NSE Intra-day chart (01 August 2018) | | | Top Gainers | | | Top Losers | | | World Indices | | | Indices | | | FII Activity(Rs. Cr) | | |
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Market Commentary | | 02 August 2018 | |
Markets likely to start slightly in red on weak global cues
Snapping record
hitting spree, Indian equity benchmarks ended the volatile day of trade with
marginal losses, after Reserve Bank of India (RBI) raised repo rate. Markets
started the session in green terrain with traders taking encouragement from the
commerce and industry ministry's data showing that growth of eight core sectors
expanded to 7-month high of 6.7% in June on the back of better performance by
cement, refinery and coal segments. Some support also came with a private
report that the Indian economy is likely to have witnessed solid economic
growth in the April-June quarter but leading indicators suggest a slowdown in
the coming months. The report stated that GDP growth to peak in April-June
quarter and then moderate to 7.2% in the second half of 2018 from around 7.8%
in first half. Traders also took note of report that the United States on
Monday designated India as a Strategic Trade Authorization-1 (STA-1) country -
a status that will allow the country to buy highly advanced and sensitive
technologies from America. However, sentiments turned pessimistic after the
RBI's Monetary Policy Committee (MPC) raised the repo rate by 25 basis points
to 6.50%. It is the first time since October 2013 that the rate has been
increased at consecutive policy meetings. Markets showed some strength to pare
all of their losses in last leg of trade, but the recovery proved short lived
and key gauges settled in red terrain, as sentiments turned downbeat on report
that growth in India's manufacturing industry slowed last month, largely
pressured by a modest weakening in demand and output, though overall conditions
remained solid. The Nikkei Manufacturing Purchasing Managers' Index, compiled
by IHS Markit, decreased to 52.3 in July from June's 53.1. Finally, the BSE
Sensex declined 84.96 points or 0.23% to 37,521.62, while the CNX Nifty was
down by 10.30 points or 0.09% to 11,346.20.
The US markets ended mostly lower
on Wednesday after the Federal Reserve left interest rates unchanged but
signaled another imminent rate increase. With the decision widely anticipated,
closer attention was paid to the accompanying statement, which included only
minor changes from the June statement. Further, the Fed is scheduled to hold
its next monetary policy meeting in late September, with CME Group's FedWatch
Tool currently indicating a 91 percent chance for a quarter-point rate hike.
Fresh worries over US-China trade friction too dampened sentiment amid report
that Donald Trump's administration is considering raising the proposed tariff
on $200 billion worth of Chinese imports to 25 percent from the 10 percent
announced last month. On the economic front, payroll processor ADP released a
report showing private sector employment increased by much more than expected
in the month of July. ADP said private sector employment jumped by 219,000 jobs
in July after climbing by an upwardly revised 181,000 jobs in June. The street
had expected an increase of about 185,000 jobs compared to the addition of
177,000 jobs originally reported for the previous month. Meanwhile, a separate
report from the Institute for Supply Management showed a slowdown in the pace
of growth in manufacturing activity in the month of July. The S&P 500 lost
2.93 points or 0.10 percent to 2813.36 and the Dow Jones Industrial Average was
down by 81.37 points or 0.32 percent to 25,333.82, while the Nasdaq jumped
35.50 points or 0.46 percent to 7,707.29.
Crude oil
futures ended lower for the second straight day on Wednesday on account of
surprise rise in US crude inventories. The Energy Information Administration
(EIA) reported that domestic crude supplies rose by 3.8 million barrels for the
week ended July 27. However, EIA data showed total domestic crude production
for the week fell by 100,000 barrels a day to 10.9 million barrels a day. That
was from a record level of 11 million barrels a day. Besides, investors also
remained cautious that global supply levels are on the upswing, as production
from the Organization of the Petroleum Exporting Countries (OPEC) and Russia
increased. Benchmark crude oil futures for September lost $1.10 or 1.6 percent
to settle at $67.66 a barrel on the New York Mercantile Exchange. October Brent
crude declined $1.82 or 2.5 percent at $72.39 a barrel on London's
Intercontinental Exchange.
Indian
rupee strengthened for second consecutive session on Wednesday, on dollar
selling by exporters and banks. The rupee sentiment was buoyed after the RBI's
Monetary Policy Committee (MPC) raised the repo rate by 25 basis points to
6.50%. It is the first time since October 2013 that the rate has been increased
at consecutive policy meetings. Some support also came with a report that
growth of eight core sectors expanded to 7-month high of 6.7% in June due to
better performance by cement, refinery and coal segments. However, further
up-move got restricted as anxiety remained among traders with weather
forecasting agency Skymet cutting 2018 monsoon estimate to 92% of the long
period average (LPA) from the earlier normal monsoon prediction, noting that as
of now, the oceanic parameters are not at all favourable for enhancing monsoon
rain during the second half of the season. On the global front, Pound Sterling
eased lower on Wednesday after July's IHS Markit manufacturing PMI left traders
with little incentive to place big bets on the currency ahead of the Bank of
England (BoE) interest rate decision due Thursday. Finally, the rupee ended at
68.43, 12 paise stronger from its previous close of 68.55 on Tuesday.
The FIIs as per Wednesday's data
were net buyers in equity and debt segments both. In equity segment, the gross
buying was of Rs 6185.95 crore against gross selling of Rs 5282.23 crore, while
in the debt segment, the gross purchase was of Rs 997.74 crore with gross sales
of Rs 290.19 crore. Besides, in the hybrid segment, the gross buying was of Rs
2.92 crore against gross selling of Rs 12.51 crore.
The US stocks ended mostly lower
on Wednesday, after the Federal Reserve left interest rates unchanged but
signaled another imminent rate increase. Asian markets were trading mostly in
red in early deals on Thursday, with sentiment fragile after the latest
escalation in Sino-US trade war while global bond markets were rattled by
Washington's increased borrowing and Japan's new tolerance for higher yields.
Indian equity markets ended Tuesday's session in negative territory, recovering
partly from the day's low, followed by Reserve Bank of India's (RBI) decision
to hike key interest rates by 25 basis points to 6.5%. Today, the markets are
likely to make flat-to-negative start amid weak global cues. Traders will be
concerned with RBI Governor Urjit Patel flagging the risks to macroeconomic stability
from a potential currency war in the wake of rising global trade tensions.
Also, there will be negative reaction on EEPC India chairman Ravi Sehgal's
statement that the 25 basis points increase in the interest rates by the RBI is
a big negative for exporters, as they would become less competitive in a tough
global market that is already facing the threat of tariff war. However, traders
may get some support later in the day with report that RBI has maintained its
growth outlook for the economy, estimating the country's Gross Domestic Product
(GDP) to grow at 7.4% in 2018-19. It noted that GDP growth would range between
7.5-7.6% in H1 and 7.3-7.4% in H2. There will be some support with the Ministry
of Finance's statement that Goods and Services Tax (GST) revenue collections
for the month July reached Rs 96,483 crore, which remains broadly on expected
lines. The tax revenue from GST collection increased in comparison to Rs 95,610
crore seen during the month of June. Meanwhile, the Cabinet has approved GST laws
amendments which included hiking threshold limit for availing composition
scheme dealers to Rs 1.5 crore, among other things. There will be lots of
earnings announcements too, to keep the markets in action.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,346.20
|
11,309.65
|
11,386.65
|
BSE Sensex
|
37,521.62
|
37,399.06
|
37,678.02
|
Nifty Top volumes
Stock
|
Volume
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata Motors
|
532.83
|
265.05
|
254.03
|
272.03
|
SBI
|
338.85
|
295.10
|
289.63
|
299.28
|
ICICI Bank
|
155.82
|
299.30
|
295.52
|
304.37
|
Vedanta
|
146.90
|
218.20
|
213.27
|
226.07
|
ITC
|
146.25
|
301.60
|
297.48
|
304.33
|
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