Indian equity
benchmarks gave up most of the day's gains to end mildly higher on Thursday, as
global equities took a breather after recent gains ahead of the US central bank
chief's speech. It was the fifth straight session of gains for the key indices.
Markets showcased a strong opening, as traders took some encouragement with
Commerce Secretary Anup Wadhawan's statement that the department of commerce is
proactively engaging with state governments to promote exports. He also
requested state governments to extend their support to take forward the
initiatives to boost country's outbound shipments. Traders also took note of
report that the Reserve Bank of India (RBI) will rationalise regulations for
overseas direct investment (ODI) in order to make them simpler and more
principles-based. The headline indices held onto gains in afternoon session,
taking support from Governor Shaktikanta Das' statement that while the Reserve
Bank of India's moratorium on repaying loans was a temporary solution in the
context of COVID-19 lockdown, the resolution framework is expected to give a
durable relief to borrowers facing the pandemic-related stress. However, Indian
shares eked out most of day's gain in late hour of trading session, as traders
got anxious with SBI Research report that disposable income growth of
households fell to 0.8 times in fiscal 2019-20 as compared to an average growth
of 2.3 times in the preceding six fiscals. Some pessimism also came with former
Finance Secretary S C Garg stating that the RBI transferred only 44 percent of
its surplus or income to the government, which is the lowest in percentage
terms in the last seven years. Earlier, the RBI board approved a surplus
transfer of Rs 57,128 crore to the central government for Accounting Year
2019-20 (July-June). Finally, the BSE Sensex rose 39.55 points or 0.10% to
39,113.47, while the CNX Nifty was up by 9.65 points or 0.08% to 11,559.25.
The US markets
ended mostly higher on Thursday, with the S&P 500 index notching another
record finish, after Federal Reserve Chair Jerome Powell announced a widely
expected shift with regard to the price-stability side of the central bank's
dual mandate. Powell said that the Fed will change its approach to a flexible
form of average inflation targeting. The Fed chief stressed that the longer-run
goal continues to be an inflation rate of 2 percent but noted inflation will
average less than that if it runs below 2 percent following economic downturns
and never moves above that level even when the economy is strong. Powell said
households and businesses will come to expect this result, meaning that
inflation expectations would tend to move below our inflation goal and pull
realized inflation down. On the economic data front, economic activity in the
US contracted slightly less than initially estimated in the second quarter,
according to a report released by the Commerce Department, although the report
still showed a sharp drop in gross domestic product. The report said real gross
domestic product plummeted by 31.7 percent in the second quarter compared to
the previously reported 32.9 percent nosedive. Street had expected the plunge
in GDP to be revised to 32.5 percent. Meanwhile, the Labor Department released
a report showing initial jobless claims pulled back in the week ended August
22nd. The report said initial jobless claims dropped to 1.006 million, a
decrease of 98,000 from the previous week's revised level of 1.104 million.
Street had expected jobless claims to decline to 1.000 million from the 1.106
million originally reported for the previous week.
Crude oil
futures ended lower on Thursday as traders bet on a quick recovery for the
energy market in the Gulf of Mexico region after one of strongest hurricanes in
years made landfall near the heart of the US refining industry. Meanwhile, the
Interior Department's Bureau of Safety and Environmental Enforcement on
Thursday estimated that 84.3% of current oil production in the Gulf of Mexico
was shut in, unchanged from a day earlier. It also said 60.1% natural-gas
production was shut in Thursday, down from 60.9% a day earlier. Crude oil
futures for October declined 35 cents or 0.8 percent to settle at $43.04 a
barrel on the New York Mercantile Exchange. October Brent crude dropped 55
cents or 1.2 percent to settle at $45.09 a barrel on London's Intercontinental
Exchange.
Indian rupee ended significantly higher against dollar on
Thursday, on persistent selling of the American currency by exporters. This is
the second consecutive session when the rupee was traded higher against dollar.
Traders remained optimistic after RBI Governor Shaktikanta Das said the central
bank has not exhausted its ammunition to deal with the current situation due to
the coronavirus pandemic. Some support also came with Commerce Secretary Anup
Wadhawan's statement that the department of commerce is proactively engaging
with state governments to promote exports. He also requested state governments
to extend their support to take forward the initiatives to boost country's
outbound shipments. On the global front; dollar was slightly higher, as
investors focused on the US Federal Reserve Chair's speech at the virtual
Jackson Hole conference later in the session. Finally, the rupee ended at
73.82, 48 paise stronger from its previous close of 74.30 on Wednesday.
The FIIs as per Thursday's data were net buyers in equity
segment and debt segment both. In equity segment, the gross buying was of Rs
6834.58 crore against gross selling of Rs 5180.49 crore. In the debt segment,
the gross purchase was of Rs 1937.12 crore with gross sales of Rs 1520.46
crore. In the hybrid segment, the gross buying was of Rs 38.81 crore against
gross selling of Rs 6.91 crore.
The US markets
ended a choppy session mostly higher on Thursday after Federal Reserve Chairman
Jerome Powell said policy makers would no longer pre-emptively hike interest
rates to stave off inflation. Asian markets are trading mostly higher in early
deals on Friday following positive cues from US markets. Indian equity
benchmarks failed to hold gains on Thursday and finally ended the trading
session marginally higher. Today, markets are likely to open in green amid
positive trend from Asian peers. Support may come as RBI Governor Shaktikanta
Das appreciated the government's response to the COVID-19 crisis as being
fiscally very prudent and very calibrated.
He said I cannot speak for the government. But I just want to say that
in the central bank, as observers of what is happening in the country in the
fiscal policy, I think the government's response has been very prudent and very
calibrated. Meanwhile, Principal Scientific Adviser K Vijay Raghavan said for
achieving Aatmanirbharata (self-reliance) in the area of defence, it is
necessary to achieve self-sufficiency in other areas, and also map core capabilities
and efficiencies in the country. However, Finance Minister Nirmala Sitharaman
after the 41st meeting of the GST Council said the economy is facing an
extraordinary Act of God situation, which may result in economic contraction.
The Centre placed before the GST Council two options for borrowing by states to
meet the shortfall in GST revenues, pegged at Rs 2.35 lakh crore in the current
fiscal. As per the Centre's calculation, the compensation requirement by the
states in the current fiscal would be Rs 3 lakh crore, of which Rs 65,000 crore
is expected to be met from the cess levied in the GST regime. Hence, the total
shortfall is estimated at Rs 2.35 lakh crore. Traders may take note of report
that the Centre for Monitoring Indian Economy said Younger workforce in the age
group of 25-29 years has seen the highest number of job losses during the
pandemic while fresh recruitments in this category is low, indicating lower
demand for new labour and inability of the enterprises to hire and train fresh
recruits during this time. There will be some buzz in oil stocks on private
report said that India's oil-product demand is set to slump to a five-year low
this financial year, with a bleak outlook for diesel consumption as the
nation's truck operators idle vehicles and consider cutting the size of their
fleets. There will be some reaction in agriculture sector related stocks with
private report stating that the indispensability of the agriculture sector in
the country has been brought to focus by the Covid-19 pandemic and it remained
the silver lining for 2020-21.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous
close
|
Support
|
Resistance
|
NSE Nifty
|
11,559.25
|
11,527.45
|
11,604.20
|
BSE Sensex
|
39,113.47
|
38,997.95
|
39,277.99
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata Motors
|
1813.83
|
143.60
|
139.65
|
147.20
|
SBIN
|
809.99
|
216.00
|
212.17
|
218.17
|
Zee Entertainment
|
592.48
|
209.00
|
203.90
|
215.30
|
IndusInd Bank
|
485.69
|
604.70
|
577.88
|
625.63
|
ITC
|
472.13
|
194.35
|
192.53
|
197.53
|
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