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NSE Intra-day chart (02 August 2016)
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Market Commentary 03 August 2016
Markets to get a cautious start on the crucial GST passage day


Indian the benchmark indices once again showed a lackadaisical performance on Tuesday, as they failed to snap the session in the green territory and settled marginally below the neutral line.  Investors' concerns mounted over the health of global economy after US crude slipped below $40 per barrel for the first time since April, on heightened worries of a crude glut despite peak summer fuel demand.  Besides, Weak trend in global markets coupled with depreciation in rupee value against the US dollar too weighed down sentiments. However, the downside risks for the frontline indices was limited by two sets of data, which were released on Monday, suggesting that India's manufacturing and infrastructure sectors are on a recovery path. While a private survey showed manufacturing activity grew at its fastest pace in four months in July, government data on eight core industries revealed a 5.2% expansion in June, compared with 2.8% in May and 3.1% in the year-earlier month. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers Index edged higher in July, to 51.8 from 51.7 in June, led by higher sales, new orders for consumer goods and exports encouraged by the rupee's depreciation. Meanwhile, FMCG majors like ITC and HUL gained on renewed buying interest ahead of the GST Bill and expectations that rural volume growth may pick up pace on the back of above normal monsoon forecast. Auto majors like Maruti Suzuki continued their uptrend for the second consecutive day after registering strong growth in domestic sales in July on improved consumer sentiment. On the other hand, Sugar stocks like Shree Renuka Sugars and Balrampur Chini Mills came under selling pressure, besides, other commodity stocks also declined on weak global leads. On the global front, Asian markets ended mostly lower on Tuesday, while European stocks too were lower in early trade. Back home, the benchmarks got off to a positive start after sentiments got buttressed by a pick-up in infrastructure sector in June coupled with rising hopes of GST Bill passage this week. The frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices see-sawed around the neutral line though the afternoon session. Finally, the BSE Sensex ended lower by 21.41 points or 0.08% to 27981.71, while the CNX Nifty dropped 13.65 points or 0.16% to 8,622.90.


The US markets closed lower on Tuesday, marking the seventh straight day of loss for the Dow industrials and ending a five-day winning streak for the Nasdaq, as investors sifted through quarterly results as well as data on personal income and inflation. The decline in stocks highlighted fading appetite for risk assets, underscored by West Texas Intermediate crude which settled below $40 a barrel for the first time since early April. On the economy front, consumers boosted spending by 0.4% in June - the third straight strong increase - in a good sign for the economy. But they've also been saving less to fund their purchases. The increase outlays in June matched expectations. Spending in the three months from April to June marked the biggest quarterly gain since the seven-year-old recovery began in mid-2009. Higher spending also underpinned a 1.2% increase in gross domestic product in the second quarter and prevented US growth from turning negative. Businesses slashed investment and government spending also fell in the spring. Most of the increase in spending in June was on services such as housing, health care, entertainment and utilities such as air conditioning. The Dow Jones Industrial Average lost 90.74 points or 0.49 percent to 18,313.77, Nasdaq dropped 46.47 points or 0.90 percent to 5,137.73, while S&P 500 was down by 13.81 points or 0.64 percent to 2,157.03. 


Crude oil futures declined further on Tuesday, with Nymex crude dropping to fresh 14-week lows below $40 a barrel, as investors awaited further signs of potential volatility on global energy markets. Lingering economic concerns and a stubborn global supply glut have dented oil prices for the past few weeks. Traders awaited the American Petroleum Institute's U.S. oil inventories report later in the day. Benchmark crude oil futures for September delivery dropped $0.57 or 1.39 percent to close at $39.49 a barrel after trading in a range of $39.27 and $40.88 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery declined by $0.34 or 0.81 percent to $41.78 a barrel on the ICE.


Indian rupee after showing a smart upmove in the previous session consolidated on Tuesday, but managed to maintain its gaining streak, even though it weakened in early deals on fresh bouts of dollar selling by banks and exporters. The domestic currency made a flat opening but gathered strength with the good going in the local equity markets on hopes of GST Bill finally getting passed in parliament on Wednesday, as the GST bill has been listed in the Rajya Sabha agenda for the day. However, the equity markets turned choppy and gave up gains, the currency followed the trend and turned choppy though finally ended with modest gains on dollar weakness overseas. On the global front, the dollar fell to fresh five-week lows against the other major currencies on Tuesday, following news of additional stimulus measures in Japan. Finally, the rupee ended at 66.73, 2 paise stronger from its previous close at 66.75 on Monday.


The FIIs as per Tuesday's data were net buyers in equity and debt segments both.In equity segment, the gross buying was of Rs 5978.16 crore against gross sell of Rs 5322.55 crore. While in the debt segment, the gross purchase was of Rs 1069.17 crore with gross sales of Rs 944.07 crore. Thus, FIIs stood as net buyers of Rs 125.10 crore in debt.


The US markets were unable to get any respite in the last session and the weakness overseas continued weighing on the markets. Traders largely overlooked the Commerce Department report showing that personal spending increased by slightly more than expected in the month of June. The Asian markets have made mostly a lower start and lots of indices are down by over half a percent, as the oil sell-off continued, reviving concerns over global growth and after Japan's fiscal stimulus package fell short of expectation. The Indian markets lost their momentum in the latter part of the trade and ended mildly in red in the last session. Today, the start of the crucial day is likely to be cautious and all eyes will be on the parliament where the Constitution amendment Bill is scheduled for discussion and voting in Rajya Sabha for roll-out of a uniform goods and services tax (GST) regime. Though, the government and the opposition have reached out at a broad understanding, but the government is likely to come up with fresh proposals over pending Congress demands on the GST Bill to get the opposition party's support. There will be some buzz in the banking sector stocks on the global rating agency S&P's report that Indian banks are likely to reduce lending rates further, after having cut base lending rates by 70-90 basis points (bps) in the past few quarters. Though, it also said that banks in India and China will continue to face pressures on their asset quality, profitability, and capitalization over the next 12-24 months. Steel sector too will be in action as though the minimum import prices (MIPs) for steel products will expire on August 5, the domestic primary steelmakers will continue to enjoy protection from imports in the form of anti-dumping duties. There will be lots of important earnings announcements too, to keep markets buzzing.


                                Support and Resistance: CNX Nifty and BSE Sensex


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  • ICICI Bank has inked a Memorandum of Understanding with Apollo India Credit Opportunity Management LLC and AION Capital Management to set up an Asset Reconstruction Company.
  • Sun Pharmaceutical Industries' subsidiary has received final approval from USFDA for its Abbreviated New Drug Application for generic version of Glumetza, Metformin Hydrochloride extended release tablets 500 mg and 1000 mg.
  • Bajaj Auto, the second-largest motorcycle manufacturer, has registered a marginal fall of 0.12% in total sales to 329833 units in July 2016 against 330,231 units in July 2015.
  • Eicher Motors and Volvo Group's joint venture firm, VE Commercial Vehicles has reported 18.28% increase in total sales in July at 4,374 units, as against 3,698 units in the same month last year.
  • NTPC has commissioned 50 MW capacity of NP Kunta Ultra Mega Solar Power Project Stage-I at Anantapuramu on July 29, 2016.
News Analysis