Bulls roared back over Dalal
Street on Thursday, with Sensex & Nifty gaining over 630 & 175 points,
respectively, after reports said the government was looking to roll-back the
recently imposed higher tax on the foreign portfolio investors (FPIs). After a
firm start of the day, key indices remained in green for the most part of the
session, as the India Meteorological Department showed that India received 28%
more rainfall than the 50-year average in the week to August 7, easing concerns
of drought. Monsoon rains are crucial for farm output & economic growth, as
agriculture forms about 15% of India's $2.5-trillion economy. The street
overlooked Reserve Bank of India's (RBI) report that consumer confidence
declined in July as reflected in the current situation index; the future
expectations index fell by about 4 points. Markets extended gains in the last
leg of the trade, as RBI announced two key measures to help non-bank financial
companies (NBFCs) which are facing a severe liquidity squeeze. The first is
harmonisation of single counterparty exposure limit for banks' exposure to
single NBFCs with the general single counterparty exposure limit. The central
bank has decided to raise a bank's exposure limit to a single NBFC to 20 per
cent of tier-I capital of the bank. The second initiative deals with credit to
the priority sector. The street also took a note of EEPC India chairman, Ravi
Sehgal's statement that the central bank should ensure easy credit disbursal to
exporters, especially in the MSME sector. Finally, the BSE Sensex gained 636.86
points or 1.74% to 37,327.36, while the CNX Nifty was up by 176.95 points or
1.63% to 11,032.45.
The US markets end higher on
Thursday as government bond yields rebounded from the previous day's slide
following upbeat trade data out of China. Yields and bond prices move in
opposite directions. The rally on markets also reflected as jitters over a potential
trade and currency clash between Beijing and Washington gave way to greed for
beaten-down assets. On the economic front, with a drop in inventories of
non-durable goods offsetting an increase in inventories of durable goods, the
Commerce Department released a report showing wholesale inventories in the US
were unchanged in the month of June. The Commerce Department said wholesale
inventories were virtually unchanged in June after climbing by 0.4 percent in
May. The report said inventories of durable goods rose by 0.3 percent for the
second straight month amid jumps in inventories of computer equipment and
furniture. Besides, first-time claims for US unemployment benefits unexpectedly
showed a modest decrease in the week ended August 3, according to a report
released by the Labor Department. The report said initial jobless claims dipped
to 209,000, a decrease of 8,000 from the previous week's revised level of
217,000. Meanwhile, the Labor Department said the less volatile four-week
moving average crept up to 212,250, an increase of 250 from the previous week's
revised average of 212,000. Continuing claims, a reading on the number of
people receiving ongoing unemployment assistance, fell by 15,000 to 1.684
million in the week ended July 27. Dow Jones Industrial Average rose 371.12
points or 1.43 percent to 26378.19, Nasdaq surged 176.33 points or 2.24 percent
to 8039.16 and S&P 500 was up by 54.11 points or 1.88 percent to 2938.09.
Crude oil futures, which dropped
into a bear market this week, reclaimed some of their steep loss on Thursday,
tracking gains for global stock markets as upbeat report emerged from China. US
stock indexes advanced after China fixed its onshore currency at a level that
was higher than expected and as trade data out of the world's second-largest
economy was more upbeat, helping to stabilize jittery global markets for now.
West Texas Intermediate (WTI) remains off roughly 21% from its 2019 settlement
high of $66.30 hit on April 23, which by most measures, is a return to
bear-market territory. Brent has fallen about 23% since the late-April
high-water mark. Benchmark crude oil futures for September surged $1.45 or 2.8
percent to settle at $52.54 a barrel on the New York Mercantile Exchange.
October Brent gained $1.15 or 2 percent to settle at $57.38 a barrel on
London's Intercontinental Exchange.
Reversing
its five-session fall, Indian rupee bounced back to end higher against the US
currency on Thursday, on persistent selling of the American currency by
exporters. Sentiments turned optimistic with the India Meteorological
Department (IMD) data showing that India received 28% more rainfall than the
50-year average in the week to August 7, easing concerns of drought. Monsoon
rains are crucial for farm output and economic growth, as agriculture forms
about 15% of India's $2.5-trillion economy. A spectacular relief rally in local
equities also supported the forex sentiment. On the global front, dollar
steadied on Thursday as risk sentiment rose after resilient Chinese trade data
and as Beijing's efforts to slow a slide in the value of the renminbi
encouraged investors to buy riskier currencies. Finally, the rupee ended at
70.69, 20 paise stronger from its previous close of 70.89 on Wednesday.
The
FIIs as per Thursday'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
5338.19 crore against gross selling of Rs 5849.97 crore, while in the debt
segment, the gross purchase was of Rs 2117.11 crore with gross sales of Rs
1029.65 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.34
crore against gross selling of Rs 2.07 crore.
The US markets rose on Thursday
as global bond yields rebounded. Asian markets are trading in green on Friday,
helped by China's better-than-expected export figures but fresh concerns about
Sino-US trade ties capped the gains. Indian markets ended higher with gains of
over one and half a percent each on Thursday mainly on the back of late hour
buying led by IT and auto stocks along with a rise in global stock markets.
Today, the markets are likely to continue jubilation with positive start
tracking firm global cues and reports that the government is likely to withdraw
higher surcharge on foreign portfolio investors (FPIs). In a bid to ease the
concern of FPIs over the increased surcharge announced in the Budget, the
Finance Ministry is considering grandfathering the income earned by them up to
the Budget (July). Under the proposal, FPIs that are so far structured as
trusts will not have to pay the increased surcharge. But if they don't change
their structure, they will have to pay the surcharge from the set date.
Besides, investors will also be looking ahead to the Index of Industrial
Production (IIP) release later in the day. Traders may take note of report that
India Inc demanded a stimulus package of over Rs 1 lakh crore to kick-start
investment cycle and revive the economy which is showing signs of a slowdown.
Meanwhile, to help startups to move from the Innovators Growth Platform of
stock exchanges to the mainboard for regular trading, regulator Sebi is
planning a new set of norms to allow them to shift after one year of trading
and expanding their shareholder base to at least 200. However, there may be
some cautiousness with India Ratings' report that the massive Rs 3 trillion capital
infusion by the government into state-run banks over the past six years has
helped them reduce losses but has failed to boost credit growth. There will be
some reaction in auto stocks with report that the Centre gave nod to 5,595
electric buses (e-buses) for inter- and intra-city transportation in 64 cities,
giving a thrust to last-mile connectivity and continued electric mobility push.
There will be some buzz in the aviation stocks with the International Air
Transport Association's (IATA) data showing that India's domestic air passenger
traffic rose 7.9 percent in June over the year ago period even as the average
demand for domestic travel across seven major aviation markets declined in the
reporting month to 4.4 percent from 4.7 percent earlier. There will be some
reaction in power stocks with Power Minister R K Singh's statement that in a
bid to encourage domestic manufacturing, India will increase import duty on
solar equipment down the value chain in the coming years.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,032.45
|
10,897.58
|
11,112.68
|
BSE Sensex
|
37,327.36
|
36,853.35
|
37,603.42
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in
Lacs)
|
Yes Bank
|
1,223.25
|
89.20
|
86.03
|
91.13
|
Tata Motors
|
358.76
|
124.05
|
118.97
|
127.07
|
SBI
|
329.29
|
294.35
|
288.13
|
298.03
|
Indiabulls Housing Finance
|
302.93
|
444.35
|
426.90
|
460.40
|
Tata Steel
|
228.26
|
367.40
|
358.83
|
377.73
|
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