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NSE Intra-day chart (08 August 2018)
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Market Commentary 09 August 2018
Markets likely to start slightly in green amid mixed global cues

 

Bulls made come back on Dalal Street after a day's break on Wednesday, with frontline gauges ending at fresh record high levels. Markets started in green but traders remained concerned with ICRA's latest report that in spite of corporates witnessing a healthy 22% revenue growth in the June quarter, most have seen flat margins, with airline and cement companies seeing declining margins due to rising input costs and crude prices. Key gauges traded almost flat in morning deals, as sentiments remained dampened with Care Ratings' report that there has been a marginal decline of 1% in employment growth at 6.6%, mainly due to a larger number of companies having witnessed lower or negative hiring growth. It added that the employment growth in 2016-17, was at 7.7%. Adding to the pessimism, the Ministry of Corporate Affairs issued preliminary notices to 272 companies for alleged non-compliance with CSR provisions under the companies law. However, markets gained momentum in noon deals and traded firmly afterwards, as traders took encouragement with International Monetary Fund's (IMF) statement that India is on track to hold its position as one of the world's fastest-growing economies as reforms start to pay off. Indian economy was described by Ranil Salgado, the IMF's mission chief for India, as an elephant starting to run, with growth forecast at 7.3% in the fiscal year. However, IMF in its latest report also said that the Reserve Bank of India (RBI) will need to gradually tighten monetary policy further, in order to keep inflation in check. Traders took note of report that the Lok Sabha has approved the first batch of supplementary demands for grants envisaging a gross additional outgo of Rs 11,697.92 crore for the current fiscal. Finally, the BSE Sensex soared 221.76 points or 0.59% to 37,887.56, while the CNX Nifty was up by 60.55 points or 0.53% to 11,450.00.

 

The US markets ended mostly lower on Wednesday, as investors grappled with a fresh round of tariff clashes between the Trump administration and China. The US completed a list of $16 billion in Chinese imports that will be subject to 25% tariffs. That brings duties on Chinese imports, which are set to take effect August 23, to $50 billion. And US officials have said they are considering duties on $200 billion more. Beijing officials have said they would respond by imposing retaliatory tariffs on up to $110 billion of US goods. Besides, traders seemed reluctant to make any significant moves amid another quiet day on the US economic front. However, equities have remained mostly buoyant over recent sessions, supported by strong corporate quarterly results and economic data that underlined a healthy economy in its ninth year of expansion. Thus far, with more than 80% of corporations reporting quarterly results, S&P 500 components have produced earnings growth of 24% and sales gains of 9.8%. Those earnings have helped to bolster the belief that a steady US economic expansion will continue, despite heightened tariff skirmishes with China. Dow Jones Industrial Average declined 45.16 points or 0.18 percent to 25583.75 and the S&P 500 lost 0.75 points or 0.03 percent to 2857.70, while Nasdaq was up by 4.66 points or 0.06 percent to 7888.33.

 

Crude oil futures ended lower on Wednesday, with registering their steepest one-day drop in more than three weeks, following the Energy Information Administration (EIA) report that domestic crude supplies declined by 1.351 million barrels for the week ended August 3. Besides, import data from China showed a continuing drop in demand from the world's second-largest economy and one of the biggest importers of crude oil, raising questions about oil's ability to gain further traction higher after the threat of production slowdowns in Middle East had supported prices. Benchmark crude oil futures for September dropped $2.23 or 3.2 percent to settle at $66.94 a barrel on the New York Mercantile Exchange. October Brent crude declined $2.37 or 3.2 percent at $72.28 a barrel on London's Intercontinental Exchange.

 

Continuing its gaining streak for second consecutive session, Indian rupee ended slightly stronger against the US dollar on Wednesday, on greenback selling by banks and exporters. Rupee sentiments remained positive with International Monetary Fund's (IMF) statement that India is on track to hold its position as one of the world's fastest-growing economies as reforms start to pay off. Indian economy was described by Ranil Salgado, the IMF's mission chief for India, as an elephant starting to run, with growth forecast at 7.3% in the fiscal year. Besides, good performance of the domestic equity market, too influenced the rupee. On the global front, the dollar edged lower against a currency basket, while sterling wallowed near one-year lows, pressured lower by Brexit uncertainty. Finally, the rupee ended at 68.62, 6 paise stronger from its previous close of 68.68 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 3463.67 crore against gross selling of Rs 3351.16 crore, in the debt segment, the gross purchase was of Rs 1254.19 crore with gross sales of Rs 513.18 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.99 crore against gross selling of Rs 6.96 crore.

 

The US markets ended mostly lower on Wednesday, as the United States and China continued to spar over trade policy. Asian markets were trading mixed in early trade on Thursday, as China hit back against the Trump administration's latest tariffs and tensions ratcheted up between the US and Russia. Domestic equity markets ended Wednesday's session at fresh lifetime highs, as positive cues from global markets and earnings season supported gains. Today, the markets are likely to make flat-to-positive start, amid mixed global cues. Traders may take encouragement with the International Monetary Fund's (IMF) statement that India is on track to hold its position as one of the world's fastest-growing economies as reforms start to pay off. The $2.6 trillion economy was described by Ranil Salgado, the IMF's mission chief for India, as an elephant starting to run, with growth forecast at 7.3% in the fiscal year through March 2019 and 7.5% in the year after that. There will be some support with a report that India's average per capita income in the last four financial years was higher at Rs 79,882 as compared to the preceding four fiscals. As per the report, the per capita income grew by 4.6% in 2013-14 to Rs 68,572; 6.2% to Rs 72,805 in 2014-15; 6.9% to Rs 77,826 in 2015-16 and by 5.7% to Rs 82,229 in 2016-17. However, there will be some cautiousness with CARE Ratings' report that economic growth has gone downhill since touching 8.2% in 2016, and correspondingly, the trend in employment growth has dovetailed market sentiment. The growth in the total employee base has dropped by over 1 percentage point to 6.6% in FY18, from 7.7% in the year-ago period. GDP growth has tapered off in the last couple of years, clocking 7.1% and 6.7% growth in FY17 and FY18 respectively. Meanwhile, the installed power generation capacity in India has risen to 344 GigaWatts (GW) and its energy deficit, which stood at over 4% in 2014, has shrunk to less than 1% in 2018. There will be lots of important earnings announcements too, to keep the markets in action.

 

 

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

 

 

Index

Previous close

Support

Resistance

NSE Nifty

11,450.00

11,399.55

11,480.20

BSE Sensex

37,887.56

37,708.83

37,998.85

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Hindalco Industries

208.06

220.60

218.37

223.87

SBI

204.98

308.70

304.20

312.05

ICICI Bank

179.16

318.70

311.30

323.05

Tata Motors

161.26

255.15

251.92

258.32

Lupin

132.75

825.55

801.13

867.38

 

  • Maruti Suzuki India has introduced Auto Gear Shift  option in top-end ZXi+ and ZDi+ variants of its best seller all new Swift. 
  • Tata Motors' Sanand Plant has achieved 100% capacity utilisation, to further meet growing demand for its new generation passenger vehicles. 
  • HCL Technologies will organise a 3-day mega recruitment drive from August 10-12, 2018 in Lucknow. 
  • Lupin has reported 43.37% fall in its consolidated net profit of Rs 202.76 crore for Q1FY19 as compared to Rs 358.06 crore for Q1FY18.
News Analysis