Indian equity benchmarks managed
to close higher with gains of over half percent each on Tuesday despite high
volatility, led by buying pressure in telecom, metal and power stocks, amid
positive global equities. After making cautious start, domestic bourses gained
traction, as the Reserve Bank of India (RBI) announced a host of steps,
including term repo operations totalling Rs 1 lakh crore in mid-September in
order to ease pressure on the liquidity and maintain congenial financial
conditions with a view to ensuring sustainable recovery of economic growth.
However, markets soon turned highly volatile, as some anxiety remained among
the local traders with report that India's economy suffered its worst slump on
record in April-June, with the gross domestic product (GDP) contracting by
23.9% as the coronavirus-related lockdowns weighed on the already-declining
consumer demand and investment. There was some cautiousness too with report that
the output of eight core infrastructure industries tumbled by 9.6%, for the
fifth consecutive month in July, due to the decline mostly in production of
steel, refinery products and cement. But, local indices regained some traction
to end higher, taking support from the survey report showing that Indian manufacturing activity signalled
growth in the month of August 2020, led by an improvement in customer demand as
client businesses reopened, after lockdown restrictions eased amid the
coronavirus disease 2019 (COVID-19). The Nikkei India Manufacturing Purchasing
Managers' Index (PMI) - a composite single-figure indicator of manufacturing
performance - jumped to 52.0 in August as against 46.0 in July. A sharp
appreciation in the rupee against the US dollar added to the momentum. Indian
rupee settled at 72.87 against the US dollar, registering a surge of 73 paise
over its previous close. Finally, the BSE Sensex gained 272.51 points or 0.71%
to 38,900.80, while the CNX Nifty was up by 82.75 points or 0.73% to 11,470.25.
The US markets ended higher on
Tuesday, with Nasdaq and S&P 500 closing at record highs as big tech and
working-from-home shares drive gains. Sentiments got boosted as upbeat economic
reports and dovish tones from the Fed helped feed the buying momentum on markets.
Federal Reserve Governor Lael Brainard said the central bank should pivot to
provide more support for US economic growth, presumably meaning the Fed could
purchase more assets, such as US Treasury or privately issued debt. Meanwhile,
Manufacturing activity in the US expanded at a faster rate in the month of
August, the Institute for Supply Management (ISM) revealed in a report. The ISM
said its purchasing managers index rose to 56.0 in August from 54.2 in July,
with a reading above 50 indicating growth in manufacturing activity. Street had
expected the index to inch up to 54.5. Besides, construction spending in the US
saw a modest increase in the month of July, according to a report released by
the Commerce Department. The report said construction spending inched up by 0.1
percent to an annual rate of $1.365 trillion in July after falling by 0.5
percent to a revised rate of $1.363 trillion in June. Street had expected
construction spending to jump by 1.0 percent compared to the 0.7 percent drop
originally reported for the previous month. The uptick in construction spending
came as spending on private construction climbed 0.6 percent to an annual rate
of $1.014 trillion. Spending on residential construction spiked 2.1 percent to
a rate of $546.6 billion, while spending on non-residential construction
slumped by 1.0 percent to a rate of $466.9 billion.
Crude oil futures ended higher on
Tuesday as some economic data show signs of recovery, boosting prospects for
energy demand. In the US, the Institute for Supply Management said its
manufacturing index rose to 56% in August, up a fourth month in a row, from
54.2% in July. Meanwhile, energy production in the Gulf of Mexico region has seen
significant recovery following Hurricane Laura last week. The Bureau of Safety
and Environmental Enforcement estimated that about 28.4% of the current oil
production in the Gulf of Mexico has been shut in, along with around 25% of
natural-gas output. Crude oil futures for October rose 15 cents or 0.4 percent
to settle at $42.76 a barrel on the New York Mercantile Exchange. November
Brent crude gained 30 cents or 0.7 percent to settle at $45.58 a barrel on
London's Intercontinental Exchange.
Reversing previous session
drubbing, Indian rupee appreciated significantly against dollar on Tuesday,
owing to dollar sale by exporters and banks and positive domestic equities.
Traders took encouragement as India's Manufacturing Purchasing Managers' Index
(PMI) for August has come in at 52, compared to 46 in July, signalling growth
and rebound in production volumes for the first time in five months. For the
first time since March, output expanded in the Indian manufacturing sector in
August. Meanwhile, RBI announced new measures to maintain stability in the
financial system, including two more tranches of special OMOs in its Operation
Twist and some easing of held-to-maturity (HTM) limits for bond holdings by
banks. On the global front; pound scaled new eight-month highs on Tuesday above
$1.34 as broad-based dollar weakness deepened in the wake of the Federal
Reserve's new policy framework that suggests U.S. interest rates will remain at
record lows for the foreseeable future. Finally, the rupee ended at 72.87, 73
paise strong from its previous close of 73.60 on Monday.
The FIIs as per Tuesday's data
were net sellers in both equity segment and debt segment. In equity segment,
the gross buying was of Rs 17681.15 crore against gross selling of Rs 20039.09
crore, while in the debt segment, the gross purchase was of Rs 1129.59 crore
with gross sales of Rs 1355.86 crore. Besides, in the hybrid segment, the gross
buying was of Rs 2498.49 crore against gross selling of Rs 15.78 crore.
The US markets ended higher on
Tuesday led by tech shares, as traders kicked off a historically tough month
for the market on the right foot and built on Wall Street's best August
performance since the 1980s. Asian markets are trading mostly in green on
Wednesday following overnight gains on Wall Street. Indian markets ended higher
on Tuesday led by gains in metals, pharma and FMCG stocks amid positive global
cues. Today, the start of session is likely to be cautious amid mixed Asian
cues. Traders will be concerned with the Finance Ministry's statement that the
gross GST collection in August stood at Rs 86,449 crore, down from Rs 87,422
crore collected in July. There will be some cautiousness as Moody's Investors
Service said India will be among the large emerging market sovereigns to have
highest debt burden by 2021. Also, rising coronavirus cases is likely to dampen
the sentiments in the markets. India has recorded over 68,000 new cases in the
past 24 hours, taking its total caseload to 3,766,108. However, some respite
may come later in the day with CII-IBA survey report stating that the financial
conditions are looking up in the current quarter (Q2FY21) due to policy
decisions and steps the government and Reserve Bank of India have taken to
support economy. Traders may also take note of Union Minister of Commerce and
Industry Piyush Goyal's statement that the whole package of the US-India trade
deal is almost ready and it can be finalised when the local political situation
in the United States is conducive. Aviation stocks will be in focus with
airlines body -- International Air Transport Association's (IATA) statement
that global air passenger traffic was 79.8 percent less in July this year
compared to the corresponding period a year ago. There will be some reaction in
power stocks with report that the slump in overall power consumption has
narrowed to just 0.85 percent in August at 110.57 billion units (BU) amid
considerable rise in economic activities and raised hopes that it would surpass
normal level this month. Also, auto stocks will also be in action reacting to
their monthly sales numbers.
Support
and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,470.25
|
11,373.59
|
11,560.24
|
BSE Sensex
|
38,900.80
|
38,553.00
|
39,237.71
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
State Bank of India
|
750.48
|
218.10
|
213.24
|
220.94
|
Bharti Airtel
|
743.37
|
546.25
|
521.81
|
563.06
|
Tata Motors
|
588.12
|
143.80
|
141.09
|
145.84
|
IndusInd Bank
|
472.95
|
627.45
|
589.94
|
663.74
|
NTPC
|
443.05
|
99.80
|
97.15
|
101.80
|
L&T has completed the strategic divestment of its Electrical & Automation business to Schneider Electric.
Maruti Suzuki India has reported total sales of 124,624 units in August 2020, as compared 106,413 units in August 2019, registering rise of 17.1%.
M&M's FES has reported domestic sales of 23,503 units in August 2020, as against 13,871 units during August 2019.
Bharti Infratel's board has decided to proceed with the scheme for a merger with Indus Towers.