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NSE Intra-day chart (18 July 2017)
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Market Commentary 19 July 2017
Markets to get a flat-to-positive start

Tuesday turned out to be a daunting session of trade for Indian equity benchmarks where frontline gauges ended with a cut of around a percent, breaching their crucial 31,800 (Sensex) and 9,850 (Nifty) levels, as market participants opted to book profit at record levels. Markets started the session on pessimistic note, as traders remained concern with the industry body Associated Chambers of Commerce & Industry of India's (ASSOCHAM) latest report stating that the inflation outlook is expected to remain quite muted at least till festival season of Durga Puja and Diwali. Adding to the pessimism, a private report showed that India's Current Account Deficit (CAD) is likely to widen to 1.3% of GDP in 2017 from 0.6% in 2016, largely owing to stronger domestic growth in the second half of this year. The report highlighted that the import demand is expected to resume once GST disruptions settle down after July. The report said lower commodity prices and adverse base effects will continue to cap the year-on-year growth rates in second half of 2017, partly offsetting the continued recovery in advanced economies. Besides, some concerns also spread among the inventors with Fitch Ratings' latest report that new indirect tax regime GST will have a negative impact on oil and gas, and SME sectors. Investors shrugged off private survey stating that Indian CEOs are confident about the growth prospects of the country over the next three years, compared to that of global economy. Meanwhile, the Supreme Court granted one week's time to the Reserve Bank of India (RBI) to respond to a report of a committee appointed to deal with bad loans with banks that have crossed Rs 8 lakh crore. Finally, the BSE Sensex declined 363.79 points or 1.13% to 31,710.99, while the CNX Nifty was down by 88.80 points or 0.90% to 9,827.15.


The US markets closed mostly higher on Tuesday, with the S&P 500 and the Nasdaq closed at records as gains in tech stocks offset weakness in telecom services and energy shares. There were concerns that the collapse of the health-care bill could unhinge the market after the Republican leaders in the Senate late Monday ditched their effort to repeal and simultaneously replace Obamacare, also known as the Affordable Care Act. On the economy front, sentiment among home builders slid in July after a stretch of strong months as rising costs for materials started to pinch. The monthly confidence gauge from the National Association of Home Builders fell two points to a reading of 64. June's reading, initially reported as 67, was revised down one point. The index now stands at the lowest level since before the election. Builders had high hopes for the new administration after then-candidate Donald Trump addressed the trade group in August, pledging to roll back regulations. The Nasdaq added 29.88 points or 0.47 percent to 6,344.31, the S&P 500 edged higher by 1.47 points or 0.06 percent to 2,460.61, while the Dow Jones Industrial Average lost 54.99 points or 0.25 percent to 21,574.73. 


Crude oil futures bounced back and ended higher on Tuesday amid reports that Saudi Arabia will sharply cut oil production in the face of defiance from fellow OPEC members. The report suggested that Saudi Arabia is considering cutting crude exports by up 1 million barrels a day. Investors also cheered data suggesting that rising global demand for crude could offset some of the current excess supply. A weak US dollar also boosted commodities. Benchmark crude oil futures for August delivery gained $0.38 or 0.8 percent to $46.40 on the New York Mercantile Exchange. In London, Brent crude for August delivery ended up by $0.74 at $48.88 a barrel on the ICE.


Continuing its rising streak for the second straight day, Indian rupee ended slightly higher against dollar on Tuesday due to sustained selling of the US currency by exporters and banks. Local currency got some support with private survey stating that Indian CEOs are confident about the growth prospects of the country over the next three years, compared to that of global economy. Besides, dollar's weakness against some currencies overseas supported the rupee, though heavy losses in the equity market capped the further gain. On the global front, dollar sank on Tuesday as two Republican senators rejected their party's bill repealing Obamacare, effectively killing it and throwing Donald Trump's economic agenda into doubt. Finally, the rupee ended at 64.33, 2 paise stronger from its previous close of 64.35 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 4567.92 crore against gross selling of Rs 4192.13 crore, while in the debt segment, the gross purchase was of Rs 1037.17 crore with gross sales of Rs 414.37 crore.


The US markets made another mixed closing in the last session, trade remained lackluster as traders expressed uncertainty about the near-term outlook for the markets after the Dow and S&P 500 reached record highs. The Asian markets have made mostly a positive start, though some are mildly in red, as investors weighed the potential for tepid economic growth. The Indian markets slumped in the last session, deposing over a percent, amid heavy selling in consumer stable stocks after the GST council increased compensation cess on cigarettes. Today, the start is likely to be flat-to-green, some recovery can be seen on positive regional cues and some good domestic earnings announcements. Meanwhile, NITI Aayog Vice Chairman Arvind Panagariya has said that India's GDP could rise to about $8 trillion over the next 15 years if the country registers an economic growth of 8 per cent annually and come very close to eliminating abject poverty entirely. Traders will also be getting some support with rating agency Fitch's latest report stating that new indirect tax regime Goods and Services Tax (GST) is likely to be beneficial for auto, cement and organised retail sectors, but will have a negative impact on oil and gas, and SME sectors. There will be some buzz in the pharma stocks, on report that the government is looking at introducing a new National Pharmaceuticals Policy and is already in the process of working out details. The oil & gas stocks too will remain in action, as the government is likely to consider the sale of government's 51.11 per cent stake in Hindustan Petroleum Corp Ltd (HPCL) to Oil and Natural Gas Corp (ONGC) for over Rs 28,000 crore. There will be lots of scrip specific actions based on the June quarter earnings announcements.


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



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  • Tata Motors showcased a class-leading technology innovation- country's first Bio-CNG Bus at the Bio-energy programme, called 'Urja Utsav'.
  • BPCL is expecting to get environmental approval for its proposed Rs 2 lakh crore mega refinery in the ecologically sensitive Konkan belt and hoping to complete the world's largest refinery complex in four years.
  • Bharti Airtel has invested more than Rs 30,000 crore in the last two years on boosting its network infrastructure.
  • Hindustan Unilever has reported marginal rise of 8.45% in its net profit at Rs 1283 crore for Q1FY18 as compared to Rs 1183 crore for the same quarter in the previous year.
News Analysis