Indian equity benchmarks
struggled for direction on Friday and closed lower for the third day in a row,
weighed down by heavyweights Reliance Industries (RIL) and the HDFC twins.
After making a cautious start, markets managed to keep their heads over neutral
lines, taking support from trade body CII's statement that the new set of
relaxations introduced while extending the lockdown till August 31 in Tamil
Nadu would pave way for quick revival of the economy besides ensuring
livelihood of people. Adding some optimism, Commerce and Industry Minister
Piyush Goyal said that the government is working on production-linked
incentives for 12 major sectors like Active Pharmaceutical Ingredients and
electronics. But, key indices soon turned negative in late morning session as
weak global markets following disappointing US gross domestic product (GDP)
data, dented investor sentiment. Besides, another record spike in Covid-19
infections in the country kept the investors nervous. Investors also maintained
cautious approach, as Reserve Bank of India is likely to leave repo rate
unchanged in the upcoming policy review meeting and the Monetary Policy
Committee may look for unconventional policy measures to ensure financial stability.
Market participants took a note of Former Reserve Bank of India (RBI) Governor
Raghuram Rajan's statement that bold government reform that triggers animal
spirits and implemented effectively is essential for India to come out of the
Covid-19 setbacks. Rajan also made it clear that the space for expanding the
balance sheet for RBI is not infinite, and the central bank will need to have a
strong focus on monitoring inflation as it does that. Finally, the BSE Sensex
lost 129.18 points or 0.34% to 37,606.89, while the CNX Nifty was down by 28.70
points or 0.26% to 11,073.45.
The US markets ended volatile day
in green on Friday, with the tech-heavy Nasdaq showing a particularly strong
upward move. Gains in the markets were supported by positive reaction to better
than expected quarterly results from several leading technology companies. The
upbeat tech earnings news seemed to overshadow concerns about stalled negotiations
over a new coronavirus stimulus package. With the Republican-controlled Senate
adjourning for the weekend on Thursday, a $600 weekly federal unemployment
benefit is set to expire at the end of the day. Democrats rejected a temporary
extension of the jobless benefit, with Senate Minority Leader Chuck Schumer
claiming a one-week extension can't be implemented in time. Lawmakers appear at
an impasse as the attempt to reach a compromise between a $1 trillion GOP
relief proposal and the $3.4 trillion bill passed by the Democratic-controlled
House in May. On the economic front, the Commerce Department released report
showing personal income slumped by more than expected in the month of June,
although the report also showed another substantial increase in personal
spending. The Commerce Department said personal income tumbled by 1.1 percent
in June after plunging by a downwardly revised 4.4 percent in May. Street had
expected personal income to decrease by 0.5 percent compared to the 4.2 percent
nosedive originally reported for the previous month. Meanwhile, the report said
personal spending surged up by 5.6 percent in June after skyrocketing by an
upwardly revised 8.5 percent in May.
Crude oil futures ended higher on
Friday buoyed by a report from the US Energy Information Administration (EIA)
that said oil production fell sharply in May. According to report, crude oil
production in the US fell a record 2 million barrels per day to 10 million
barrels per day. However, concerns about the energy demand outlook due to
continued worries about the economy amid the rapid spread of the coronavirus
pandemic and mixed economic data from several parts of the world limited oil's
upside. A likely uptick in production as Organization of the Petroleum
Exporting Countries (OPEC) and allies prepare to relax output curbs by 2
million barrels a day beginning Saturday also capped oil's rise. Crude oil
futures for September rose 35 cents or 0.9 percent to settle at $40.27 a barrel
on the New York Mercantile Exchange. October Brent crude added 27 cents or 0.6
percent to settle at $43.52 a barrel on London's Intercontinental Exchange.
Rupee ended higher against dollar
on Friday owing to dollar sale by exporters and banks. Sentiments remained
optimistic as India Ratings and Research (Ind-Ra) stated that swelling of
India's foreign exchange reserves in combination with benign oil prices and
tepid imports have led to a current account surplus and helped the Indian rupee
to remain broadly stable since mid-March. However, upside remain capped with
private report stating that the Reserve Bank of India is likely to leave repo
rate unchanged in the upcoming policy review meeting and the Monetary Policy
Committee may look for unconventional policy measures to ensure financial
stability. On the global front, dollar extended its dramatic fall on Friday, as
investors fretted that a rebound in the U.S. economy would be derailed by the
struggle to stem the coronavirus epidemic. Finally, the rupee ended at 74.81, 3
paise stronger from its previous close of 74.84 on Thursday.
The FIIs as per Friday's data
were net buyers in equity, while they were net sellers in debt segment. In
equity segment, the gross buying was of Rs 7568.05 crore against gross selling
of Rs 6146.44 crore, while in the debt segment, the gross purchase was of Rs
843.00 crore with gross sales of Rs 1547.30 crore. Besides, in the hybrid
segment, the gross buying was of Rs 10.07 crore against gross selling of Rs
9.70 crore.
The US markets ended higher on
Friday as a slate of technology giants buoyed the S&P 500 and offset
disappointing earnings from some industrials and weak economic data. Asian
markets are trading mostly in red on Monday as US-China tensions continue to
heat up. Indian markets ended the day in red on Friday dragged by heavyweights
like Reliance Industries, HDFC Bank, Kotak Mahindra Bank and auto stocks.
Today, the start of new month is likely to be pessimistic amid lackluster trade
in Asian peers coupled with weak economic data and concerns over rising
coronavirus cases. India recorded over 50,000 coronavirus cases for a 5th
consecutive day, taking its tally way past the 1,800,000 mark. India's death
toll now stands at 38,161. Investors will be eyeing IHS Markit India
Manufacturing PMI data to be out later in the day. Traders will be concerned
with union Finance Minister Nirmala Sitharaman's statement that the coronavirus
pandemic has definitely hit the supply chains which is continuing to disrupt
the economic revival. Markets participants will react to the Commerce and
Industry Ministry's data showing that contracting for the fourth consecutive
month, the output of eight core infrastructure industries shrank by 15% in June
due to fall in the production of coal, crude oil, natural gas, steel, cement
and electricity. There will be some cautiousness with Finance Ministry's
statement that GST collections in July fell to Rs 87,422 crore from Rs 90,917
crore in June. However, July collections are higher than Rs 62,009 crore in May
and Rs 32,294 crore in April. Meanwhile, the government data showed that
India's fiscal deficit in the three months to end June stood at 6.62 trillion
rupees ($88.52 billion), or 83.2% of the budgeted target for the current fiscal
year. Though, some support may come later in the day with a report that foreign
portfolio investors (FPI) remained net buyers for the second consecutive month
in July by pumping in Rs 3,301 crore in Indian markets amid hopes of a
coronavirus vaccine. The auto sector stocks will be in action, reacting to
their monthly sales numbers. There will be some buzz in the pharma stocks as
the Centre is reportedly looking to increase customs duty on imported active pharmaceutical
ingredients (APIs) by 10-15%, in order to boost local manufacturing of the bulk
drugs. Power stocks will also be in focus with power producers' total
outstanding dues owed by distribution firms rose over 47% year-on-year to Rs
1.33 trillion in June 2020, reflecting stress in the sector. There will be some
reaction in steel stocks with a private report that steel companies have
increased prices by about Rs 2,000 a tonne during the past 10 days, on the back
of an increase in domestic demand and international prices, taking it to
near-pre-Covid levels. 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
|
11,073.45
|
11,016.60
|
11,140.35
|
BSE Sensex
|
37,606.89
|
37,393.12
|
37,859.22
|
Nifty Top volumes
Stock
|
Volume
|
Previous
close (Rs)
|
Support (Rs)
|
Resistance
(Rs)
|
(in
Lacs)
|
State Bank of India
|
1459.03
|
191.45
|
187.15
|
195.30
|
Indian Oil Corporation
|
414.14
|
88.45
|
87.15
|
89.85
|
Sun Pharmaceutical
Industries
|
412.53
|
531.70
|
512.46
|
545.96
|
ICICI Bank
|
373.46
|
346.80
|
341.56
|
352.51
|
Reliance Industries
|
345.93
|
2,067.10
|
2,036.94
|
2,113.14
|
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