Snapping their six-session
winning run, Indian equity benchmarks ended Monday's session near day's low
with massive losses of over two percent, amid reports of a fresh border
flare-up between India and China. Indian markets opened trade on a strong note,
as traders took support with report that the Ministry of Home Affairs (MHA) has
issued new guidelines for opening up of more activities in areas outside the
Containment Zones. In Unlock 4, which will come into effect from September 1,
2020, the process of phased re-opening of activities has been extended further.
Under the new guidelines, states are not to impose any local lockdown (State/
District/ sub-division/City/ village level), outside the containment zones,
without prior consultation with the central government. Some buoyancy also came
with Public Enterprises Selection Board (PESB) chairman Rajiv Kumar's statement
that central public sector enterprises, which have a combined net worth of
close to Rs 12 lakh crore, can boost India's GDP by 2-3 percent by leveraging
funds and stepping up capital expenditure. However, local indices wiped out all
of their morning gains and slumped sharply in afternoon trade, as market
participants remained on sidelines ahead of gross domestic production (GDP)
data, scheduled to be released later in the day. Sentiments remain dampened
with private report stating that India's fiscal deficit is expected to touch 7
percent of GDP in 2020-21 fiscal as against budget estimate of 3.5 per cent,
with revenue collections being hit amid disruptions in economic activities due
to lockdowns. Adding to the pessimism, apex exporters body FIEO has expressed
concerns over freezing of bank accounts of some exporters by the Enforcement
Directorate (ED) without giving any warning, hearing or reasons, and has sought
Commerce Ministry's intervention in the matter. Finally, the BSE Sensex lost
839.02 points or 2.13% to 38,628.29, while the CNX Nifty was down by 260.10
points or 2.23% to 11,387.50.
The US markets ended mostly lower
on Monday on worries about US-China tensions. Also, investors were quite
reluctant to make significant moves due to a lack of positive triggers.
Investors continued to weigh the likely impact of the coronavirus pandemic on
the economy despite recent comments from Federal Reserve Chairman Jerome Powell
that said interest rates will likely remain lower for a long time. Clarida said
a low unemployment rate by itself, in the absence of evidence that price
inflation is running or is likely to run persistently above mandate-consistent
levels or pressing financial stability concerns, will not, under our new
framework, be a sufficient trigger for policy action. Over the past five
months, the Dow's advanced 29.7%, its biggest 5-month percent gain since July
2009, while the S&P 500 added 35.4%, its best 5-month run since October
1938. The Nasdaq outperformed, advancing 52.9%, booking its strongest 5 months
since March 2000. The S&P 500 clinched its best August return since 1986
and the Dow its best return for that month since 1984, while the Nasdaq
recorded its strongest August since 2000. Much of the strength has been attributed
to hopes for vaccines and treatments for the COVID-19 pandemic that has
debilitated economies across the globe. The S&P 500 and Nasdaq have
continued to notch records as risk assets shrug off the economic damage wrought
by the coronavirus.
Crude oil futures end lower on
Monday amid a bit of uncertainty about outlook for energy demand due to
continued rise in coronavirus cases. Further, still, the likelihood of a drop
in crude imports by China due to the fairly huge stockpiles in the country
prevented traders from creating any significant long positions in the contract.
However, investors were also weighing the likely impact of OPEC-led production
cuts on crude prices, and this presumably helped limit oil's downside. Data
showing continued expansion in China's manufacturing activity, and a surge in
Japanese industrial production helped as well. Crude oil futures for October
declined 36 cents or 0.8 percent to settle at $42.61 a barrel on the New York
Mercantile Exchange. November Brent crude dropped 53 cents or 1.2 percent to
settle at $45.28 a barrel on London's Intercontinental Exchange.
Rupee ended substantially weaker
against dollar on Monday on account of continued dollar demand from importers
and banks. Sentiments remained fragile with private report stating that Chinese
troops 'carried out provocative military movements in Eastern Ladakh to change
the status quo' but they were blocked by Indian soldiers. Adding pessimism,
anther private report stated that India's fiscal deficit is expected to touch 7
percent of GDP in 2020-21 fiscal as against budget estimate of 3.5 per cent,
with revenue collections being hit amid disruptions in economic activities due
to lockdowns. Heavy selling in domestic equities also aided the negative trend
in the local unit. On the global front; dollar was set for a fourth straight
month of losses on Monday after a U.S. Federal Reserve policy shift on
inflation, while the euro was poised to post a fourth month of gains, taking
both currencies to levels last seen in 2018. Finally, the rupee ended at 73.60,
21 paise weaker from its previous close of 73.39 on Friday.
The FIIs as per Monday's data
were net buyers in equity, while they were net sellers in debt segment. In
equity segment, the gross buying was of Rs 7146.93 crore against gross selling
of Rs 6669.73 crore, while in the debt segment, the gross purchase was of Rs
402.05 crore with gross sales of Rs 2286.53 crore. Besides, in the hybrid
segment, the gross buying was of Rs 0.87 crore against gross selling of Rs 7.12
crore.
The US markets ended mostly in
red on Monday as worries about US-China tensions and reports showing a surge in
new coronavirus cases in several states across America weighed on sentiment.
Asian markets are trading mixed on Tuesday amid new Federal Reserve comments
that suggested rates will stay low for an extended period. Indian markets
reversed gains and ended sharply lower on Monday after tensions between India
and China border near Ladakh escalated. Today, the markets are likely to get a
cautious start amid mixed global cues coupled with weak macro-economic data.
Investors will be eyeing the Manufacturing PMI data to be out later in the day.
The implementation of the new margin rules from today is also expected to
impact the market trend. Traders will be concerned with report that India's
economy suffered its worst slump on record in April-June, with the gross
domestic product (GDP) contracting by 23.9% as the coronavirus-related
lockdowns weighed on the already-declining consumer demand and investment.
There will be some cautiousness with report that the output of eight core
infrastructure industries tumbled by 9.6%, for the fifth consecutive month in
July, due to the decline mostly in production of steel, refinery products and
cement. Market participants may also react to the rising coronavirus cases in
the country. India has recorded over 68,000 new cases of coronavirus in the
past 24 hours, taking its total caseload to 3,687,939. Meanwhile, the Union
Government's fiscal deficit overshot the budget target for the current
financial year within four months (April-July), mainly on account of the impact
of lockdown on revenue collections. Though, some support may come later in the
day with report that the RBI will conduct a simultaneous purchase and sale of
government securities under open market operation (OMO) for an aggregate amount
of Rs 10,000 crore on September 03, 2020. The Reserve Bank of India (RBI) as
part of its measures to foster orderly market conditions has also announced
that it will conduct additional special open market operation, involving the
simultaneous purchase and sale of government securities for an aggregate amount
of Rs 20,000 crore in two tranches of Rs 10,000 crore each. There will be some
buzz in the telecom stocks as Justice Arun Mishra-led Supreme Court bench will
pronounce the much awaited Adjusted Gross Revenue dues' verdict relating to
telecom companies later in the day. Metal stocks will be in focus after Miners'
body FIMI urged the government to introduce a mechanism to monitor the price
and sale of domestic steel, which has witnessed a steep rise in recent months.
There will be some reaction in fertiliser industry related stocks as India
Ratings and Research (Ind-Ra) in a report said India's fertiliser sales are
likely to grow 10-15 percent in 2020-21, however, the momentum seen in first
half of the fiscal is likely to moderate during the second half. The auto
sector stocks will also be in action, reacting to their monthly sales numbers.
Support
and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,387.50
|
11,210.81
|
11,679.21
|
BSE Sensex
|
38,628.29
|
38,012.73
|
39,627.01
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Bharti Airtel
|
1,868.56
|
513.10
|
507.00
|
520.75
|
Tata Motors
|
1,605.65
|
143.20
|
138.29
|
148.04
|
State Bank of India
|
1,199.91
|
212.00
|
204.39
|
225.59
|
ITC
|
969.98
|
191.10
|
187.74
|
196.74
|
Oil & Natural Gas
Corporation
|
931.94
|
81.95
|
80.06
|
84.66
|
Reliance Industries' subsidiary -- RRVL is acquiring the Retail & Wholesale Business and the Logistics & Warehousing Business from the Future Group.
Maruti Suzuki India's Arena sales network has completed three years.
Coal India's board has approved creating an additional board level post in the PSU and its subsidiaries.
GAIL (India) is eyeing expansion in petrochemicals, specialty chemicals and renewables to supplement growth in its core business of natural gas marketing and transportation.