Friday turned out to be a
nightmarish session of trade for Indian equity benchmarks with frontline gauges
shaving off over a percentage point. Domestic equities witnessed a huge
bloodbath, as bears took charge resulting key indices fell below their
psychologically important 31,300 (Sensex) and 9,750 (Nifty) levels,
respectively, as stock markets across the world went into a tailspin amid an
ongoing escalation in tensions between the US and North Korea. Markets made a
pessimistic start, as traders remained concerned over SEBI's crackdown on shell
companies and a stand-off in the Doklam area of the Sikkim sector between
Indian and Chinese troops. Sentiments also remained dampened with report that
the Reserve Bank of India (RBI) has halved its dividend payout to the
government to Rs 30,659 crore for the fiscal ended June 2017. Last fiscal, the
RBI had transferred Rs 65,876 crore surplus as dividend to the government. This
would potentially impact the government's fiscal math this financial year,
which is under pressure due to state-run banks' sluggish earnings growth.
Markets tried to pare some of their losses but another wave of selling in
second half of trade dragged markets to intraday lows. Sentiments weighed on
report that there were downside risks to India's projected growth of 6.75-7.5
percent growth in 2017-18, the finance ministry's Mid-Term Economic Survey said
in a guarded forecast, indicating that multiple pain points continue to hinder
growth in the broader economy amid an uncertain fiscal outlook. The second part
of the Economic Survey for 2016-17, which besides giving an overview of India's
economy, was also critical about ad hoc state-sponsored farm loan write-offs to
deal with rural distress. Separately, flows from foreign portfolio investors
into India have slowed of late as rich valuations and delay in corporate
earnings recovery have reduced their appetite for domestic stocks. Finally, the
BSE Sensex tumbled 317.74 points or 1.01% to 31,213.59, while the CNX Nifty was
down by 109.45 points or 1.11% to 9,710.80.
The US markets gained some
strength during trading on Friday and ended in green terrain, as traders opted
to buy beaten down but fundamentally strong stocks after three days of
continuous drubbing. Traders took some encouragement with report from the Labor
Department showing just a modest uptick in consumer prices in the month of
July. The Labor Department said its consumer price index inched up by 0.1
percent in July after coming in unchanged in June. Economists had expected
prices to rise by 0.2 percent. Excluding food and energy prices, core consumer
prices still crept up by 0.1 percent in July, matching the increases seen in
the three previous months. Core prices had also been expected to climb by 0.2
percent. The smaller than expected increase in consumer prices has led to
optimism that the Federal Reserve will not be in a hurry to raise interest
rates. However, gains remained capped as the ever-escalating war of words
between President Donald Trump and North Korea continued to raise geopolitical
concerns. Trump suggested in remarks on Thursday that his comments threatening
North Korea with ‘fire and fury' may not have been tough enough. Trump
continued to ramp up the rhetoric with a post on Twitter indicating that the
U.S. is prepared to take military action against North Korea. The Dow Jones
Industrial Average gained 14.31 points or 0.07 percent to 21,858.32, the Nasdaq
rose 39.68 points or 0.64 percent to 6,256.56, while the S&P 500 was up by
3.11 points or 0.13 percent to 2,441.32.
Crude oil futures though ended
higher on Friday but snapped the week in negative terrain, as investor
sentiment soured on oil prices this week, following data showing Opec output
increased in July as its members failed to adhere to output limits set out in
the global deal to curb production. There was some recovery in the prices with
IEA report that global oil demand is expected to reach 1.5 million barrels per
day this year, up from its July forecast of 1.4 million. Meanwhile, Baker
Hughes reported that the number of active U.S. rigs drilling for oil climbed by
3 to 768 rigs this week. However, the total active U.S. rig count including nat
gas rigs fell by 5 to 949. Benchmark crude oil futures for September delivery ended
up by $0.23 or 0.5 percent to $48.82 on the New York Mercantile Exchange. In
London, Brent crude for September delivery ended lower by $0.14 at $52.23 a
barrel on the ICE.
Indian rupee continued its
downtrend for the third-straight day against the US dollar on Friday, due to
strong demand for the American currency from importers amid foreign fund
outflows. Investors remained concerned with report that the Reserve Bank of
India (RBI) has halved its dividend payout to the government to Rs 30,659 crore
for the fiscal ended June 2017. Last fiscal, the RBI had transferred Rs 65,876
crore surplus as dividend to the government. This would potentially impact the
government's fiscal math this financial year, which is under pressure due to
state-run banks' sluggish earnings growth. Besides, heavy losses in domestic
equity markets also weighed on the sentiment of the local currency. On the
global front, dollar skidded to an eight-week low against yen on Friday as
escalating tensions between the United States and North Korea triggered yet
more investor flight to safety. Finally, the rupee ended at 64.14, 7 paise
weaker from its previous close of 64.07 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 4528.64 crore against gross
selling of Rs 5512.37 crore, while in the debt segment, the gross purchase was
of Rs 839.43 crore with gross sales of Rs 625.92 crore.
The US markets made a minor
bounce back in the last session and all the major averages managed a positive
close, mainly on bargain hunting and report of modest uptick in consumer prices
in the month of July. The Asian markets have made mostly a positive start with
tensions between the US and North Korea showing signs of easing, though the
Japanese market was lower as the yen strengthened against the dollar. The
Indian markets ended lower in the last session making it a week of losses by
declining for the fifth consecutive trading session. Today, the start of the
holiday truncated week is likely to be in green tailing the recovery in the
global markets and some stability can be seen with the progress of the trade.
Traders will be getting some support with outgoing Niti Aayog Vice Chairman
Arvind Panagariya's statement that resolution of bad loans in the banking
system is on 'right track' and will 'open the door' to rapid credit expansion
and growth. He added that so banks will be better equipped to lend and on the
sides of borrowers there will be greater appetite. Traders will also be getting
some support with a private report that the Indian economy is at the cusp of
entering its strongest growth phase and a full blown bull market is yet to play
out with the wide-based Nifty expected to touch 11,500 in 2018. Though, traders
will be reacting negatively to report that India's industrial production fell
to four-year low of 0.1 per cent in June as manufacturers reduced inventories
ahead of the GST rollout. Now all eyes will be on the inflation data, as both
Consumer Price Index (CPI) and Wholesale Price Index (WPI) inflation data will
be released later in the day. Telecom stocks will be buzzing as the telecom
regulator RS Sharma has said that recommendations on contentious interconnect
usage charge should be finalised by August end. There will be some important
earnings announcements too, to keep the markets in action.
Support and Resistance: NSE
(Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
9,710.80
|
9673.68
|
9759.78
|
BSE Sensex
|
31213.59
|
31101.34
|
31352.52
|
Nifty Top volumes
Stock
|
Volume
(in Lacs)
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
SBI
|
676.53
|
280.15
|
270.73
|
296.28
|
Hindalco
|
211.26
|
221.00
|
214.33
|
231.33
|
Vedanta
|
183.83
|
279.10
|
272.28
|
290.23
|
ICICI Bank
|
172.12
|
286.95
|
281.62
|
290.97
|
Tata Motors
|
146.99
|
374.50
|
362.30
|
382.90
|
IOC has received the government's nod to buy one very large ship full of crude oil from the US every month this year, as it looks at cheaper alternatives that have emerged due to global supply glut.
GAIL (INDIA) has reported a fall of 23.18% in its net profit at Rs 1025.64 crore for the quarter ended June 30, 2017 as compared to Rs 1335.18 crore for the same quarter in the previous year.
Tata Steel is hopeful of shortly reaching a final agreement on a deal to separate its UK pension scheme from its businesses.
HDFC Bank has launched an in-house state-of-the-art Digital Command Centre in Mumbai to keep pace with digitally savvy customers.