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NSE Intra-day chart (22 August 2019)
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Market Commentary 23 August 2019
Benchmarks to make a cautious start amid weak global cues


Indian equity markets continued their worst run on Thursday, with Sensex & Nifty crashing over 1.50% each. Key indices made a sluggish start of the day, impacted by Care Ratings' report that the ongoing economic slowdown has started hurting corporates as well, with companies reporting a sharp decline in both revenue and profit growth numbers in the June quarter. India Inc's net sales growth for the June quarter slid to 4.6% as against 13.5% for the same period last year, while the net profit growth moderated to 6.6% as compared to last year's 24.6%. The street also remained worried, amid a private report that unemployment in India has shot up to a 3-year high of 8.3 per cent, as on August 20. With the urban unemployment rate close to 10%, job seekers in the urban areas are suffering more than those in the rural areas. In the second half of the session, benchmarks saw further fall to settle near their intraday low points, amid mixed cues from the global markets. Domestic sentiments remained pessimistic, with a report stating that the government's net revenue growth from direct taxes has decelerated sharply to 4.7% for April 1-August 15 this year as against a required annual growth rate of 17.3%, reflecting lower buoyancy in the wake of an overall slowdown in the economy. Market participants also seemed taking a note of reports that Chief economic advisor K Subramanian called for a mindset change in the private sector by desisting from the tendency to grab profit and socialise losses and also seek sops in times of stress. He also said it will be only investment and not consumption that will help the economy grow. Finally, the BSE Sensex lost 587.44 points or 1.59% to 36,472.93, while the CNX Nifty was down by 177.35 points or 1.62% to 10,741.35.


The US markets ended mostly lower on Thursday as investors turned cautious ahead of a widely anticipated speech by the Federal Reserve chairman. Traders hope for a better read on Fed policy Friday, when Chairman Jerome Powell is scheduled to speak at the central bank's annual conference in Jackson Hole, Wyoming. The choppy trading on markets came amid another inversion of the yield curve, with the yield on the two-year note briefly dropping below the yield on the ten-year note. The yield curve inversion, an indicator of a looming recession, came after the minutes of the Federal Reserve's latest monetary policy meeting failed to provide much clarity about the outlook for interest rates. The minutes said the Fed intends to remain flexible regarding future changes to rates, with members planning to pay close attention to the implications of incoming data for the economic outlook. On the economic front, first-time claims for US unemployment benefits fell by much more than expected in the week ended August 17, according to a report released by the Labor Department. The report said initial jobless claims dropped to 209,000, a decrease of 12,000 from the previous week's revised level of 221,000. Street had expected jobless claims to dip to 216,000 from the 220,000 originally reported for the previous week. Meanwhile, the Labor Department said the less volatile four-week moving average inched up to 214,500, an increase of 500 from the previous week's revised average of 214,000. Besides, a report released by the Conference Board showed its reading on leading US economic indicators rose by much more than anticipated in the month of July. The Conference Board said its leading economic index climbed by 0.5 percent in July after edging down by 0.1 percent in both May and June. Nasdaq declined 28.82 points or 0.36 percent to 7991.39 and S&P 500 was down by 1.48 points or 0.05 percent to 2922.95, while Dow Jones Industrial Average gained 49.51 points or 0.19 percent to 26252.24.


Crude oil futures ended in red on Thursday, on concerns about the outlook for near-term energy demand due to a slowing global economy. However, recent data showing a drop in US crude stockpiles and simmering tensions between the US and Iran limited oil's losses. During the unveiling of the Bavar-373, Iranian President Hassan Rouhani said that talks are useless when enemies do not accept logic. The Bavar-373 is able to recognize up to 100 targets at a same time and confront them with six different weapons. Besides, the US Energy Information Administration reported that domestic supplies of natural gas rose by 59 billion cubic feet for the week ended August 16. That was slightly less than the average increase of 61 billion cubic feet expected by S&P Global Platts. Benchmark crude oil futures for October declined 33 cents or 0.6 percent to settle at $55.35 a barrel on the New York Mercantile Exchange. October Brent fell 38 cents or 0.6 percent to settle at $59.92 a barrel on London's Intercontinental Exchange.


Indian rupee ended considerably weaker against the US dollar on Thursday, on fresh bouts of dollar demand from importers. Also, heavy selling in domestic equities and rising crude oil prices kept pressure on the Indian rupee. Investors remain concerned with a private report that unemployment in India has shot up to a 3-year high of 8.3 per cent, as on August 20. With the urban unemployment rate close to 10%, job seekers in the urban areas are suffering more than those in the rural areas. On the global front, Japanese yen rose on Thursday as risk appetite weakened, as investors looking to U.S. Federal Reserve Chairman Jerome Powell's speech at Jackson Hole on Friday. Finally, the rupee ended at 71.81, 26 paise weaker from its previous close of 71.55 on Wednesday.


The FIIs as per Thursday'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 3955.47 crore against gross selling of Rs 4999.80 crore, while in the debt segment, the gross purchase was of Rs 2479.45 crore with gross sales of Rs 2080.21 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.39 crore against gross selling of Rs 0.89 crore.


The US markets ended mostly lower on Thursday after weaker-than-expected manufacturing data raised fresh worries over the health of the economy. Asian markets are trading mixed on Friday as uncertainty over how much further the Federal Reserve would cut rates added to the general air of caution in markets buffeted by global growth fears. Indian markets extended southward journey for third straight session and ended sharply lower with cut of over one and half a percent on Thursday tracking weak cues from other Asian markets amid concerns of a looming global economic slowdown. Today, the markets are likely to make a cautious start amid weakness in global markets. Traders will be concerned with report that Chief Economic Adviser (CEA) Krishnamurthy Subramanian virtually ruled out a major stimulus package for the economy, saying profit is private, losses are public is not good economics. He said sunrise and sunset phases for industry are usual and expecting the government to support industry in sunset phases can be morally hazardous. There will be some cautiousness as the International Monetary Fund (IMF) has raised questions regarding the NDA government's revenue targets in the light of the below-trend revenue collections amid the worsening slowdown in the broader economy. Also, amid a slowdown in industry and agriculture, credit rating agency ICRA has estimated the GDP growth rate at 6% in the first quarter of the current financial year (Q1FY20). GDP growth rate in Q1 FY19 was 8%. There will be negative reaction on private report indicating that consumer confidence in India has declined by 3.1 percentage points in August compared to last month. However, some respite may come later in the day with Niti Aayog Vice Chairman Rajiv Kumar's statement that the government is considering a number of measures which will be taken at an appropriate time to deal with financial stress and unleash animal spirit in the economy. Investors may take note of a report that the commerce ministry will soon come out with a new foreign trade policy, which provides guideline and incentives for increasing exports, for the next five financial years 2020-25. Meanwhile, traders' body CAIT has asked the finance ministry to extend the last date for filing annual GST return by two months to October 31. The last date to file the return is August 31. There will be some buzz in the auto stocks with report that with India's auto sales declining for the ninth straight month in July, more automotive manufacturers are laying off workers and temporarily halting production to keep costs in check. There will be some reaction in aviation stocks with the Directorate General of Civil Aviation's data showing that air passenger traffic in India grew 3.1% in the first seven months of 2019-the slowest pace in at least five years-amid market uncertainties in a slowing economy and the grounding of Jet Airways (India).


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