Snapping three straight days of
gains, Indian equity indices ended volatile day of trade on lower note on
Thursday, tracking a massive selloff in global markets after US Fed's gloomy
economic outlook spooked investors across the world. Key indices opened on a
negative note and remained lackluster throughout the session, as Care Ratings
said India's GDP is likely to contract by 20% during Q1FY21 on account of the
COVID-19 pandemic-induced disruptions. It said notwithstanding the fact that
considerable uncertainty prevails regarding the quarterly economic performance,
taking cognizance of the adverse impact of lockdown we are pegging the real GDP
growth at (-) 20% Y-o-Y for Q1 FY21. Cautiousness also crept in after the World
Bank said that it is likely to project a steeper contraction of India's economy
than 3.2 per cent it has forecast for the current financial year due to the
increasing number of Covid-19 cases and the resultant regional lockdowns. It
cautioned India against using its tariff policy to attract the firms wanting to
shift from China. Domestic markets remained under pressure in late afternoon
deals with Centre of Monitoring Indian Economy (CMIE) data showing that the
unemployment rate in India recorded for August 18 was 8.20 percent (30-day
moving average), against 7.64 percent at the start of the month on August 1.
Some cautiousness also remained amongst the market-men amid reports that the
growing threat of stagflation for the Indian economy and persistence of retail
inflation above 6 per cent may lead to rise in interest rates. The uncertain
outlook on inflation in the short term has already led the Monetary Policy
Committee (MPC) to hold the interest rates in August and has also diminished
the likelihood of any further rate cut in the near term. Finally, the BSE
Sensex fell 394.40 points or 1.02% to 38,220.39, while the CNX Nifty was down
by 96.20 points or 0.84% to 11,312.20.
The US markets ended higher on
Thursday with the Nasdaq settling at a record high, as investors rushed to
large-capitalization technology and e-commerce shares for safety, after a pair
of economic reports set off concerns about the broader US economy's tenuous
recovery from the coronavirus epidemic. Support also came in on reports that
China and the US have agreed to hold new trade talks in the coming days. A
spokesman for the Chinese commerce ministry said the two sides will hold talks
over the phone to review the progress of the phase one trade deal. On the
economic data front, First-time claims for US unemployment benefits
unexpectedly increased in the week ended August 15th, according to a report
released by the Labor Department. The report said initial jobless claims
climbed to 1.106 million, an increase of 135,000 from the previous week's
revised level of 971,000. The increase surprised participants, who had expected
jobless claims to drop to 925,000 from the 963,000 originally reported for the
previous week. Besides, the Conference Board released a report showing its
leading economic index for the US increased for the third straight month in
July, although the pace growth by the index slowed from the two previous
months. The report said the leading economic index jumped by 1.4 percent in
July after surging up by 3.0 percent in June and by 3.1 percent in May.
Crude oil futures ended lower on
Thursday after a rise in weekly jobless claims added to concerns about the
outlook for demand already shaken by minutes of the Federal Reserve's last
meeting. The number of first-time US weekly jobless claims rose back above 1
million last week. Minutes of the Fed's July 28-29 meeting released Wednesday
said staff economists told policy makers they were lowering their estimate for
economic growth over the second half of the year. Meanwhile, a meeting of the
OPEC+ alliance's Joint Ministerial Monitoring Committee offered no surprises,
with ministers maintaining output cuts of 7.7 million barrels a day, but
emphasizing the need for countries that failed to cut enough in previous months
to make compensatory reductions this month and next. Crude oil futures for
September declined 35 cents or 0.8 percent to settle at $42.58 a barrel on the
New York Mercantile Exchange. October Brent crude fell 47 cents or 1 percent to
settle at $44.90 a barrel on London's Intercontinental Exchange.
Tumbling for second straight
session, Rupee ended substantially weaker against dollar on Thursday on account
of continued dollar demand from importers and banks. Sentiments remained
fragile with the World Bank's report stating that it is likely to project a
steeper contraction in India's economy than the 3.2 per cent it had forecast
for the current financial year, given the rising number of Covid-19 cases and
the resultant regional lockdowns. Traders were also worried as Care Ratings
stated that India's GDP is likely to contract by 20 per cent during the first
quarter of the current fiscal on account of the COVID-19 pandemic-induced
disruptions. On the global front; dollar rose on Thursday, pulling away from a
two-year trough after less dovish than expected minutes from last month's US
Federal Reserve meeting prompted bears to buy into the heavily shorted currency
in its biggest one-day surge since June. Finally, the rupee ended at 75.02, 20
paise weaker from its previous close of 74.82 on Wednesday.
The FIIs as per Thursday's data
were net buyers in equity segment and debt segment both. In equity segment, the
gross buying was of Rs 5545.90 crore against gross selling of Rs 4447.14 crore,
while in the debt segment, the gross purchase was of Rs 1363.09 crore with
gross sales of Rs 643.44 crore. Besides, in the hybrid segment, the gross
buying was of Rs 10.68 crore against gross selling of Rs 22.36 crore.
The US markets ended higher on
Thursday as gains in heavyweight tech stocks outweighed downbeat data that
affirmed the Federal Reserve's view of a difficult road to economic recovery.
Asian markets are trading in green on Friday following the release of mixed US
economic data overnight. Indian markets ended lower on Thursday led by the slip
in index heavyweights like ICICI Bank and Reliance Industries. Today, the start
of session is likely to be optimistic tracking gains in global markets. Traders
will be taking encouragement with a private report that Russia is looking for a
partnership with India for producing the Covid-19 vaccine Sputnik V. Russian
Direct Investment Fund (RDIF) is likely to do phase 3 clinical trials in Russia,
UAE, Saudi Arabia, Brazil and Philippines. Some support will also come in with
another private report that India's rural economy swung to growth in June after
eight months of contraction. Though, there may be some cautiousness with rising
coronavirus cases in the country. India has recorded over 68,500 coronavirus
cases, taking its total past the 2.9-million mark to 2,904,329. The country's death toll has surged to
53,994. Investors may react to the minutes of the Reserve Bank of India's
August monetary policy meeting which showed that outlook for the domestic
economy remains extremely uncertain. The MPC, however, said that the worst is
almost surely behind us in terms of output losses. Meanwhile, NSE has announced
its latest semi-annual review of indices according to which SBI Life Insurance
and Divi's Laboratories will enter the benchmark index Nifty 50, replacing
Bharti Infratel and Zee Entertainment Enterprises. Besides, Edible oil industry
body SEA said it has urged the government to allow import of only crude palm
oil and place all refined oils under the restricted category of trade. There
will be some buzz in the sugar stocks as a Niti Aayog task force has
recommended linking sugarcane prices to sugar rates to keep the industry in
sound financial health. There will be some reaction housing finance companies
stocks as rating firm ICRA said housing finance companies (HFCs) may see a
muted portfolio growth and would require Rs 3.8-4.5 lakh crore to meet their
refinancing obligations in FY21.
Support
and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,312.20
|
11,280.85
|
11,352.50
|
BSE Sensex
|
38,220.39
|
38,116.63
|
38,363.30
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Zee Entertainment
Enterprises
|
1,659.60
|
199.45
|
192.30
|
206.80
|
NTPC
|
1,123.41
|
101.10
|
96.26
|
103.91
|
ICICI Bank
|
684.48
|
367.75
|
363.69
|
370.74
|
Tata Motors
|
435.33
|
121.70
|
119.99
|
124.54
|
State Bank of India
|
375.05
|
194.75
|
193.21
|
196.31
|
L&T's wholly owned subsidiary -- LTHE has signed a Memorandum of Understanding with NTPC.
Maruti Suzuki India has entered into partnership with Nadathur S. Raghavan Centre for Entrepreneurial Learning.
Infosys has launched Infosys Cobalt - a set of services, solutions, and platforms that acts as a force multiplier for cloud-powered enterprise transformation.
Hindalco Industries has signed a MoU with UltraTech Cement to deliver 1.2 million metric tonne of bauxite residue annually.