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NSE Intra-day chart (14 August 2019)
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Market Commentary 16 August 2019
Markets to get a positive start tracking Asian peers


After yesterday's heavy sell-off, Indian bourses rebounded on Wednesday to end on higher note. Key indices made a positive start of the day, as India's retail inflation based on Consumer Price Index (CPI) eased to 3.15% in the month of July 2019, on the back of softening fuel and light prices, even as inflation in the overall food basket moved up. CPI was 3.18% in June 2019, while it stood at 4.17% in July 2018. Adding some comfort, Reserve Bank of India (RBI) said that bank credit to registered NBFCs (other than MFIs) for on-lending to agriculture, micro and small enterprises (MSEs) and housing sector up to prescribed limits will be classified as priority sector lending, in a bid to boost credit to the needy segment of borrowers. Markets gained traction in noon deals, after India's Wholesale price index (WPI) inflation also fell to a multi-year low of 1.08% in the month of July, on account of cheaper fuel and food items. According to the latest data released by the government, WPI slowed down to 1.08% (provisional) in July, 2019 as compared to 2.02% (provisional) for the previous month and 5.27% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 1.08% compared to a build up rate of 3.1% in the corresponding period of the previous year. Traders were optimistic, as the commerce ministry laid out an online system for claiming benefits under Transport and Marketing Assistance (TMA) scheme, aimed at promoting exports of agri goods. Finally, the BSE Sensex gained 353.37 points or 0.96% to 37,311.53, while the CNX Nifty was up by 103.55 points or 0.95% to 11,029.40.


The US markets ended a choppy session mostly higher on Thursday, staging a tentative recovery after strong US retail sales and Walmart earnings gave a reassuring view of US consumers. Walmart surged after raising its full-year profit forecast. The retail giant expressed confidence that it could mitigate the effects of higher tariffs in the US-China trade war more effectively than smaller retailers. Besides, the Commerce Department released a report showing retail sales in the US increased by much more than expected in the month of July, partly reflecting the impact of online retail giant Amazon's (AMZN) Prime Day promotion. The report said retail sales climbed by 0.7 percent in July after rising by a revised 0.3 percent in June. The stronger than expected retail sales growth came despite a pullback in sales by motor vehicle and parts dealers, which slid by 0.6 percent in July after climbing by 0.3 percent in June. Meanwhile, with a drop in retail inventories offsetting an increase in manufacturing inventories, the Commerce Department released a report showing US business inventories were virtually unchanged in the month of June. The Commerce Department said business inventories came in flat in June after rising by 0.3 percent in May. Retail inventories fell by 0.3 percent in June after climbing by 0.3 percent in May, while manufacturing inventories rose by 0.2 percent for the second consecutive month. The report also said wholesale inventories came in virtually unchanged in June following a 0.4 percent increase in May. A report released by the Labor Department showed a modest increase in first-time claims for US unemployment benefits in the week ended August 10. The report said initial jobless claims rose to 220,000, an increase of 9,000 from the previous week's revised level of 211,000. Dow Jones Industrial Average gained 99.97 points or 0.39 percent to 25579.39, and S&P 500 was added by 7.00 points or 0.25 percent to 2847.60, while Nasdaq declined 7.32 points or 0.09 percent to 7766.62.


Crude oil futures settled in red on Thursday as US-China trade tensions continue to feed worries about a global economic slowdown that could weigh on demand. China said it would take unspecified necessary countermeasures if US plans for 10% tariffs on additional Chinese goods go into effect on September 1. This comes after the Trump administration earlier this week said it would delay a chunk of those tariffs until mid-December. Besides, oil prices also dropped after the Energy Information Administration (EIA) reported a second straight weekly rise in US crude supplies, with inventories up 1.6 million barrels in the week ended August 9. Benchmark crude oil futures for September dropped 76 cents or 1.4 percent to settle at $54.47 a barrel on the New York Mercantile Exchange. October Brent declined $1.25 or 2.1 percent to settle at $58.23 a barrel on London's Intercontinental Exchange.


Indian rupee, after making a good start, gave away most of its gains to end marginally higher against dollar on Wednesday, driven by weakening of the greenback in overseas markets. Local currency got some support with the government data showing that India's retail inflation based on Consumer Price Index (CPI) eased marginally to 3.15% in the month of July 2019, on the back of softening fuel and light prices, even as inflation in the overall food basket moved up. CPI was 3.18% in June 2019, while it stood at 4.17% in July 2018. Also, inflation stayed below the RBI's medium-term target of 4% for an eleventh straight month. Moreover, firm domestic equity markets also supported the local unit. On the global front, pound rose against its major counterparts on Wednesday, following the release of a data showing an acceleration in U.K. consumer price inflation in July. Finally, the rupee ended at 71.27, 13 paise stronger from its previous close of 71.40 on Tuesday.


The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 5753.71 crore against gross selling of Rs 6313.84 crore, while in the debt segment, the gross purchase was of Rs 510.21 crore with gross sales of Rs 895.23 crore. Besides, in the hybrid segment, the gross buying was of Rs 24.53 crore against gross selling of Rs 22.94 crore.


The US markets ended mostly higher on Thursday as upbeat data on Americans' spending habits helped to ease investors' fears about a possible recession. Asian markets are trading mostly in green on Friday following gains on Wall Street. The Indian markets before going for a holiday posted strong gains on Wednesday, on lower inflation and easing trade tensions. Markets remain closed on Thursday on account of Independence Day. Today, the start of the session is likely to be in green tracking Asian peers. Traders will be taking encouragement with government data showing that India's merchandise exports rebounded and grew 2.25% in July, aided by higher shipments of organic goods, drugs and pharmaceuticals, while imports shrank, narrowing the trade deficit. The commerce department data showed that India's exports increased to $26.3 billion in July from $25.75 billion a year earlier, imports declined 10.4% to $39.76 billion last month from $44.39 billion in July 2018. This resulted in the trade deficit narrowing to $13.43 billion from $18.63 billion a year earlier. Some support will also come with the India Meteorological Department (IMD) data showing that monsoon rains in India in the week through August 14 were above average for a third straight week, easing concerns of drought. Traders may take note that Prime Minister Narendra Modi took stock of the economy on Thursday, amid rising concerns over a slowdown, weak consumer confidence and steep loss of investor wealth from a decline in stock prices. Meanwhile, SBI study stated that the current economic slowdown can be attributed to a combination of structural and cyclical factors, in addition to global uncertainties. It added that the country's economy is showing signs of slowdown, with hi-frequency indicators like industrial output posting subdued growth and automobile sales touching historical lows. There will be some buzz in the banking stocks with Fitch's report that the recent steps by the Reserve Bank to encourage banks to increase lending to non-banking finance companies and retail borrowers are likely to rise risks for the sector. Textile will be in focus with report that Indian textile and clothing industry players say one-third of their production capacity is lying idle due to sluggish exports, poor domestic demand, and growing imports from Bangladesh and Sri Lanka, and have sought immediate relief from the government. There will be some reaction in auto stocks with the auto industry body Society of Indian Automobile Manufacturers' (SIAM) statement that even if it is for a short period of time, just to kick start the industry, there should be a reduction in goods and services tax (GST) from 28 percent to 18 percent.


Support and Resistance: NSE (Nifty) and BSE (Sensex)



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Nifty Top volumes




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