Volatility hit over Indian equity
benchmarks on Friday, with both larger peers, the Sensex and the Nifty ending
lower by losses of 86 and 30 points, respectively. The markets made a cautious
start of the day, after former finance minister P Chidambaram said that the
Union Budget 2019-20 does not chalk out a clear roadmap to take India on the
path of high economic growth and lacks bold steps and structural reforms. The
street also remained concerned with US Commerce Secretary Wilbur Ross'
statement that India must recognize that its protectionist policies and tariff
rules are hurting its companies and are a big impediment to attracting foreign
direct investment. The markets staged recovery in the second half of the
session, supported with Finance Minister Nirmala Sitharaman's statement that
the big picture presented in the Budget is backed with a plan to increase
investment without compromising on the fiscal consolidation roadmap. Some
relief also came with a report stating that as rainfall in the first 11 days of
this month was 24% more than normal, the overall season's rain deficit came
down to 12%, from 33% witnessed in June. But, key indices failed to hold gains
and slipped into red terrain, as traders got cautious ahead of release of index
of industrial production (IIP) for May and consumer price index-based inflation
for June. Finally, the BSE Sensex fell 86.88 points or 0.22% to 38,736.23,
while the CNX Nifty was down by 30.40 points or 0.26% to 11,552.50.
The US markets ended higher on
Friday on renewed optimism about the Federal Reserve lowering interest rates as
soon as its next meeting later this month. Congressional testimony from Fed
Chairman Jerome Powell indicating crosscurrents, such as trade tensions and
concerns about global growth, have continued to weigh on the US economic
outlook helped spark the resurgence in optimism about a rate cut. Powell's
remarks triggered an upward trend on markets that lifted the Dow above the
27,000 level for the first time ever. Though, trading activity was somewhat
subdued as traders brace for the unofficial start of earnings season next week.
On the economic front, the Labor Department released a report showing US producer
prices unexpectedly edged higher in the month of June. The Labor Department
said its producer price index for final demand inched up by 0.1 percent in
June, matching the uptick seen in May. Street had expected producer prices to
come in unchanged. The modest increase in producer prices came as a steep drop
in energy prices was more than offset by continued service price growth. The
report said energy prices plunged by 3.1 percent in June after tumbling by 1.0
percent in the previous month, with gas prices plummeting by 5.0 percent.
Excluding food and energy prices, however, core producer prices climbed by 0.3
percent in June after rising by 0.2 percent in May. Core prices had been
expected to show another 0.2 percent increase. The bigger than expected increase
in core prices came as service prices rose by 0.4 percent in June after
climbing by 0.3 percent in May. Dow Jones Industrial Average surged 243.95
points or 0.90 percent to 27332.03, Nasdaq rose 48.10 points or 0.59 percent to
8244.14 and S&P 500 was up by 13.86 points or 0.46 percent to 3013.77.
Crude oil futures ended slightly
higher on Friday, after Gulf of Mexico storm expected to cause only a brief
reduction in the region's oil and natural-gas production. Meanwhile, the
International Energy Agency (EIA) has said global demand for the Organization
of the Petroleum Exporting Countries (OPEC) oil looks likely to fall to its
lowest in over 16 years as the US's production share rises. The IEA said demand
from OPEC in the first quarter of 2020 will fall to 28 million barrels a day.
Oil's overall gains for the week have been fueled in part by falling US
inventories which have come down over the past four weeks. The market has
managed to climb even though investors pondered more signs that global supply
will remain plentiful as the US competes with OPEC, and against the backdrop of
a less-than-robust demand scenario. Benchmark crude oil futures for August
tacked on a penny to settle at $60.21 a barrel on the New York Mercantile
Exchange. September Brent gained 20 cents or 0.3 percent to settle at $66.72 a
barrel on London's Intercontinental Exchange.
Indian rupee ended weaker against the American currency on
Friday, due to fresh dollar demand from banks and importers. Investors remain
concerned ahead of key macro data - index of industrial production (IIP) for
May and consumer price index-based inflation for June scheduled to be released
later today. Sentiments also remained dampened with former finance minister P
Chidambaram's statement that the Union Budget 2019-20 does not chalk out a
clear roadmap to take India on the path of high economic growth and lacks bold
steps and structural reforms. On the global front, dollar edged lower for a
third consecutive day on Friday as stronger-than-expected U.S. inflation data
failed to shake convictions that the Federal Reserve will start cutting
interest rates at a policy meeting later this month. Finally, the rupee ended
at 68.69, 24 paise weaker from its previous close of 68.44 on Thursday.
The
FIIs as per Friday's data were net sellers in equity segment, while they were
net buyers in debt segment. In equity segment, the gross buying was of Rs
3343.64 crore against gross selling of Rs 3520.45 crore, while in the debt
segment, the gross purchase was of Rs 2284.18 crore with gross sales of Rs
1683.22 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.18
crore against gross selling of Rs 7.59 crore.
The US markets ended higher on
Friday on optimism the Federal Reserve will soon cut its benchmark interest
rate. Asian markets trading mixed on Monday as investors await the release of
Chinese gross domestic product data for the second quarter. Indian markets
wiped out early gains and ended lower in the volatile session on Friday mainly
due to late hour sell-off led by declines in IT firm Wipro and Oil and Natural
Gas Corporation. Today, the markets are likely to make a cautious start of new
week amid weak macro-economic data coupled with mixed global cues. As per
Central Statistics Office (CSO) data, India's Index of Industrial Production
(IIP) growth slipped to 3.1 per cent in May mainly on account of subdued
performance of mining and manufacturing sector. The IIP had expanded by 3.8 per
cent in May 2018. Besides, India's retail inflation hit a eight-month high in
June on higher food prices, but stayed below the central bank's target,
potentially giving it room for a further interest rate easing to boost slowing
growth. Moreover, investors will be eyeing India's Wholesale price inflation
and balance of trade data for June will be out later in the day. There will be
some cautiousness with the Ministry of Agriculture & Farmers' Welfare's
statement that farmers have planted 41.3 million hectares with summer crops,
down 8.6 per cent year on year, though the gap in sowing narrowed from the
previous week as monsoon rains picked up. Besides, the US and Indian trade
negotiators ended talks on Friday without making major progress on a range of
disputes over tariffs and other protectionist measures imposed by both sides
that are straining bilateral ties. However, some support may come later in the
day with report that foreign investors have remained net buyers in the Indian
capital markets this month so far, even as the equity segment saw robust
outflows post the Budget. There will be some buzz in the non-banking financial
companies (NBFCs) stocks with report that in a bid to deal with stress in the
NBFC sector, guidelines will be issued soon for State-owned banks to take over
pooled assets of NBFCs. There will be some reaction in the telecom socks with
report that the telecom regulator is not in a position to modify its previously
recommended penalty on Vodafone India and Idea Cellular (now merged) and Bharti
Airtel as it is bound by the provisions of TRAI Act. There will be some
important earnings announcements too to keep the markets buzzing.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,552.50
|
11,514.22
|
11,615.17
|
BSE Sensex
|
38,736.23
|
38,606.77
|
38,943.76
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
607.03
|
94.20
|
92.28
|
95.48
|
IOC
|
333.50
|
146.85
|
144.73
|
148.43
|
Tata Motors
|
273.07
|
159.30
|
154.58
|
163.43
|
NTPC
|
214.68
|
127.80
|
125.35
|
131.35
|
SBI
|
146.62
|
363.60
|
361.22
|
366.27
|
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