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NSE Intra-day chart (01 August 2017)
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Market Commentary 02 August 2017
Markets to get a green start; RBI's policy review eyed

Buying in last leg of trade comes as the saving grace for the markets and helped them to settle at fresh record closing highs, with Nifty surpassing its crucial 10,100 mark, as traders remained optimistic ahead of outcome interest rate decision from two-day Monetary Policy Committee meeting that started today. The street is expecting a rate cut of at least 25 basis points by RBI tomorrow. Markets traded with huge volatility throughout the day, with frontline gauges swinging between green and red for most part of the day, but bulls which woke up in dying hour of trade mainly supported the markets to hit another record high. Traders also took encouragement with report that the collection of Integrated Goods and Services Tax from imports crossed Rs 20,000 crore in July - the first month of the roll out of the new indirect tax regime. Adding to the optimism, global rating agency Moody's has reported that India's GDP growth will remain in the range of 6.5-7.5 percent over the next 12-18 months and GST will support the momentum for faster growth. However, gains remained capped as some cautiousness crept in the markets after the growth of eight core sectors slowed to 0.4% in June due to contraction in output of coal, refinery products, fertiliser and cement. The growth rate of eight infrastructure sectors was 7% in June last year. Some anxiety also spread among the investors, as PMI survey data indicated that the introduction of the goods & services tax (GST) weighed heavily on the Indian manufacturing industry in July. The Nikkei/IHS Markit Manufacturing Purchasing Managers' Index fell to 47.9 in July from June's 50.9, its first reading below the 50 mark that separates growth from contraction since December and its lowest reading since February 2009. Some concerns also came with the report that investments in the domestic capital market through participatory notes (P-notes) slumped to Rs 1.65 lakh crore in June amid stringent norms put in place by Sebi to curb the inflow of illicit funds. Finally, the BSE Sensex gained 60.23 points or 0.19% to 32,575.17, while the CNX Nifty was up by 37.55 points or 0.37% to 10,114.65.


The US markets closed higher on Tuesday, with the Dow logging its second straight record closing high and a sixth straight session in positive territory, on the back of upbeat earnings, shaking off less-than-stellar reports on manufacturing and inflation. Earnings remained in focus, with traders awaiting further signs of upbeat sentiment in earnings, which have so far provided healthy signs. On the economy front, Americans increased spending in June by the smallest amount in five months as income growth flat-lined, but lower gasoline prices also played a role. Consumer spending rose 0.1% in June, matching the smallest increase of 2017. Households spent more on health care, but they saved on gasoline because of cheaper prices at the pump. Income growth and inflation, meanwhile, were unchanged. Incomes failed to rise for the first time since the end of last year. The PCE index, the Federal Reserve's preferred inflation gauge, was flat in June. What's more, the 12-month rate of inflation stood at 1.4%, down from 2.2% earlier in the year. The Dow Jones Industrial Average added 72.8 points or 0.33 percent to 21,963.92, the Nasdaq gained 14.82 points or 0.23 percent to 6,362.94, while the S&P 500 edged higher by 6.05 points or 0.24 percent to 2,476.35.


Crude oil futures got a halt to their gaining streak on Tuesday, following reports that Opec increased output despite the group's pact to curb production. A survey reported that OPEC oil output jumped by 90,000 barrels per day (bpd) to a 2017 high. Much of the incrase was due to surging output from Libya. Supplies from Iraq also rose, helping to offset Saudi cuts. In May, Opec and non-Opec members agreed to extend production cuts for a period of nine months until March, but stuck to production cuts of 1.8 million bpd agreed in November last year. Benchmark crude oil futures for September delivery declined by $1 or 2 percent to $49.17 on the New York Mercantile Exchange. In London, Brent crude for September delivery ended lower by 2.24 percent at $51.54 a barrel on the ICE.


Snapping two-day losing streak, Indian rupee recovered against the American currency on Tuesday on the back of dollar sales by exporters and bank. Traders took some support with Moody's report that the Indian economy will likely grow in the range of 6.5-7.5% over the next 12-18 months and the growth momentum will get support from the goods and services tax (GST) regime. Investors remained optimistic ahead of outcome interest rate decision from two-day Monetary Policy Committee meeting that started today. Moreover, gains in the domestic equities and continuous foreign capital inflows too supported the domestic unit. On the global front, dollar edged up against a trade-weighted currency basket on Tuesday, but held close to a 14-month low as investors added to bets that political turmoil in Washington will hit prospects of another Federal Reserve rate hike in coming months. Finally, the rupee ended at 64.08, 11 paise stronger from its previous close of 64.19 on Monday.


The FIIs as per Tuesday'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 5467.30 crore against gross selling of Rs 6685.14 crore, while in the debt segment, the gross purchase was of Rs 1081.20 crore with gross sales of Rs 615.12 crore.


The US markets despite remaining lackluster posted modest gains in the last session and the Dow reached another new record closing high. There was some positivity with traders continuing to react to the latest batch of earnings news, with most corporate results exceeding estimates. The Asian markets have made mostly a positive start led by the technology stocks after results from Apple Inc. buoyed sentiment in the sector. The Indian markets gained life in the final hour of trade in the last session and managed to end in green on firm global cues and rate cut hopes. Today, the start of the crucial day is likely to be in green on sanguine global cues, though all eyes will be on RBI's policy decision to be announced later in the day, which will decide the further course of action for the markets. With retail inflation receding to record low levels, the six-member monetary policy committee (MPC), headed by RBI Governor Urjit Patel is likely to cut the benchmark lending rate by at least 0.25 percent in its third bi-monthly monetary policy review. Traders will be getting some support with Minister of State for Finance Santosh Kumar Gangwar's statement that the government has collected over Rs. 1.80 lakh crore in direct tax till July 15 in the current fiscal, an increase of 21.4 per cent year-on-year, "belying" fears of slowdown in economic activities. The current growth rate is higher than the target rate of 15.32 per cent required to achieve the Budget Estimate. Meanwhile, Finance Minister Arun Jaitley has said that the GST Council, at its next meeting later this week, will finalise a mechanism to operationalise anti-profiteering clause which seeks to protect consumers' interest. GST Council comprising state finance minister will meet on August 5 to take stock of implementation of GST which was rolled from July 1. There will be lots of important earnings announcements to keep the markets in action today.


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  • Tata Steel has completed the sale of its 42- and 84-inch pipe mills in Hartlepool to Liberty House Group.
  • Tata Motors has reported 7% rise in total sales of passenger and commercial vehicle in July 2017 at 46,216 vehicles as compared to 43,160 vehicles sold in July 2016. 
  • Airtel Payments Bank, a subsidiary of Bharti Airtel, has entered into a strategic partnership with HPCL to give further boost to digital payments in the country and to add to customer convenience.
  • M&M has reported its auto sales performance for July 2017 which stood at 41,747 vehicles, compared to 39,458 vehicles during July 2016, representing a growth of 6%.
News Analysis