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NSE Intra-day chart (06 August 2020)
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Market Commentary 07 August 2020
Benchmarks to make flat-to-negative start amid weakness in Asian peers


Indian benchmark indices came off highs but still closed out a volatile day with gains of around a percent each on Thursday, on the back of value buying by fund and retail investors in the select blue chip counters amid firm global cues. Frontline gauges surged above their crucial 38,000 (Sensex) and 11,200 (Nifty) levels. Markets made an optimistic start and traded in fine fettle, as traders took 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. Sentiments also remained positive with the Department for Promotion of Industry and Internal Trade's (DPIIT) statement 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. Key gauges added more strength in afternoon session to trade near day's high point, after the Reserve Bank of India (RBI), in its second bi-monthly policy for financial year 2020-21 (FY21), has kept the repo rate unchanged in the August policy. With no change this time, the repo rate currently stands at 4 percent. The reverse repo rate has been maintained at 3.35 percent. The central bank has maintained its policy stance at accommodative which could continue for as long as necessary to revive growth. The RBI also announced several additional measures to accelerate the economy, enhance liquidity, improve the flow of credit and deepen digital payment facilities, among others. However, in final hour of trade, markets gave up some of their initial gains, as some concern came with RBI Governor Shaktikanta Das' statement that the country's headline inflation is expected to remain elevated during the second quarter of the current fiscal year and may subside thereafter. He also said domestic food inflation remains elevated across most economies since the onset of the pandemic. Finally, the BSE Sensex gained 362.12 points or 0.96% to 38,025.45, while the CNX Nifty was up by 98.50 points or 0.89% to 11,200.15.


The US markets ended higher on Thursday, with the Nasdaq jumping to a new record closing high, as lawmakers pledged to keep working on another coronavirus financial-aid package and President Donald Trump said he could issue executive orders on some relief measures. Meanwhile, the State Department, in coordination with the Centers for Disease Control and Prevention, said it was lifting its global advisory against international travel for Americans that has been in place since March because of the COVID-19 pandemic. Sentiments also got boost on substantial gains by big-name tech companies like Facebook and Apple, which spiked by 6.5 percent and 3.5 percent, respectively.  Google parent Alphabet, Netflix and Microsoft also posted notable gains as tech stocks continued to outperform the broader markets. Besides, positive sentiment also generated in reaction to a Labor Department report showing first-time claims for US unemployment benefits pulled back by much more than expected in the week ended August 1st. The report said initial jobless claims tumbled to 1.186 million, a decrease of 249,000 from the previous week's revised level of 1.435 million. Street had expected jobless claims to edge down to 1.415 million from the 1.434 million originally reported for the previous week. With the much bigger than expected decrease, jobless claims dropped their lowest level since the coronavirus-induced lockdowns in mid-March. The Labor Department said the less volatile four-week moving average also fell to 1,337,750, a decrease of 31,000 from the previous week's revised average of 1,368,750.


Crude oil futures ended a choppy trading session in negative territory Thursday, snapping a four-day winning streak, as traders weighed crude demand and supply levels amid the ongoing coronavirus pandemic. Meanwhile, Saudi Aramco set its official selling price (OSP) for Europe and Asia at 90 cents a barrel over the Oman/Dubai average, down 30 cents from August. The reduction came as a relief to traders who had feared the Saudis would make a deeper cut in an effort to gain market share and also to punish countries like Nigeria, Angola and Iraq, who have appeared to pay little heed to OPEC+ production curbs. Crude oil futures for September declined 24 cents or 0.6 percent to settle at $41.95 a barrel on the New York Mercantile Exchange. October Brent crude lost 8 cents or 0.2 percent to settle at $45.09 a barrel on London's Intercontinental Exchange.


Indian rupee ended flat on Thursday due to mild dollar demand from banks and importers. Sentiments got some support 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. However, traders remained cautious as RBI has kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent. Consequently, the reverse repo rate under the LAF remains unchanged at 3.35 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 4.25 per cent. On the global front, Pound strengthened to a new five-month high against the dollar and headed for the $1.32 mark after the Bank of England indicated that any move to cut rates below 0% was not imminent despite the economy's slow recovery from the coronavirus hit. Finally, the rupee ended unchanged from its previous close of 74.94 on Wednesday.


The FIIs as per Thursday's data were net sellers in both equity segment and debt segment. In equity segment, the gross buying was of Rs 5981.80 crore against gross selling of Rs 6200.66 crore, while in the debt segment, the gross purchase was of Rs 1131.67 crore with gross sales of Rs 1455.52 crore. Besides, in the hybrid segment, the gross buying was of Rs 224.34 crore against gross selling of Rs 9.22 crore.


The US markets ended higher on Thursday as investors hoped for a new fiscal stimulus package. Asian markets are trading in red on Friday as investors await several economic data releases for July. Indian markets ended sharply higher on Thursday after the Reserve Bank of India (RBI) left interest rates unchanged, as widely expected, and maintained an accommodative stance as long as it is necessary to revive growth and mitigate the impact of Covid-19 on the economy. Today, the start of session is likely to be flat-to-negative mirroring lackluster cues from Asian peers. Rising coronavirus cases may dampen sentiments. India has recorded its worst-ever spike of 62,170 case in a single day. With this, India's tally of total cases has crossed the 2-million mark to now stand at 2,025,409. The death toll has soared to 41,627. There will be some cautiousness with a private report that business optimism for the July-September quarter slumped to a record low due to sharp rise in COVID-19 cases, the extension of lockdown in containment zones and staggered easing of restrictions. However, some respite may come later in the day as Union Minister Jitendra Singh said India will be an important pillar of the post-coronavirus global economic recovery and that the road map for winning the battle against the pandemic lies in countries restarting the economy and strengthening cooperative federalism. Some support may come with a private report that the Centre is looking to expand the scope of its Production-Linked Incentive (PLI) scheme to a few more sectors. The Finance Ministry, NITI Aayog and line ministries are reportedly discussing the PLI scheme for sectors such as chemicals, fertilisers, solar equipment including solar cells, power equipment sector, electirc vehicle (EV) components (batteries, auto parts). The 2-wheeler stocks will be in limelight as ratings agency ICRA revised downwards sales forecast for two-wheelers in India, expecting it to decline by 16-18 percent to around 1.7 crore units in FY2021. Home loan companies stocks will be in focus as the RBI announced an additional special liquidity facility (ASLF) of Rs 10,000 crore equally split between Nabard and the NHB to help small financiers and home loan companies amid COVID-19 difficulties. There will be some reaction in logistics sector stocks as ICRA revised the outlook on the logistics sector from stable to negative given the prevailing circumstances and its near impact on the industry metrics. Meanwhile, Mindspace Business Parks REIT is all set to debut on the bourses today. The Rs 4,500-crore IPO was subscribed 13 times during July 27-29. There will be some result announcements to keep the markets in action.


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



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  • Bharti Airtel has inked a multi-year strategic pact with Amazon Web Services to deliver Cloud solutions to large as well as SME customers in India. 
  • Axis Bank has joined forces with Innoviti Payment Solutions to offer EMI options on its debit cards swiped on Innoviti point-of-sale terminals. 
  • Wipro is planning to join forces with Intel to enable Wipro's LIVE Workspace, the company's digital workspace solution with the Intel vProplatform. 
  • Tata Motors has launched a subscription model for electric version of its compact SUV Nexon.
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