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NSE Intra-day chart (31 July 2020)
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Market Commentary 03 August 2020
Markets to get negative start amid weakness in Asian peers


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)



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Reliance Industries






  • Wipro has been selected as strategic partner by Metro Bank to deliver and transform Testing and Environment Management Services. 
  • HDFC has received approval from shareholders to raise up to Rs 1.25 lakh crore by issuing bonds or other hybrid instruments on a private placement basis. 
  • Axis Bank has launched an Artificial Intelligence powered conversational banking interactive voice response system. 
  • Tata Steel's modular construction solutions brand Nest-In has launched onion storage solution Agronest for better storage and reducing wastage.
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