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Market Commentary 19 August 2019
Benchmarks to open marginally in green amid firm global cues


Indian equity markets ended Friday's session marginally higher. Indices made a negative start of the day, amid report that India Inc's growth engine slowed in the June quarter amid sluggish demand across sectors and the base effect in the form of a strong expansion in the year-ago period, reflecting the overall slowdown in the economy. Sentiments remained lackluster with an another report stating that the current economic slowdown can be attributed to a combination of structural & 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 & automobile sales touching historical lows. But, in the noon deals, markets staged recovery to settle the day in green terrain, on account of firm cues from global markets. Traders got relief, as the Central Board of Direct Taxes (CBDT) brought in concept of Document Identification Number (DIN), taking further steps to ensure transparency in Tax Administration.  All communications made by the tax department to assessees from October 1, 2019 will carry a computer-generated DIN in order to promote transparency. Some support also came with the 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. Finally, the BSE Sensex gained 38.80 points or 0.10% to 37,350.33, while the CNX Nifty was up by 18.40 points or 0.17% to 11,047.80.


The US markets ended higher on Friday with gains of over a percent each, amid optimism about the world's central banks providing aggressive stimulus in order to prevent a global recession. European Central Bank official Olli Rehn helped inspire confidence after expressing the need for a significant easing package in September to support the flagging eurozone economy. The expectations for more stimulus contributed to a pullback by US treasuries and a subsequent increase in bond yields. The yield on the benchmark ten-year note dropped below the two-year yield on Wednesday, sparking fears of an impending recession and a sell-off on Wall Street. Meanwhile, traders overlooked a report from the University of Michigan showing a significant deterioration in US consumer sentiment in August. The report said the consumer sentiment index tumbled to 92.1 in August after inching up to 98.4 in July. Street had expected the index to dip to 97.2. With the much steeper than expected drop, the consumer sentiment index slumped to its lowest level since hitting 91.2 in January. The deterioration in consumer sentiment came amid concerns about the proposed increase in tariffs on Chinese imports as well as the reasoning behind the Federal Reserve's interest rate cut. A separate report from the Commerce Department showed an unexpected slump in housing starts in July but a sharper than expected increase in building permits. The report said housing starts tumbled by 4.0 percent to an annual rate of 1.191 million from the revised June estimate of 1.241 million. Dow Jones Industrial Average jumped 306.62 points or 1.20 percent to 25886.01, Nasdaq surged 129.38 points or 1.67 percent to 7895.99 and S&P 500 was up by 41.08 points or 1.44 percent to 2888.68.


Crude oil futures ended higher on Friday amid weakening demand against supply uncertainties linked to the Middle East and OPEC production. Besides, recession fears faded a bit amid hopes global central banks will announce further stimulus to revive economic growth. Worries about energy demand outlook waned a bit with strong US retail sales data (sales rose as much as 0.7% in July, the highest in four months) and dovish comments from ECB's Rehn that signaled a significant easing package in September to support the euro zone economy. Also, China's state planner said it would roll out a plan to boost disposable income this year and in 2020. Benchmark crude oil futures for September gained 40 cents or 0.7 percent to settle at $54.87 a barrel on the New York Mercantile Exchange. October Brent rose 41 cents or 0.7 percent to settle at $58.64 a barrel on London's Intercontinental Exchange.


Indian rupee strengthened for second consecutive session on Friday, on dollar selling by exporters and banks. The rupee sentiment was buoyed with Commerce Secretary Anup Wadhawan's report that exports growth of the country in the current fiscal is likely to be in double digits despite the challenging situation both on the external and internal fronts. He added in the last financial year, growth in exports was between nine and 10% and the volume touched $331 billion. Meanwhile, India's merchandise exports grew by 2.25 percent in July 2019 to $26.33 billion as compared to same period of last year, on the back of higher shipments of organic goods, drugs and pharmaceuticals. Trade deficit, gap between imports and exports, narrowed to $13.43 billion in July from $18.63 billion a year ago, helped by lower oil import bill. However, dollar's strengthen against some other currencies overseas along with rising crude oil prices capped the gains. On the global front, dollar rallied on Friday, hitting a two-week high against the euro as expectations for lower interest rates weighed on the European currencies. Finally, the rupee ended at 71.14, 13 paise stronger from its previous close of 71.27 on Wednesday.


The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 7256.72 crore against gross selling of Rs 5231.90 crore, while in the debt segment, the gross purchase was of Rs 2201.97 crore with gross sales of Rs 1741.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.58 crore against gross selling of Rs 4.84 crore.


The US markets ended in green on Friday as a rebound in bond yields eased fears of a recession that sent stocks tumbling earlier in the week. Asian markets are trading higher on Monday as hopes of more stimulus from central banks around the world and steps being taken by major economies such as Germany and China soothed investors' fears of a sharp global economic slump. Indian markets ended choppy trading session in green territory on Friday amid narrowing trade deficit and expectations the government might soon provide a broad stimulus package to counter the economic slowdown. Today, the Sensex and Nifty are likely to make a slightly positive start of new week tracking firm global cues. Traders will be taking some support with Union finance minister Nirmala Sitharaman's statement that her officials are in discussions with their counterparts in the PMO and once the talks are over, the government will figure out what remedial steps should be taken and announce the same. Some support will also come with the Reserve Bank of India's (RBI) data showing that India's foreign exchange reserves surged by $1.620 billion to $430.572 billion in the week to August 9 on rise in foreign currency assets. Traders may take note of Fitch Solutions' statement that the RBI is expected to cut interest rates by 40 basis points before the end of the current financial year as monetary easing till now appears to be insufficient in boosting economic growth. However, continued selling by FPIs may cap gains. Foreign investors pulled out Rs 8,319 crore on a net basis from capital markets in the first half of August. Some cautiousness may come as the Australia and New Zealand Banking Group (ANZ) slashed its forecast for India's economic growth to 6.2% in the financial year ending next March from a previous estimate of 6.5%, warning it would be tough for authorities to engineer a turnaround. Sugar stocks will be in focus as the World Trade Organization's (WTO) dispute settlement body has agreed to set up panel requested by Brazil, Australia and Guatemala to review India's support measures for the sugar sector. There will be some buzz in the aviation stocks with report that aviation watchdog DGCA is looking at the option of introducing a new pilots training programme that will focus more on competitive assessment rather than just fixed flying hours. There will be some reaction in reality stocks with Fitch Ratings' report that with non-bank financial companies (NBFCs) and housing finance companies becoming risk averse towards lending to real-estate sector, developers are likely to face a liquidity crisis. Meanwhile, Ujjivan Small Finance Bank has filed a draft prospectus for Rs 1,200 crore initial public offer with market regulator Securities and Exchange Board of India (SEBI).


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



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Nifty Top volumes




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Indiabulls Housing Finance





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GAIL (India)






  • ONGC is investing around Rs 83,000 crore in 25 major projects to boost oil and gas production. 
  • Coal India's 54 coal mining projects are facing delay due to various reasons such as contractual issues and delay in green clearances among others. 
  • Dr. Reddy's Laboratories has received complete response letter from the USFDA for its versions of NuvaRing and Copaxone. 
  • Bajaj Finance, the lending and investment arm of Bajaj Finserv is offering the Shoes Insurance policy for expensive footwear.
News Analysis