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NSE Intra-day chart (05 August 2019)
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Market Commentary 06 August 2019
Benchmarks to make a gap-down opening amid weak global cues


Bears made a comeback on Dalal Street on Monday, amid escalating tensions concerning Jammu & Kashmir spooked investors. Markets made a negative start of the day, as Foreign investors withdrawn a net amount of Rs 2,881 crore from the Indian capital markets in the first two sessions of August on account of domestic as well as global headwinds.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. Investors paid no heed towards report that India's services sector activity bounced back in the month of July, aided by rising new work intakes. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index jumped to 53.8 in July from 49.6 in June. Key indices remained under pressure throughout the session, also because of weak cues from global markets. Traders remained pessimistic as the Federation of Automobile Dealers Associations (FADA) feared that the job cuts may continue across automobile dealerships with more showrooms being shut in the near future and sought immediate government intervention such as reduction of GST to provide relief to the auto industry. It said that around two lakh jobs have been cut across automobile dealerships in India in the last three months as vehicle retailers take the last resort of cutting manpower to tide over the impact of the unprecedented sales slump. Market participants failed to take any sense of relief 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. Finally, the BSE Sensex declined 418.38 points or 1.13% to 36,699.84, while the CNX Nifty was down by 134.75 points or 1.23% to 10,862.60.


The US markets ended deeply in red on Monday as China allowed its currency to fall to a more-than-10-year low versus the dollar after President Donald Trump rattled markets by announcing additional tariffs on Chinese goods late last week. Trump accused China of currency manipulation even though his administration has repeatedly declined to officially label China a currency manipulator. He stated china dropped the price of their currency to an almost a historic low. It is called currency manipulation. Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time. Trump claimed that he would stop China from taking hundreds of billions of dollars from the US with unfair trade practices and currency manipulation. He further mentioned China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers' wages and harm our farmers' prices. On the economic front, growth in US service sector activity unexpectedly slowed in the month of July, according to a report released by the Institute for Supply Management (ISM). The ISM said its non-manufacturing index fell to 53.7 in July after dropping to 55.1 in June. A reading above 50 still indicates service sector growth, although Street had expected the index to inch up to 55.5. With the unexpected decrease, the non-manufacturing index slid to its lowest level since hitting 51.8 in August of 2016. The unexpected decrease by the headline index was partly due to a steep drop by the business activity index, which tumbled to 53.1 in July from 58.2 in June. The new orders index also slumped to 54.1 in July from 55.8 in June, indicating a continued slowdown in the pace of growth in new orders. Dow Jones Industrial Average dropped 767.27 points or 2.90 percent to 25717.74, Nasdaq declined 278.03 points or 3.47 percent to 7726.04 and S&P 500 was down by 87.31 points or 2.98 percent to 2844.74.


Crude oil futures ended lower on Monday as concern for a prolonged trade war and its risk to global crude demand was rekindled. Meanwhile, China's currency weakened below the important level of 7 yuan to the dollar, sparking a global selloff in equities and other assets perceived as risky as investors flooded into haven assets, including Treasurys. Besides, oil markets also awaited monthly Short Term Energy Outlook from the Energy Information Administration. Benchmark crude oil futures for September dropped 97 cents or 1.7 percent to settle at $54.69 a barrel on the New York Mercantile Exchange. October Brent, down slightly on the day, to settle at $59.81 a barrel on London's Intercontinental Exchange.


Continuing its free fall for the third straight session, Indian rupee depreciated considerably against dollar on Monday, on increased demand for the US currency from importers. The domestic currency was also weighed down by sharp losses in the local equities. Market participants paid no heed towards a monthly survey showed the country's services sector activity in July returned to growth territory driven by new business orders that rose at fastest pace since October 2016, following which job creation picked up. The IHS Markit India Services Business Activity Index rose to 53.8 in July from 49.6 in June, pointed to the quickest increase in output in one year. On the global front, U.S. dollar dropped against its major rivals on Monday, as a risk-off mood triggered by mounting trade concerns sent investors fleeing, even from the usually safe haven Japanese currency. Finally, the rupee ended at 70.73, Rs 1.13 weaker from its previous close of 69.60 on Friday.


The FIIs as per Monday'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 4811.88 crore against gross selling of Rs 7701.39 crore, while in the debt segment, the gross purchase was of Rs 2337.15 crore with gross sales of Rs 1333.38 crore. Besides, in the hybrid segment, the gross buying was of Rs 13.93 crore against gross selling of Rs 8.40 crore.


The US markets tumbled on Monday as fresh trade threats between Beijing and Washington raised fears of an economic slowdown. Asian markets are trading in red on Tuesday following overnight losses on Wall Street. Indian markets ended lower with cut of over a percent each on Monday amid weak global cues and political uncertainty over the Kashmir issue. Today, the markets are likely to continue sluggish momentum with a gap-down opening, mirroring weakness in the global markets. Moreover, the tension in Jammu and Kashmir over scrapping of Article 70 and continued foreign capital outflow may also weigh on the markets. The Rajya Sabha had approved a resolution scrapping the special status to Jammu and Kashmir and passed another Bill approving the bifurcation of the state into two Union territories. However, some support may come later in the day with Finance Minister Nirmala Sitharaman's statement that the government planned steps to improve the state of the economy fairly quickly after getting inputs from business leaders. Traders may take note of report that the ASSOCHAM expects the Reserve Bank of India to cut the benchmark policy Repo rate by 50 basis points or more, in the wake of a realistic assessment of the state of economy which needs an immediate demand push and investment support by way of reduced cost of borrowing. Besides, a private report indicated that India's economy needs external capital flow to grow at 9% and touch $5 trillion in the next five years. There will be some buzz in the Non-banking finance companies (NBFCs) stocks with report that bank credit to NBFCs fell by over Rs 6,000 crore between April and June, once again highlighting the risk aversion towards the sector. There will be some reaction in gems and jewellery stocks with report that India's gold imports in July plunged 55 per cent from a year ago to the lowest level in three years as a rally in local prices to a record high and a hike in import taxes curtailed demand. There will be lots of earnings reaction based on the performance of the companies.


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  • Reliance Industries is planning to acquire an 87.6% stake in Shopsense Retail Technologies, also known as Fynd, for Rs 295 crore.
  • Hero MotoCorp is planning to expand delivery of two-wheelers to its customers at their doorstep, at a nominal charge. 
  • Wipro's strategic design arm -- Designit has opened a new studio in Sydney to expand its Australian operations and to meet growing business requirements in the region. 
  • M&M has reduced prices of e-Verito by up to Rs 80,000 in order to pass the benefit of reduced GST on electric vehicles to customers.
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