Equity benchmark
indices erased the stellar gains made at open and ended Wednesday's session on
flat note, weighed down by blue-chips such as Reliance Industries (RIL), HDFC
Bank and Power Grid. Initial rally was largely attributed to strong trend in
Asian markets' indices and sustained foreign fund inflows. Traders also took
encouragement with the Department of Economic Affairs in its monthly
macroeconomic report stating the worst may now be over for India and the road
ahead will take the economy back on the track. The sentiments remained up-beat
with the Minister of State for Commerce and Industry Hardeep Singh Puri's
statement that immediate review of the Association of Southeast Asian Nations
(ASEAN)-India trade in goods agreement would help realise the true bilateral
trade potential between India and the 10-member Southeast Asian bloc. He said
it will also contribute to the realisation of 2020 trade target of $200 billion
set by both parties. However, domestic stock markets lost momentum and turned
highly volatile in afternoon session, as survey report showed India's service
sector remained sluggish in the month of July, with substantial reductions in
both activity and inflows of new work were recorded, as ongoing lockdown
restrictions stifled demand and forced companies to cease operations. As per
the survey report, the seasonally adjusted Nikkei Services Business Activity
Index was at 34.2 in July from 33.7 in June. Further, the Nikkei India
Composite PMI Output Index -- which measures both manufacturing and services -
was at 37.2 in July from 37.8 in June. Some pessimism also came with ICRA's
report where it mentioned that the securitisation volumes are estimated to
significantly drop to Rs 1.2-1.3 lakh crore during the current fiscal due to
the impact of COVID-19 and lower availability of eligible loan pools for
securitisation. Finally, the BSE Sensex lost 24.58 points or 0.07% to
37,663.33, while the CNX Nifty was up by 6.40 points or 0.06% to 11,101.65.
The US markets
settled higher on Wednesday, leaving the Nasdaq with its 31st record close this
year, as investors embraced corporate earnings and service-sector data that
surprised to the upside. Reports of some progress in Congress toward a fresh
coronavirus relief package also offered some support for the bulls. reports
suggested that, Trump administration officials and congressional Democratic
leaders are working to reach a coronavirus aid bill deal by the end of the week
even if the parties still remain far apart on the issues. As lawmakers wrangle
over additional pandemic aid, House Speaker Nancy Pelosi said the Trump
administration might be able to unilaterally extend the federal moratorium on
tenant evictions put in place in March by the CARES Act that expired on July
25. Adding to the positive sentiment, a report from the Institute for Supply
Management (ISM) showed an unexpected acceleration in the pace of growth in
service sector activity in the month of July. The ISM said its non-manufacturing
index inched up to 58.1 in July after spiking to 57.1 in June, with a reading
above 50 indicating growth in service sector activity. Street had expected the
index to drop to 55.0. Chair of the ISM Services Business Survey Committee
Anthony Nieves said this reading represents growth in the services sector for
the second straight month after contraction in April and May, preceded by a
122-month period of expansion. He added respondents remain concerned about the
pandemic; however, they are mostly optimistic about business conditions and the
economy as businesses continue to reopen.
Crude oil
futures ended higher on Wednesday lifted by data showing a sharp drop in US
crude inventories in the week ended July 31. The Energy Information
Administration said US crude stocks fell by 7.4 million barrels last week,
almost 2.5 times the expected decline. The American Petroleum Institute
released a report on Tuesday showing an inventory draw of 8.587 million barrels
in the week ended July 31. Further, optimism about US lawmakers agreeing on a
coronavirus package and a weaker greenback also supported oil prices. Crude oil
futures for September surged 49 cents or 1.2 percent to settle at $42.19 a
barrel on the New York Mercantile Exchange. October Brent crude rose 74 cents
or 1.7 percent to settle at $45.17 a barrel on London's Intercontinental
Exchange.
Indian rupee
ended stronger against dollar on Wednesday due to fresh selling of the American
currency by banks and exporters. Sentiments were positive with Commerce and
Industry Minister Piyush Goyal's statement that the country's exports have
showed signs of significant improvement and reached almost the level of the
corresponding month last year in July 2020. Some support also came with the
Department of Economic Affairs' monthly macroeconomic report stating that the
worst may now be over for India and the road ahead will take the economy back
on the track. On the global front, dollar remained weak on Wednesday as a US
coronavirus relief package stalled in Congress and US bond yields sank, with
investors weighing prospects of further monetary easing to support the economy.
Finally, the rupee ended at 74.94, 10 paise stronger from its previous close of
75.04 on Tuesday.
The FIIs as per
Wednesday's data were net buyers in equity segment and debt segment both. In
equity segment, the gross buying was of Rs 5450.77 crore against gross selling
of Rs 4574.99 crore. In the debt segment, the gross purchase was of Rs 1211.71
crore with gross sales of Rs 1089.35 crore. In the hybrid segment, the gross
buying was of Rs 2778.73 crore against gross selling of Rs 17.67 crore.
The US markets
closed higher Wednesday, supported by hopes for progress toward another fiscal
relief package in Congress and better than expected corporate earnings results.
Asian markets are trading mostly in green in early deals on Thursday amid
encouraging reports for a Covid-19 vaccine. Indian equity indices were volatile
in trade before closing flat on Wednesday. Today, the markets are likely to get
positive start following firm cues from global markets. Investors will be
eyeing ahead of the Reserve Bank of India's (RBI) three-day monetary policy
meeting outcome today. Traders will be taking encouragement with Director
General of Foreign Trade Amit Yadav's statement that the Directorate General of
Foreign Trade will realign itself along the lines of Prime Minister's Make in
India and will push for production of items domestically to cut down imports.
The organisation is focusing on creating more capacities within the country to
produce items that can cut down imports and accelerate exports from the
electronics and hardware sector, including ventilators. He also said that the
government-run agency is also taking suggestions from the industry and others
as to the areas which promise new capacities to reduce import and accelerate
exports. Some support may come as the Department for Promotion of Industry and
Internal Trade (DPIIT) said that it will rope in a consulting agency to
scrutinise tenders of government procuring entities for compliance with public
procurement regulations that aim at promoting 'Made in India' products. The
DPIIT has floated a notice inviting request for proposal (RFP) from interested
agencies. Meanwhile, state Bank of India Chairman Rajnish Kumar said the
government and corporates must work together for a quick economic recovery. He
added that investment in infrastructure, in particular, should be stepped up.
There will be some buzz in stocks of Medical device industry as Medical
Technology Association of India (MTaI) said Medical technology industry has
suffered around 50-85 percent drop in revenue during April-June with a decline
in surgical procedures at hospitals due to COVID-19 situation. There will be
some reaction in stocks of Aluminium industry as the Aluminium Association of
India (AAI) said that blocking of the online system for exporters to apply for
tax incentives under the export incentive scheme MEIS has created an extremely
precarious situation for aluminium exports. It added the move will further
render exports vulnerable and uncompetitive. There will be lots of important
earnings announcements too, to keep the markets in action.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous
close
|
Support
|
Resistance
|
NSE Nifty
|
11,101.65
|
11,035.25
|
11,196.85
|
BSE Sensex
|
37,663.33
|
37,429.30
|
38,018.66
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata Motors
|
993.72
|
115.40
|
112.38
|
118.03
|
State Bank of
India
|
688.89
|
191.45
|
189.35
|
195.20
|
Hindalco
Industries
|
478.95
|
175.75
|
167.03
|
180.93
|
ICICI Bank
|
370.58
|
352.20
|
348.63
|
357.88
|
Axis Bank
|
369.37
|
434.95
|
429.78
|
443.48
|
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