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NSE Intra-day chart (06 July 2018)
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Market Commentary 09 July 2018
Markets likely to make optimistic start on firm global cues


Indian equity benchmarks ended the Friday's session with marginal gains, as traders opted to book most of their early gains in last leg of trade. Markets, soon after a cautious start, gained traction and traded superbly for most part of the day as traders took some support with private report that a lower base in the previous year's quarter and likely good show by select companies in sectors such as automobiles, capital goods, FMCG, IT, and metals should help the Nifty 50 companies report a double-digit growth in aggregate sales and profits for the June 2018 quarter. Markets extend gains, as optimism remained on the street with a private report stating that the Indian engineering exports have managed to grow by close to 20% for the April-May, 2018, reflecting a so far so good scenario even as the US - China tariff war has spread to some key trading markets in Europe, Canada and Mexico and shows no early signs of abating. Some support also came with private report stating that economic activity is indeed improving after robust services PMI data showed that the manufacturing sector is growing at a robust pace, providing a big boost to the government at the centre. Adding to the optimism, India's outgoing chief economic advisor Arvind Subramanian said that the country can handle shocks from external factors like high oil prices and a strong dollar. However, market participants trimmed their gains in last leg of trade and dragged markets lower to end off day's high on report that the increase in minimum support prices (MSP) by the government is set to bump up the Reserve Bank of India's already heightened inflation forecast and will likely lead to higher interest rates at the next monetary policy review on August 1 and possibly another before the year ends. Finally, the BSE Sensex rose 83.31 points or 0.23% to 35,657.86, while the CNX Nifty was up by 22.90 points or 0.21% to 10,772.65.


The US markets extended their gains for second straight day on Friday, after Labor Department data showed that a better-than-expected growth in jobs report for June, despite trade-war anxieties. The US created 213,000 new jobs in June, another hearty gain that shows companies are finding ways to fill open jobs despite a dwindling pool of skilled workers. The Labor Department said in a surprise, the unemployment rate rose to 4% last month after dropping to an 18-year low of 3.8% in May. The jobless rate rose largely because some 600,000 people entered the labor force. Besides, hourly wages rose a modest 5 cents to $26.98 and the yearly rate of pay increases was unchanged at 2.7%. Separately, the nation's trade deficit shrank 6.6% in May to a 19-month low, just a month before the first wave of US tariffs on foreign goods in a broadening dispute over unfair trade practices. The Commerce Department said the deficit declined to $43.1 billion in May from a revised $46.1 billion in April. Exports rose 1.9% to a record $215.3 billion. The US shipped more passenger planes and soybeans, among other things. Imports rose a smaller 0.4% to $258.4 billion. The US imported more wireless phones and computers and fewer pharmaceutical drugs. Meanwhile, the Trump administration officially imposed tariffs on $34 billion of Chinese imports at midnight Eastern Time, and Beijing implemented tariffs on the same value in US goods, as promised. The Dow Jones Industrial Average surged 99.74 points or 0.41 percent to 24456.48, the S&P 500 rose 23.21 points or 0.85 percent to 2759.82 and the Nasdaq was up by 101.96 points or 1.34 percent to 7688.39.


Crude oil futures ended higher on Friday, despite data showing a ramp up in the number of US oil rigs, signalling a potential expansion in domestic crude output. Oilfield services firm Baker Hughes reported that the number of US oil drilling rigs in operation rose by 5 to 863 in the week to June 29. That comes on the back of two-straight weeks of falling rig counts. However, the prices were supported by ongoing bets on a shortage in global crude supplies amid rising oil demand, the potential for a larger drop in Iranian crude exports - amid looming US sanctions - and ongoing challenges in Venezuela's energy industry. Benchmark crude oil futures for August delivery surged 86 cents or 1.2 percent to settle at $73.80 a barrel on the New York Mercantile Exchange. September Brent crude declined 28 cents or 0.4 percent at $77.11 a barrel on London's Intercontinental Exchange.


Indian rupee trimmed all of its early losses and managed to end higher against the American currency on Friday, due to increased selling of the American currency by exporters and banks. Traders took support with private report stating that economic activity is indeed improving after robust services PMI data showed that the manufacturing sector is growing at a robust pace, providing a big boost to the government at the centre. Besides, the dollar losing muscle against other currencies overseas and positive trend in equity market too supported the rupee.  However, gains were limited as anxiety remained among traders with private report stating that global trade tensions and rising oil prices are expected to weaken India's rupee over the next year, dragging the currency closer to the record low hit last week against the dollar. On the global front, U.S. dollar fell against a basket of major currencies on Friday, as investors assumed defensive positions ahead of the closely watched June jobs report and dug in to digest the effects of the next round of the U.S.-China trade tiff. Finally, the rupee ended at 68.88, 5 paise stronger from its previous close of 68.93 on Thursday.


The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4330.83 crore against gross selling of Rs 4079.97 crore, while in the debt segment, the gross purchase was of Rs 1235.64 crore with gross sales of Rs 449.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.16 crore against gross selling of Rs 0.49 crore.


The US markets ended higher on Friday, as strong US jobs growth blunted the impact of an escalating US-China trade dispute. Asian markets were trading in green on Monday, as investors set aside concerns about escalating trade tensions to prepare for the latest earnings season after signs of continued economic strength. Indian equity markets ended slightly higher on Friday, as investors prefer to book profits at higher levels. Today, the start of the new week is likely to be in green, tracking gains in Asian equities following favorable US jobs data. Besides, investors will be eyeing the start of the official earnings season this week to gauge the performance of India Inc in the first quarter. Traders will be getting some support with industry body Assocham's statement that the government's decision to hike the minimum support price (MSP) for 14 khariff crops would boost farmers' income, resulting in a huge rural demand push to the Indian economy. Meanwhile, foreign investors have pumped in over Rs 3,000 crore in the Indian capital markets in the last five trading sessions after pulling out hefty funds during April-June. The recent infusion comes following a net outflow of more than Rs 61,000 crore in the last three months. Prior to that, they had poured in Rs 2,662 crore in March. Besides, a report by the World Trade Organization (WTO) showed that India has initiated far more number of measures widely considered to be trade restricting since last year, when the US and China began locking horns on a global trade war spanning hundreds of billions of dollars. There will be some buzz in the steel sector, with a private report that India's crude steel output grew six per cent to 26 million tonne (MT) in the first quarter of the ongoing financial year. The country had produced 24.5 MT of crude steel during April-June, 2017-18. Banking stocks will be in focus on report that Public sector banks are planning to tap the markets to raise more than Rs 50,000 crore this fiscal to shore up their capital base for business growth and meeting regulatory global risk norms.


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  • Reliance Industries' subsidiary -- Reliance Jio Infocomm -- has launched JioPhone 2 at an introductory price of Rs 2999. 
  • Tata Steel has reported 7.82% rise in domestic production at 3.17 MT and 8% increase in sales at 2.97 MT in the June quarter. 
  • Maruti Suzuki India has reported 11.75% rise in its production to 132,616 units in June 2018, as compared to 118,667 units in June 2017. 
  • Bajaj Auto India has introduced a three in one hat-trick offer for its customers, in key markets across the country.
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