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NSE Intra-day chart (19 August 2019)
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Market Commentary 20 August 2019
Benchmarks to make a cautious start on Tuesday

 

Indian equity benchmarks pared most of the early gains and ended flat on Monday, with Sensex & Nifty ending higher just by 52 and 6 points, respectively. Markets made a fabulous start of the day, aided by Fitch Solutions' statement that the Reserve Bank of India (RBI) is expected to cut interest rates by 40 basis points before the end of the current financial year as monetary easing till now appears to be insufficient in boosting economic growth. Sentiments got boosted amid reports that private equity and venture capital investments in India crossed $8 billion in July -- the highest fund infusion in a month by PE/VC funds -- amid strong investment activity in infrastructure and real estate asset classes. But, in the last hour of the trade, key indices pared most of their gains, as the Australia and New Zealand Banking Group (ANZ) slashed its forecast for India's economic growth to 6.2% in the financial year ending next March from a previous estimate of 6.5%, warning it would be tough for authorities to engineer a turnaround. However, markets managed to settle in positive terrain, supported with RBI Governor Shaktikanta Das' statement that the business community has been facing various challenges at the moment and growth is a matter of highest priority for the monetary policy committee (MPC) of the central bank. Finally, the BSE Sensex gained 52.16 points or 0.14% to 37,402.49, while the CNX Nifty was up by 6.10 points or 0.06% to 11,053.90.

 

The US markets ended higher on Monday on reports that President Donald Trump's administration is once again delaying restrictions on Chinese tech giant Huawei. Commerce Secretary Wilbur Ross said a temporary general license set to expire on Monday will be extended for another 90 days. The move will allow Huawei to continue purchasing supplies from US companies despite being placed on an economic blacklist back in May. Rose said there is another 90 days for the US telecom companies, some of the rural companies are dependent on wild ways. So we are giving them a little more time to wean themselves off. But there are no specific licenses being granted for anything. Further, the continued rebound on markets also came after Trump's economic advisers took to the Sunday talk shows to downplay concerns about a possible recession. Meanwhile, White House trade adviser Peter Navarro said it is a certainty the US will have a strong economy through 2020 and beyond with a bull market, thanks to stimulus from major economies and the largest trade deal ever in history. He also insisted the Fed will be lowering rates as part of that global stimulus push. Besides, the strength on markets also came amid a continued rebound in bond yields on optimism about new global stimulus. Dow Jones Industrial Average surged 249.78 points or 0.96 percent to 26135.79, Nasdaq gained 106.82 points or 1.35 percent to 8002.81 and S&P 500 was up by 34.97 points or 1.21 percent to 2923.65.

 

Crude oil futures ended higher on Monday after Yemen's Houthi rebels launched a drone attack over the weekend on one of Saudi Arabia's largest oil fields. The Houthis said they targeted the Shaybah oil field, which is owned by Saudi Arabian Oil Company, or Aramco, and holds about 14 billion barrels of oil. Aramco said a fire was extinguished at a natural-gas processing plant and that there were no injuries and no disruptions to production at the field, which produces around 1 million barrels of oil a day. Besides, gains were extended, buoyed by encouraging comments from President Donald Trump and other officials on trade talks, along with a move by China over the weekend to lower borrowing costs for companies. Benchmark crude oil futures for October rose $1.33 or 2.4 percent to settle at $56.14 a barrel on the New York Mercantile Exchange. October Brent rose $1.10 or 1.9 percent to settle at $59.74 a barrel on London's Intercontinental Exchange.

 

Snapping its two-day winning streak, Indian rupee ended weaker against dollar on Monday, amid strong demand for the American currency from importers. Sentiments turned pessimistic as the Australia and New Zealand Banking Group (ANZ) slashed its forecast for India's economic growth to 6.2% in the financial year ending next March from a previous estimate of 6.5%, warning it would be tough for authorities to engineer a turnaround. Traders overlooked Fitch Solutions' statement that the Reserve Bank of India (RBI) is expected to cut interest rates by 40 basis points before the end of the current financial year as monetary easing till now appears to be insufficient in boosting economic growth. Dollar's strength against major global currencies overseas also weighed on the local unit. On the global front, Sterling fell back from a near three-week high against the euro on Monday but sentiment towards the pound was better than in recent sessions as investors hoped Britain and the European Union would make some progress in Brexit talks. Finally, the rupee ended at 71.43, 29 paise weaker from its previous close of 71.14 on Friday.

 

The FIIs as per Monday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 8548.88 crore against gross selling of Rs 7230.42 crore, while in the debt segment, the gross purchase was of Rs 3222.88 crore with gross sales of Rs 2657.04 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.25 crore against gross selling of Rs 3.14 crore.

 

The US markets ended higher on Monday amid optimism about a potential resolution to the trade war and a limit to its economic fallout. Asian markets are trading mostly in green on Tuesday amid signs of progress on trade negotiations and speculation of government stimulus to shore up economic growth. Indian markets cut most of gains and ended marginally higher on Monday on the back of late hour selling pressure in auto and PSU bank counters. Today, the markets are likely to make a cautious start as markets await a relief package from the government to revive growth. There will be some cautiousness with report that former Reserve Bank of India (RBI) Governor Raghuram Rajan has called slowdown in the economy very worrisome and said the government needs to fix the immediate problems in power and non-bank financial sectors and come out with a new set of reforms to energise private sector to invest. Traders will be concerned with Care Ratings' report that India's jobs scene -- with unemployment at a 45-year high -- is looking gloomy with hiring activity slowing across most sectors. Also, some cautiousness may come with report that the Reserve Bank of India will sell five government securities worth Rs 17,000 crore on Friday. The move will suck out liquidity from the financial system. However, some respite may come later in the day with Finance Minister Nirmala Sitharaman's statement that corporate tax rate for companies with over Rs 400 crore turnover will be gradually cut to 25% and the government will support wealth creators. Traders may take note of a report that a top American lawmaker has urged the Trump Administration to resolve the trade tension with India as soon as possible, saying the dispute benefits none. There will be some buzz in the auto stocks with Federation of Automobile Dealers Associations' (FADA) report that retail sales of passenger vehicles (PV) declined by 11% to 2,43,183 units in July as compared to the same period last year, hit by weak demand across the country. The non-banking financial companies (NBFCs), housing finance companies (HFCs) will be in focus as the government has removed the redemption reserve requirement for issuance of debentures by NBFCs, HFCs and listed firms, a move aimed at reducing cost for raising capital. There will be some reaction in agriculture stocks with government data showing that India's foodgrains production is almost flat at 284.95 million tonnes (MT) in 2018-19 crop year due to fall in pulses and coarse cereals output even as the country harvested record rice as well as wheat crops.

 

Support and Resistance: NSE (Nifty) and BSE (Sensex)

 

Index

Previous close

Support

Resistance

NSE Nifty

11,053.90

11,012.20

11,121.25

BSE Sensex

37,402.49

37,267.69

37,628.08

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,276.52

76.65

74.85

79.60

Tata Motors

231.95

120.80

119.67

122.27

Indiabulls Housing Finance

228.35

536.85

520.95

562.70

SBI

198.31

286.85

284.43

290.83

ITC

125.25

251.55

249.23

255.58

 

  • Tech Mahindra is all set to divest 73.38% equity investment held by the Company in FixStream Networks Inc., USA, a subsidiary company. 
  • HCL Technologies has signed a MoU with MADC for expansion of its MIHAN campus in Nagpur, in-line with HCL's plan for Tier-II cities in the country. 
  • Maruti Suzuki is looking for tax relief for hybrid and CNG cars in addition to EVs in order to promote green mobility in the country. 
  • Tata Motors has launched offers across its Tiago, Tigor, Hexa and Nexon range sold in India during this monsoon.
News Analysis