hurt the poor. The President called for policymaking that would reduce the suffering of the poor, and seemed to question the focus shift in the government’s poverty alleviation programmes and policies from an entitlement-based approach to an entrepreneurial one.
Furthermore, a private report highlighted that India’s GDP is likely to have grown at a much slower-than-expected pace of 5 percent in the October-December period and may see a 6 percent growth in the following quarter due to a slowdown in manufacturing and services sectors post demonetization.
Besides, sharp selling in IT counter also weighed on investor sentiments. Technology stocks came under pressure on reports that two US Congressmen have reintroduced a bill to curb the use of H-1B visas, on which the Indian IT sector is particularly dependent. The new bill would require workers on the H-1B visa pay a minimum of $100,000, up from $60,000 currently. However, losses remained capped in local markets with the report of Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley indicated that India appears to be much better placed with improved macro-economic fundamentals, as measures to eliminate shadow economy and tax evasion are expected to have positive impact on GDP.
India expects to grow at around 7 percent in the first half of the next financial year. Market participants got some relief with the report that Reserve Bank of India (RBI) replaced as much as 44% of the currency extinguished by demonetisation with new notes by December 30, 2016. The report also expresses hopes that India's currency supply is likely to return to near normal by February end and growth, which has been hit by the withdrawal of Rs 500 and Rs 1,000 notes, is likely to bounce back faster than earlier expected.
On the global front, Asian markets ended mostly higher on Friday as uncertainty over incoming President Donald Trump's policies weighed on the dollar and U.S. bond yields, boosting risk appetite for emerging markets. However, investors are cautious ahead of the release of the closely-watched US monthly jobs data to be released later in the day. The lead from Wall Street provides little clarity as stocks turned in a lacklustre performance as uncertainty over some of President-elect Donald Trump's policies gave investors pause, despite solid economic data.
Back home, the benchmark got off to a positive start in the early trade as investors were largely influenced by the supportive leads from Asian markets. The indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices see-sawed around the neutral line throughout the morning session. But fresh bouts of selling pressure surfaced after weak European opening post, which the indices found it hard to claw back into the green terrain and eventually settled in the negative zone.
FII Activity (6 January 2017)
The FIIs as per Friday’s data were net sellers in equity segment, while they were net buyers in debt segment, according to data released by the NSDL.
In equity segment, the gross buying was of Rs 4542.95 crore against gross selling of Rs 4585.82 crore. Thus, FIIs stood as net sellers of Rs 42.87 crore in equities.
In the debt segment, the gross purchase was of Rs 1829.51 crore with gross sales of Rs 1079.02 crore. Thus, FIIs stood as net buyers of Rs 750.49 crore in debt.
Now what to expect??
Nifty Future Levels
Nifty unable to sustain at upper level… it made high of 8306 and slipped.
Now what to expect?
Nifty future has support at 8180 and resistance at 8290—8320
Three consecutive close + weekly above 8320 will take it to 8540—8520+ mark. Further upside rally will if close above 8520 else it could test its support level of 8180 again.
Fresh selling can be initiated below 8180 mark
Trade with levels only.
Bank Nifty Future Levels
Support at 18000--17800 and resistance at 18400.
Three consecutive close + weekly close above 18400 will take it to 18900---19050+ mark in days to come else could test its support level of 18000—17800.
Further downside panic will see on close below 17800
Trade with levels only.
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