Javeri Fiscal Services Ltd. Daily Newsletter
NSE Intra-day chart (02 August 2019)
Top Gainers
Company NameClose% Change
Top Losers
Company NameClose% Change
World Indices
IndicesLast Trade% Change
Indices
IndicesLast Trade% Change
FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
Equity
Debt
Equity
Debt
Equity
Debt
 
Market Commentary 05 August 2019
Markets to open in red amid weak global cues

 

Indian equity benchmarks staged recovery to end the Friday's trading session in green terrain, with Sensex garnering around 100 points. After a negative start, the markets traded in red terrain for the most part of the session, as the World Bank's report showed that India has now taken a backseat to be the seventh largest economy globally with UK and France now ahead of it. As per the data, India grew to $2.73 trillion economy in 2018. In 2017, the country stood at the fifth spot with its size at $2.65 trillion. However, in the last leg of the trade, key indices turned positive, amid a report that the gross Goods and Services Tax (GST) collections increased to Rs 1.02 lakh crore in the month of July 2019. The July mop-up was 5.8 per cent higher than the Rs 96,483 crore collected in the same month last year. In late noon deals, markets participants took support with the Reserve Bank of India's (RBI) latest data report showed that bank credit rose by 12.01 percent to Rs 96.57 trillion, while deposits grew 10.59 percent to Rs 126.491 trillion in the fortnight ended on July 19. In the year ago fortnight, deposits were at Rs 114.371 trillion and advances stood at Rs 86.09 trillion. Adding some relief among traders, the India Meteorological Department said that monsoon is expected to be normal in August and September. Quantitatively, the rainfall across the country as a whole during the two-month period is likely to be 100 per cent of the Long Period Average (LPA) with a model error of plus or minus 8 per cent. Finally, the BSE Sensex gained 99.90 points or 0.27% to 37,118.22, while the CNX Nifty was up by 17.35 points or 0.16% to 10,997.35.

 

The US markets extended their losses and settled in red territory on Friday as investors overlooked a jobs report in line with expectations and focused on threats by President Trump to extend tariffs to essentially all Chinese imports. The President Donald Trump announced plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports. Trump revealed the plan shortly after US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin wrapped up the latest round of trade talks in Shanghai. The president accused China of failing to follow through on pledges to buy large quantities of US agricultural products and stop the sale of Fentanyl to the US. The new tariffs announced by Trump represent the latest escalation in the trade war between the US and China, which has been a dark cloud over the global economy for over a year. Besides, the Labor Department report showed that US job growth slowed in the month of July but came in line with economist estimates. The report said non-farm payroll employment climbed by 164,000 jobs in July after jumping by a downwardly revised 193,000 jobs in June. Street had expected employment to increase by 164,000 jobs compared to the spike of 224,000 jobs originally reported for the previous month. The Labor Department also said the unemployment rate held at 3.7 percent in July, unchanged from June and in line with market participants estimates. Dow Jones Industrial Average declined 98.41 points or 0.37 percent to 26485.01, Nasdaq slipped 107.05 points or 1.32 percent to 8004.07 and S&P 500 was down by 21.51 points or 0.73 percent to 2932.05.

 

Recovering all of previous session's losses, crude oil futures ended higher on Friday with gains of over 2 percent as Trump's announcement ramped up tensions surrounding the trade war and stoked fears about global energy demand. The US President Donald Trump vowed to slap a 10 percent tariff on $300 billion of Chinese imports from next month. Trump also threatened to further raise tariffs if Chinese President Xi Jinping fails to move more quickly to strike a trade deal. The US-China trade spat is only going to get worse as Beijing said it would not give an inch under pressure from Washington. Benchmark crude oil futures for September rose $1.71 or 3.2 percent to settle at $55.66 a barrel on the New York Mercantile Exchange. October Brent added $1.39 or 2.3 percent to settle at $61.89 a barrel on London's Intercontinental Exchange.

 

Indian rupee continued its downtrend for the second straight day against the US dollar on Friday, due to strong demand for the American currency from importers. Investors remain concerned with the World Bank report showing that India has now taken a backseat to be the seventh largest economy globally with UK and France now ahead of it. As per the data, India grew to $2.73 trillion economy in 2018. In 2017, the country stood at the fifth spot with its size at $2.65 trillion. Traders failed to take support with the India Meteorological Department stating that monsoon is expected to be normal in August and September. Quantitatively, the rainfall across the country as a whole during the two-month period is likely to be 100 per cent of the Long Period Average (LPA) with a model error of plus or minus 8 per cent. On the global front, euro has staged a strong bound against the US dollar, following weak US economic data releases and the recent announcement of fresh trade tariffs. Finally, the rupee ended at 69.60, 54 paise weaker from its previous close of 69.06 on Thursday.

 

The FIIs as per Friday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 5265.89 crore against gross selling of Rs 6432.76 crore, while in the debt segment, the gross purchase was of Rs 1169.20 crore with gross sales of Rs 2268.27 crore. Besides, in the hybrid segment, the gross buying was of Rs 17.92 crore against gross selling of Rs 14.73 crore.

 

The US markets ended lower on Friday as concerns about the outlook for the global economy continued to weigh on investor sentiments. Asian markets are trading in red on Monday as investors fretted over President Donald Trump's escalation of the US-China trade war. Indian markets recouped early losses and ended volatile session in green territory on Friday amid reports that Finance Ministry and PMO held discussions over suggestions and submissions by foreign portfolio investors (FPIs) regarding the surcharge issue. Today, the start of new week is likely to be pessimistic amid continued selling by foreign investors coupled with weak global cues. Foreign investors have withdrawn a net amount of Rs 2,881 crore from the Indian capital markets in the first two sessions of August on account of domestic as well as global headwinds. According to latest depositories data, FPIs pulled out a net sum of Rs 2,632.58 crore from equities and Rs 248.52 crore from the debt segment during August 1-2, taking the cumulative net outflow to Rs 2,881.10 crore. Besides, investors will be eyeing Services PMI data for the month of July to be out later in the day and Index of Industrial Production (IIP) later in the week. However, some support may come later in the day with former RBI Governor Bimal Jalan's statement that the current slowdown in the Indian economy is cyclical and growth will pick up in one or two years. Traders will also be looking ahead to be the Reserve Bank of India's (RBI) monetary policy meeting starting later in the day. The RBI is expected to cut the policy rate by 25 basis points, for the fourth time in a row, to give a boost to the economy at a time when key indicators point towards a slowdown. Traders may take note of a private report that the country will need to grow by 9% every year for five years continuously and raise aggregate investment rate to 38% of GDP to achieve Prime Minister Narendra Modi's target of turning India into a $5 trillion economy. There will be some buzz in the select banking stocks with report that the RBI has slapped penalties on nine commercial banks, including State bank of India, Punjab National Bank and Bank of Baroda, for a host of violations, including delay on the reporting of fraud in the account of Kingfisher Airlines in case of two lenders. There will be some reaction in housing finance companies stocks with report that the National Housing Board (NHB) has announced an additional liquidity infusion facility of Rs 10,000 crore for priority sector home loans for one year. This is only limited to affordable housing, which means loans up to Rs 35 lakh in metros and for non-metros limit is Rs 28 lakh. There will be lots of earnings reaction based on the performance of the companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,997.35

10,870.82

11,102.02

BSE Sensex

37,118.22

36,692.03

37,459.78

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,063.98

88.30

86.43

90.53

SBI

644.72

308.45

302.92

318.12

Tata Motors

440.16

130.70

127.40

133.60

ICICI Bank

309.40

410.60

404.78

417.13

Bharti Airtel

280.60

343.55

328.85

356.60

 

  • Power Grid has been declared as the successful bidder under Tariff based competitive bidding to establish transmission system for two projects.  
  • Tata Motors has slashed prices of Tigor EV by up to Rs 80,000 with immediate effect in order to pass the benefits of reduced GST on such models. 
  • Hero MotoCorp has reported sales of 5,35,810 units of motorcycles and scooters in the month of July 2019. 
  • Indiabulls Housing Finance is planning to buy back bonds worth up to $50 million of the $350 million 6.375 percent notes issued by the company.
News Analysis