Attack on Saudi crude facilities scorches Indian equities, currency; consumer durables aides

A steep rise in global crude oil prices dragged Indian equities and currency down on September 16.

“The sharp surge in crude oil prices has definitely impacted sentiments as it has an adverse impact on the Indian economy. Going forward, investors would keep a close watch on geo-political developments as any further escalation could take oil prices even higher and it would be detrimental for the Indian market and economy,” said Ajit Mishra Vice President – Research at Religare Broking.

The drone attacks on key oil producer Saudi Arabia’s crude facilities over the weekend spooked investors as it triggered fresh worries of geopolitical tension and raised concerns of supply disruption in the global market, making oil prices see their biggest surge since 1991.

An attack on Saudi Arabia that shut 5 percent of global crude output caused the biggest surge in oil prices since 1991 after US officials blamed Iran and President Donald Trump said Washington was “locked and loaded” to retaliate, Reuters reported.

India is the world’s third-biggest importer of crude oil and elevated crude oil prices are detrimental for the country’s financial health which is already going through a rough patch.

Lacklustre global cues and rupee’s strong fall against the US dollar soured the mood further.

The Indian currency settled 67 paise lower at 71.59 per dollar on September 16.

The Sensex ended the day 262 points, or 0.70 percent down, at 37,123.31, with only six stocks – Tech Mahindra, ONGC, Sun Pharma, Hindustan Unilever, Tata Consultancy Services and Bharti Airtel – in the green.

Mahindra & Mahindra, with a loss of 2.55 percent, emerged as the top loser in the Sensex kitty. It was followed by State Bank of India, Yes Bank, Asian Paints, HDFC and Tata Steel, falling 1.66-2.42 percent.

The Nifty index managed to hold the psychologically important level of 11,000. The index settled 72 points, or 0.65, percent down at 11,003.50, with 14 stocks in the green and 36 in the red.

Among the broader indices, BSE Midcap ended 0.27 percent lower while the BSE Smallcap logged a gain of 0.64 percent.

Most sectoral indices incurred losses. BSE Oil & Gas suffered the most, falling 1.61 percent. BSE Energy ended 1.33 percent lower and BSE Finance declined 0.95 percent.

On the other hand, BSE Consumer Durables climbed 1.22 percent. BSE Fast Moving Consumer Goods (up 0.63 percent) also logged decent gains.

The breadth of the market remained positive. As many as 1,369 stocks logged gains on BSE, against 1,150 losers.

Top news of the day:

Wholesale price-based inflation was unchanged at 1.08 percent in August even as prices of food items rose, government data showed.

Top oil producer Saudi Aramco has told Indian refiners that there will be no shortage in supplies, PTI reported, quoting the Indian oil ministry.

Former Jammu and Kashmir (J&K) chief minister Farooq Abdullah has now been detained under the Public Safety Act (PSA), reports suggest.

The Nationalist Congress Party (NCP) and the Indian National Congress announced a seat-sharing pact for Maharashtra Legislative Assembly election. Both NCP and Congress will fight on 125 seats each, out of total 288 Assembly seats. Rest of the seats will be assigned to smaller allies.

Stocks in news:

The share price of Equitas Holdings tumbled 12.81 percent to settle at Rs 102.10 on September 16 on BSE after the market regulator Securities and Exchange Board of India (SEBI) returned the company’s draft scheme.

Shares of CG Power and Industrial Solutions remained locked at 5 percent upper circuit at Rs 14.95 after media reports indicated that private equity firm KKR held a direct equity stake in the company.

Prabhat Dairy shares fell 4.10 percent to Rs 76.05 after the board approved a voluntary delisting of the company’s shares.

The share price of commercial vehicle manufacturer SML Isuzu slipped 2.81 percent to settle at Rs 601.55 after the company decided to observe Block Closure (Chassis Division) for six days due to continued low demand in the automobile sector.

Shares of Housing & Urban Development Corporation (HUDCO) climbed 2.25 percent to Rs 38.70 after the company received Rs 253 crore in full and final settlement of its dues.

Shares of Info Edge India gained 1.96 percent to close the day at Rs 1,935 after the company entered into an agreement to invest about Rs 4 crore in Bizcrum Infotech.

Colgate Palmolive gained 5.06 percent to end at Rs 1,315.70 after global brokerage Credit Suisse maintained ‘outperform’ rating on the stock with a target at Rs 1,450 per share. Credit Suisse expecting a 15 percent upside in the share price.

Global update:

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, reported Reuters.

Asian markets ended mixed. Shanghai Composite Index closed flat at 3,030.75, while Kospi ended 0.64 percent higher at 2,062.22. Hang Seng fell 0.83 percent to 27,124.55.

Technical view on the market:

After the gap down opening, Nifty received some buying support near the key hourly moving averages. Nevertheless, the index couldn’t recover significantly.

On the higher side, the Nifty faced another round of selling as it attempted to approach its swing high of 11,084. On the higher side, the upper end of a potential bearish running triangle and the 40-day exponential moving average are present to restrict further upside.

“Near these hurdles, the Nifty has formed an Inside bar, which suggests that there is a higher probability of the bar pattern breaking out on the downside. The breakout level for the same is at 10,945. The short term bearish potential holds true as long as the Nifty trades below 11,180. The short term target on the downside will be the August low of 10,637 with thepotential to head lower,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan by BNP Paribas.Get access to India’s fastest growing financial subscriptions service Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the website or mobile app.