Tuesday turned out to be
disappointing session for the Indian equity indices which got pounded by around
two percent, on the back of weak global cues, and concerns with regard to
rising Covid-19. After a negative opening, the domestic bourses never looked in
recovery mood and ended the trade near intraday lows, breaching their crucial
support levels of 36,050 (Sensex) and 10,650 (Nifty). The sentiments weighed
down by private report stated that a longer wait for a vaccine against the
COVID-19 virus may lead to a contraction of up to 7.5 percent in the Indian GDP
in FY21. It also revised down their base case estimates on the real GDP within
a week, and now expect it to contract by 4 percent because of a drop in
economic activity. The sentiments remained on pessimistic note reacting to
Consumer Price Index (CPI) data, which increased to 6.09% in June 2020, mainly
on account of higher prices of food items. The CPI was 3.18% in June 2019.
Domestic markets extended their losses in late afternoon session, amid a
private report stating that net inflows in equities plunged 94 per cent
month-on-month in June. It said increase in redemptions by 74.9 per cent
month-on-month to Rs 14,200 crore led to a decline in net inflows in equities
from Rs 5,600 crore in the previous month to Rs 300 crore in June, the lowest
in four years. Markets participants also took a note of reports that India's
inflation based on wholesale price index (WPI) stood at -1.81% in the month of
June as compared to 2.02% during the corresponding month of the previous year.
Fuel & Power index, having weight of 13.15%, increased by (5.50%) to 88.3
(provisional) in June 2020 from 83.7 (provisional) for the month of May, 2020.
Prices of mineral oils group increased compared to month of May, 2020, while
prices of coal and electricity remain unchanged. Market participants largely
overlooked Niti Aayog Vice Chairman Rajiv Kumar's statement that there is a
need to translate the coronavirus-led pandemic situation into an opportunity to
meet the sustainable development goals. Finally, the BSE Sensex fell 660.63
points or 1.80% to 36,033.06, while the CNX Nifty was down by 195.35 points or
1.81% to 10,607.35.
The US markets ended higher on
Tuesday after Federal Reserve Gov. Lael Brainard called for sustained
large-scale asset purchases by the US central bank to help the economy rebound
amid a thick fog of uncertainty brought on by COVID-19. Brainard also said that
the US economic recovery likely will face headwinds for some time, and require
further accommodation. Besides, steel,
chemical, and biotechnology stocks saw considerable strength on the day, moving
higher along with most of the other major sectors. Meanwhile, banking stocks
were among the few groups to buck the uptrend, dragging the KBW Bank Index down
by 1.6 percent. On the economic data front, partly reflecting a substantial
rebound in gasoline prices, the Labor Department released a report showing US
consumer prices increased by slightly more than expected in June following
three straight monthly declines. The Labor Department said its consumer price
index climbed by 0.6 percent in June after edging down by 0.1 percent in May.
Street had expected consumer prices to rise by 0.5 percent. The bigger than
expected increase in consumer prices reflected the strongest price growth since
August of 2012. Over half of the monthly increase in consumer prices was due to
the rebound in gasoline prices, which soared by 12.3 percent in June after plunging
by 3.5 percent in May.
Crude oil futures ended higher on
Tuesday getting a boost from some weakness in the US dollar. However, upside
remained capped in the wake of mounting tensions between the US and China, as
well as a continued rise in COVID-19 infections in the US and elsewhere - both
of which can hurt energy demand. Meanwhile, the US announced its formal
opposition to a number of Chinese claims in the South China Sea. China
described the US rejection of its maritime claims as completely unjustified and
as an attempt to stir discord between China and Southeast Asian countries.
China also announced it will impose unspecified sanctions on defense contractor
Lockheed Martin Corp. after the US approved a possible $620 million deal to
supply missile parts to Taiwan. Crude oil futures for August gained 19 cents or
0.5 percent to settle at $40.29 a barrel on the New York Mercantile Exchange.
September Brent crude added 18 cents or 0.4 percent to settle at $42.90 a
barrel on London's Intercontinental Exchange.
Indian rupee tumbled against
dollar on Tuesday, on account of sustained dollar demand from importers and
banks amid heavy selling in domestic equities and strengthening American
currency. Risk appetite also remained weak amid rising tensions between US and
China. Besides, investors' sentiment weakened as Consumer Price Index (CPI),
which increased to 6.09% in June 2020, mainly on account of higher prices of
food items. The CPI was 3.18% in June 2019. Also, Wholesale Price Index (WPI) -
based inflation stood at (-) 1.81% in June due to decline in prices of fuel and
power, even as food articles remained expensive. The rate of deflation in May
was 3.21%. On the global front, dollar edged up on Tuesday as diplomatic
tensions between the United States and China and rising coronavirus cases
knocked investor confidence, although moves in currency markets were small in a
quiet session. Finally, the rupee ended at 75.42, 23 paise weaker from its
previous close of 75.19 on Monday.
The FIIs as per Tuesday's data
were net sellers in equity segment, while they were net buyers in debt segment.
In equity segment, the gross buying was of Rs 3630.51 crore against gross
selling of Rs 3714.58 crore, while in the debt segment, the gross purchase was
of Rs 1782.87 crore with gross sales of Rs 1289.85 crore. Besides, in the
hybrid segment, the gross buying was of Rs 0.11 crore against gross selling of
Rs 1.69 crore.
The US markets ended higher on
Tuesday as investors bought energy and materials stocks and looked beyond a
recent surge in coronavirus cases. Asian markets are trading mostly in green on
Wednesday as optimism about a coronavirus vaccine bolstered risk appetite.
Indian markets ended lower on Tuesday on weak global cues as rising coronavirus
cases weighed on investors' sentiment. Today, the markets are likely to open
higher following overnight gains on Wall Street and positive cues from Asian
peers. Traders will be taking encouragement with Former Reserve Bank Governor D
Subbarao's statement that the government needs to build on some silver linings
in the farm sector, driven by the prospect of a favourable monsoon, to speed up
the economic recovery. Some support will come with Commerce and Industry
Minister Piyush Goyal's statement that the government is working on creating a
genuine single window clearance mechanism and mapping the entire land bank
available for the industry and industrial development. Traders may take note of
a private report stating that the RBI to slash up to 75 bps -- 25 bps on August
6 and another 50 bps in October, if the COVID-19 is brought under control by
October. Besides, the government has extended the due date for filing annual
return by composition dealers for 2019-20 till August 31. However, rising
coronavirus cases may impact the markets. India has recorded nearly 29,000
Covid-19 cases in the past 24 hours, taking its total number of Covid-19 cases
to 937,487. With over 550 deaths on Tuesday, the country's death toll has now
reached 24,315. Meanwhile, SEBI has extended the deadline till August 15 for
sending public comments on a report on social stock exchange which allows for
direct listing of non-profit organisations. Auto stocks will be in focus with
SIAM's statement that India's auto sales volume will take another 3-4 years to
reach 2018 levels, as the coronavirus-induced lockdown hurt monthly revenue and
increased pressure on a sector already reeling from poor demand. There will be
some reaction in insurance stocks as IRDAI asked insurers to give 5% discount
on Corona Kavach premium to doctors and health workers, and ensure that
hospitals do not deny cashless treatment to insured persons in conformity with
the terms of policy.
Support
and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,607.35
|
10,528.28
|
10,721.03
|
BSE Sensex
|
36,033.06
|
35,760.95
|
36,421.63
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
State Bank of India
|
622.43
|
186.35
|
183.20
|
190.90
|
Tata Motors
|
469.26
|
105.20
|
103.68
|
107.13
|
ICICI Bank
|
340.33
|
346.05
|
340.28
|
352.13
|
Bharti Airtel
|
323.29
|
588.40
|
579.03
|
597.28
|
Reliance Industries
|
310.74
|
1,915.00
|
1,887.63
|
1,942.03
|
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