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NSE Intra-day chart (11 July 2018)
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Market Commentary 12 July 2018
Markets to make a green start ahead of macroeconomic data

 

 

Indian equity benchmarks ended the volatile day of trade almost flat, as traders remained on sidelines ahead of Index of Industrial Production (IIP) and Consumer Price Index (CPI) data to be released on July 12, 2018. Markets traded between green and red terrain throughout the session and ended with negligible gains, keeping their head above water on Tuesday, as traders took some support with report that the Global Innovation Index (GII) has ranked India as the 57th most innovative nation in the world. The country has improved its ranking from 60th position last year. India has been improving steadily since it was ranked 81st in 2015. Investors' sentiments got improved as updated World Bank figures for 2017 showed that India is now the world's sixth-biggest economy, having muscled past France, which was pushed to the seventh spot. India's gross domestic product (GDP) stood at $2.597 trillion at the end of 2017, compared to $2.582 trillion for France. Market participants also got some support with union minister for electronics and IT Ravi Shankar Prasad's statement that India is the third largest investor in the United Kingdom and emerged as the second largest international job creator with Indian companies having created over 110,000 jobs in the UK in recent months. The domestic sentiments also remained upbeat with a report that India and South Korea have inked 11 MoUs, including an agreement to discuss upgrade of the Comprehensive Economic Partnership Agreement (CEPA), with an aim to increase bilateral trade to $50 billion by 2030. However, gains remained capped as traders remain concerned with India's G-20 Sherpa Shaktikanta Das, expressing concern over increasing protectionism and trade conflicts across the world, said that countries ought to work out arrangements that are beneficial to all in the larger interest of reviving global growth. Some cautiousness crept in with a private report stating that Indian inflation likely rose to a near two-year high in June, driven by surging oil and food prices, a development that would strengthen calls for more monetary policy tightening by the Reserve Bank of India. Finally, the BSE Sensex gained 26.31 points or 0.07% to 36,265.93, while the CNX Nifty was up by 1.05 points or 0.01% to 10,948.30.

 

Snapping a four-session winning streak, the US markets ended lower on Wednesday, with losses of over half a percent, after the Trump administration announced new tariffs on Chinese goods, further escalating tensions between the two largest economies in the world, which some investors fear could morph into a full-on trade war. The White House said it would assess 10% tariffs on a further $200 billion in Chinese goods. The move is seen as deepening the rift with Beijing and sending a message to other trading partners that the US is willing to escalate a trade fight. The US last week hit Beijing with levies on $34 billion in goods, and Beijing retaliated with tariffs of the same amount. A final decision on the products to be hit with the new tariffs is expected after a consultation period in late August. China's Ministry of Commerce said that the new levies are totally unacceptable and that the behavior is hurting not just China but the whole world. On the economic front, the Labor Department released a report showing producer prices increased by slightly more than expected in the month of June. The Labor Department said its producer price index for final demand rose by 0.3 percent in June after climbing by 0.5 percent in May. Excluding food and energy prices, core producer prices also climbed by 0.3 percent in June, matching the increase seen in May. The Dow Jones Industrial Average declined 219.21 points or 0.88 percent to 24700.45, the S&P 500 dropped 19.82 points or 0.71 percent to 2774.02 and the Nasdaq was down by 42.59 points or 0.55 percent to 7716.61.

 

Crude oil futures ended lower on Wednesday with the benchmark registering its sharpest daily slump in about 13 months, as fears of flagging demand and renewed production from Libya overshadowed a report showing the biggest weekly drop in domestic crude supplies in nearly two years. The biggest weekly drop in US crude supplies couldn't halt the drop in oil prices as traders chose to focus on expectations for higher global output. The Energy Information Administration reported a 12.6 million-barrel drop in US crude supplies for the week ended July 6.  Besides, market players were taking profits after reports of the return of Libyan crude oil, possible waivers for US sanctions on Iranian oil and renewed trade war fears. Benchmark crude oil futures for August fell $3.73 or 5 percent to settle at $70.38 a barrel on the New York Mercantile Exchange. September Brent crude dropped $5.46 or 6.9 percent at $73.40 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally higher against dollar on Wednesday, due to increased selling of the American currency by exporters and banks. Investors' sentiments got support with updated World Bank figures for 2017 showing that India is now the world's sixth-biggest economy, having muscled past France, which was pushed to the seventh spot. India's gross domestic product (GDP) stood at $2.597 trillion at the end of 2017, compared to $2.582 trillion for France. However, gains were capped as investors remained cautious ahead of key economic data i.e. Consumer Price Index-based (CPI) inflation and Index of Industrial Production data (IIP), scheduled to be released tomorrow. On the global front, dollar firmed against most of its rivals on Wednesday, after the United States threatened to impose additional tariffs on Chinese goods, escalating trade tensions between the world's two largest economies. Finally, the rupee ended at 68.77, 5 paise stronger from its previous close of 68.82 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5489.52 crore against gross selling of Rs 5230.81 crore, while in the debt segment, the gross purchase was of Rs 279.76 crore with gross sales of Rs 387.01 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.76 crore against gross selling of Rs 4.19 crore.

 

The US markets snapped four-day winning streak to end lower on Wednesday, after the Trump administration announced new tariffs on Chinese goods, further escalating tensions between the two largest economies in the world, which some investors fear could morph into a full-on trade war. Asian markets were trading in green in early deals on Thursday, with markets shaking off some of the trade jitters seen overnight after the Trump administration announced a list of Chinese goods that may be subject to new tariffs. Trimming some of the early gains, domestic equity markets ended marginally higher on Wednesday, as investors remained cautious amid escalating trade war concerns between the US and China. Today, markets are likely to make positive start, ahead of the release of macroeconomic data. Industrial growth (IIP) for May and retail inflation (CPI) for June data will be release later today. Traders may take some encouragement with a report that India has become the world's sixth largest economy overtaking France. According to World Bank data on gross domestic product (GDP) of countries for 2017, India's gross domestic product (GDP) stood at $2.597 trillion at the end of 2017, compared to $2.582 trillion for France. Some support may also come with the International Labour Organization (ILO), an arm of the United Nations, report that if 40% of India's electricity comes from renewables by 2030 (from 7.5% in February 2018), the country could add about 3 million new jobs. There will be some buzz in telecom sector stocks, with report that the Telecom Commission approved the new telecom policy - National Digital Communications Policy (NDCP), 2018 - aimed at promoting investments, ease of doing business, and emerging technologies like 5G. There will be some buzz in real estate sector related stocks with a private report that the private equity (PE) investment in Indian real estate sector grew by an average 36% annually to reach $8.6 billion in 2017 from $2.5 billion in 2014.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,948.30

10,921.98

10,975.63

BSE Sensex

36,265.93

36,169.65

36,362.25

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

TCS

229.04

1,979.90

1,916.70

2,020.55

Vedanta

163.71

218.10

215.27

221.92

SBI

128.57

259.10

257.12

261.87

ICICI Bank

127.18

268.75

265.87

273.27

ITC

113.63

275.75

272.90

279.45

  • Lupin and Boehringer Ingelheim have expanded their partnership with plans to market two new oral anti-diabetics recently approved by the DCGI - Gibtulio Met and Ajaduo. 
  • Dr. Reddy's Laboratories has launched Hydroxychloroquine Sulfate Tablets USP, 200 mg, a therapeutic equivalent generic version of Plaquenil Tablets, in the US market, approved by the USFDA. 
  • TCS has reported a rise of 23.47% in its consolidated net profit at Rs 7,340 crore for Q1FY19 as compared to Rs 5,945 crore for Q1FY18. 
  • Tata Motors has acquired 26% stake in TruckEasy marking its first investment in a start-up.
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