Bears made a comeback on Dalal
Street on Monday, amid escalating tensions concerning Jammu & Kashmir
spooked investors. Markets made a negative start of the day, as Foreign
investors withdrawn a net amount of Rs 2,881 crore from the Indian capital markets
in the first two sessions of August on account of domestic as well as global
headwinds. According to latest depositories data, FPIs pulled out a net sum of
Rs 2,632.58 crore from equities and Rs 248.52 crore from the debt segment
during August 1-2, taking the cumulative net outflow to Rs 2,881.10 crore.
Investors paid no heed towards report that India's services sector activity
bounced back in the month of July, aided by rising new work intakes. As per the
survey report, the seasonally adjusted Nikkei Services Business Activity Index
jumped to 53.8 in July from 49.6 in June. Key indices remained under pressure
throughout the session, also because of weak cues from global markets. Traders
remained pessimistic as the Federation of Automobile Dealers Associations
(FADA) feared that the job cuts may continue across automobile dealerships with
more showrooms being shut in the near future and sought immediate government
intervention such as reduction of GST to provide relief to the auto industry.
It said that around two lakh jobs have been cut across automobile dealerships
in India in the last three months as vehicle retailers take the last resort of
cutting manpower to tide over the impact of the unprecedented sales slump.
Market participants failed to take any sense of relief with former RBI Governor
Bimal Jalan's statement that the current slowdown in the Indian economy is
cyclical and growth will pick up in one or two years. Finally, the BSE Sensex
declined 418.38 points or 1.13% to 36,699.84, while the CNX Nifty was down by
134.75 points or 1.23% to 10,862.60.
The US markets ended deeply in
red on Monday as China allowed its currency to fall to a more-than-10-year low
versus the dollar after President Donald Trump rattled markets by announcing
additional tariffs on Chinese goods late last week. Trump accused China of
currency manipulation even though his administration has repeatedly declined to
officially label China a currency manipulator. He stated china dropped the
price of their currency to an almost a historic low. It is called currency
manipulation. Are you listening Federal Reserve? This is a major violation
which will greatly weaken China over time. Trump claimed that he would stop
China from taking hundreds of billions of dollars from the US with unfair trade
practices and currency manipulation. He further mentioned China has always used
currency manipulation to steal our businesses and factories, hurt our jobs,
depress our workers' wages and harm our farmers' prices. On the economic front,
growth in US service sector activity unexpectedly slowed in the month of July, according
to a report released by the Institute for Supply Management (ISM). The ISM said
its non-manufacturing index fell to 53.7 in July after dropping to 55.1 in
June. A reading above 50 still indicates service sector growth, although Street
had expected the index to inch up to 55.5. With the unexpected decrease, the
non-manufacturing index slid to its lowest level since hitting 51.8 in August
of 2016. The unexpected decrease by the headline index was partly due to a
steep drop by the business activity index, which tumbled to 53.1 in July from
58.2 in June. The new orders index also slumped to 54.1 in July from 55.8 in
June, indicating a continued slowdown in the pace of growth in new orders. Dow
Jones Industrial Average dropped 767.27 points or 2.90 percent to 25717.74,
Nasdaq declined 278.03 points or 3.47 percent to 7726.04 and S&P 500 was
down by 87.31 points or 2.98 percent to 2844.74.
Crude oil futures ended lower on
Monday as concern for a prolonged trade war and its risk to global crude demand
was rekindled. Meanwhile, China's currency weakened below the important level
of 7 yuan to the dollar, sparking a global selloff in equities and other assets
perceived as risky as investors flooded into haven assets, including Treasurys.
Besides, oil markets also awaited monthly Short Term Energy Outlook from the
Energy Information Administration. Benchmark crude oil futures for September
dropped 97 cents or 1.7 percent to settle at $54.69 a barrel on the New York
Mercantile Exchange. October Brent, down slightly on the day, to settle at
$59.81 a barrel on London's Intercontinental Exchange.
Continuing
its free fall for the third straight session, Indian rupee depreciated
considerably against dollar on Monday, on increased demand for the US currency
from importers. The domestic currency was also weighed down by sharp losses in
the local equities. Market participants paid no heed towards a monthly survey
showed the country's services sector activity in July returned to growth
territory driven by new business orders that rose at fastest pace since October
2016, following which job creation picked up. The IHS Markit India Services
Business Activity Index rose to 53.8 in July from 49.6 in June, pointed to the
quickest increase in output in one year. On the global front, U.S. dollar
dropped against its major rivals on Monday, as a risk-off mood triggered by
mounting trade concerns sent investors fleeing, even from the usually safe
haven Japanese currency. Finally, the rupee ended at 70.73, Rs 1.13 weaker from
its previous close of 69.60 on Friday.
The
FIIs as per Monday's data were net sellers in equity segment, while they were
net buyers in debt segment, In equity segment, the gross buying was of Rs
4811.88 crore against gross selling of Rs 7701.39 crore, while in the debt
segment, the gross purchase was of Rs 2337.15 crore with gross sales of Rs
1333.38 crore. Besides, in the hybrid segment, the gross buying was of Rs 13.93
crore against gross selling of Rs 8.40 crore.
The US markets tumbled on Monday
as fresh trade threats between Beijing and Washington raised fears of an
economic slowdown. Asian markets are trading in red on Tuesday following
overnight losses on Wall Street. Indian markets ended lower with cut of over a
percent each on Monday amid weak global cues and political uncertainty over the
Kashmir issue. Today, the markets are likely to continue sluggish momentum with
a gap-down opening, mirroring weakness in the global markets. Moreover, the
tension in Jammu and Kashmir over scrapping of Article 70 and continued foreign
capital outflow may also weigh on the markets. The Rajya Sabha had approved a
resolution scrapping the special status to Jammu and Kashmir and passed another
Bill approving the bifurcation of the state into two Union territories.
However, some support may come later in the day with Finance Minister Nirmala
Sitharaman's statement that the government planned steps to improve the state
of the economy fairly quickly after getting inputs from business leaders.
Traders may take note of report that the ASSOCHAM expects the Reserve Bank of
India to cut the benchmark policy Repo rate by 50 basis points or more, in the
wake of a realistic assessment of the state of economy which needs an immediate
demand push and investment support by way of reduced cost of borrowing.
Besides, a private report indicated that India's economy needs external capital
flow to grow at 9% and touch $5 trillion in the next five years. There will be
some buzz in the Non-banking finance companies (NBFCs) stocks with report that
bank credit to NBFCs fell by over Rs 6,000 crore between April and June, once
again highlighting the risk aversion towards the sector. There will be some
reaction in gems and jewellery stocks with report that India's gold imports in
July plunged 55 per cent from a year ago to the lowest level in three years as
a rally in local prices to a record high and a hike in import taxes curtailed
demand. There will be lots of earnings reaction based on the performance of the
companies.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,862.60
|
10,798.20
|
10,911.40
|
BSE Sensex
|
36,699.84
|
36,463.07
|
36,890.33
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in
Lacs)
|
Yes Bank
|
1,363.53
|
81.05
|
77.70
|
86.20
|
SBI
|
488.16
|
299.80
|
293.38
|
304.53
|
Tata Motors
|
354.52
|
124.00
|
121.47
|
127.37
|
ICICI Bank
|
250.33
|
403.05
|
396.98
|
407.88
|
Indiabulls Housing Finance
|
202.96
|
476.45
|
459.67
|
490.97
|
Reliance Industries is planning to acquire an 87.6% stake in Shopsense Retail Technologies, also known as Fynd, for Rs 295 crore.
Hero MotoCorp is planning to expand delivery of two-wheelers to its customers at their doorstep, at a nominal charge.
Wipro's strategic design arm -- Designit has opened a new studio in Sydney to expand its Australian operations and to meet growing business requirements in the region.
M&M has reduced prices of e-Verito by up to Rs 80,000 in order to pass the benefit of reduced GST on electric vehicles to customers.