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NSE Intra-day chart (17 July 2018)
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Market Commentary 18 July 2018
Markets to make optimistic start

 

Indian equity benchmarks ended the Tuesday's trade in green terrain, with frontline gauges recapturing their crucial 11,000 (Nifty) and 36,500 (Sensex) levels. Despite cautious start, markets gained momentum and traded in positive trajectory for most part of the day's trade, as sentiments remained up-beat with report that India Inc said the spike in inflation, which rose to over 4-year high of 5.77% in June, was temporary as it is caused by disruptions in supply chain, and inflation is expected to be benign on the back of a good monsoon in the near future. Some support also came with report stating that corporate India announced deals worth $74.8 billion in the January-June period, registering a 90% jump over last year, largely driven by big ticket consolidations. Traders also took note of a report that the Indian government on July 16 invited Omani companies to invest in India and benefit from Make in India programme aimed to encourage manufacturing. Markets changed gear in last leg of trade to end near intraday highs as traders took encouragement with some better-than-expected Q1FY19 numbers posted by bluechip companies. Some optimism also spread among the local traders with private report projecting the Indian economy to record 7.4% growth in 2018-19. Traders shrugged off report stating that the International Monetary Fund (IMF) trimmed India's growth projection by 0.1 percentage point to 7.3% for 2018-19 against the earlier estimate of 7.4%, owing to high oil prices and a tight monetary policy regime. IMF said that India's growth rate is expected to rise to 7.3% in 2018 (2018-19) and 7.5% in 2019 (2019-20), the projection is 0.1 and 0.3 percentage point lower for 2018 and 2019, respectively. Traders also paid no heed towards IHS Markit Business Outlook survey stating that the Indian business sentiment regarding future activity remained subdued in June amid intense competition, high fuel prices and strong cost pressures. Meanwhile, Niti Aayog CEO Amitabh Kant said that For India to grow at 9-10% for three decades consistently and reap the dividend of demographic advantage, promoting entrepreneurship among women has to be the key strategy. Finally, the BSE Sensex surged 196.19 points or 0.54% to 36,519.96, while the CNX Nifty was up by 71.20 points or 0.65% to 11,008.05.

 

The US markets ended higher on Tuesday, following Federal Reserve Chairman Jerome Powell indicated the US central bank wouldn't move too quickly in changing monetary policy, and that it would be flexible in the face of changing conditions. Powell stated the US economy has grown at a solid pace so far this year and noted the latest data suggests economic growth in the second quarter was considerably stronger than in the first quarter. The Fed chief also described recent inflation data as encouraging, with consumer price inflation a little above the central bank's 2 percent target. Besides, traders digested the latest round of corporate earnings, which came in mixed but nevertheless showed strong growth. On the economic front, the Fed released a report showing industrial production increased in line with street estimates in June amid a rebound in auto production. The report said industrial production climbed by 0.6 percent in June after falling by a downwardly revised 0.5 percent in May. A separate report from the National Association of Home Builders showed homebuilder confidence has held steady in the month of July. The report said the NAHB/Wells Fargo Housing Market Index remained unchanged in July after dipping to 68 in June. The unchanged reading matched street estimates. The Dow Jones Industrial Average surged 55.53 points or 0.22 percent to 25119.89, the S&P 500 gained 11.12 points or 0.40 percent to 2809.55 and the Nasdaq was up by 49.40 points or 0.63 percent to 7855.12.

 

After falling more than 4% in previous session, Crude oil futures ended marginally higher on Tuesday as traders remained concerned about changes in global production and an uncertain economic and political backdrop. Recent report of a production outage in Libya served as a reminder that overall supplies remain tight and the expiration of August crude options contributed to volatility in the market. Libya's National Oil Corporation declared force majeure on crude oil loadings as of July 16 at the Zawiya port. It cited reduced production at the Sharara oil field following the attack and abduction over the weekend of four employees of the company Akakus, which operates the field. Benchmark crude oil futures for August inched up by 2 cents to settle at $68.08 a barrel on the New York Mercantile Exchange. September Brent crude added 32 cents, or 0.5 percent at $72.6 a barrel on London's Intercontinental Exchange.

 

Indian rupee trimmed some of its early gains but still ended higher against the American currency on Tuesday, as fresh sale of the US currency by exporters paced up. Local currency got some support with report that India Inc said the spike in inflation, which rose to over 4-year high of 5.77 per cent in June, was temporary as it is caused by disruptions in supply chain, and inflation is expected to be benign on the back of a good monsoon in the near future. Some optimism also spread among the local traders with private report projecting the Indian economy to record 7.4% growth in 2018-19. However, strength in dollar overseas, as investors awaited US Federal Reserve Chairman Jerome Powell's first congressional testimony for hints on the pace of interest rate hikes, capped rupee's gains. Finally, the rupee ended at 68.46, 12 paise stronger from its previous close of 68.58 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 3973.55 crore against gross selling of Rs 4513.62 crore, while in the debt segment, the gross purchase was of Rs 288.92 crore with gross sales of Rs 280.41 crore. Besides in the hybrid segment, the gross buying was of Rs 0.74 crore against gross selling of Rs 0.44 crore.

 

The US markets ended higher on Tuesday, as investors took Federal Reserve chairman Jerome Powell's comments to suggest that the central bank is willing to slow down the pace of interest-rate increases if needed. Investors also continued dissecting the latest round of corporate earnings results. Asian markets were trading in green in early deals on Wednesday, after an upbeat assessment on the US economy from Federal Reserve Chairman Jerome Powell comforted investors wary of a blowout in protectionism. Buying intensified in the last hour of trade helped Indian equity markets to end Tuesday's session on positive note. Gains in oil marketing company stocks also helped the markets, as oil prices declined as crude export terminals in Libya have reopened and exports from other OPEC countries and Russia have improved. Today, the start is likely to be in green, following positive global cues. Traders will be getting encouragement with the Confederation of Indian Industry (CII) president Rakesh Bharti Mittal's statement that GDP growth at 7.5% plus was a very healthy and positive sign for Indian economy, noting that impact of sustained structural reforms is now being felt on the ground. There will be some support with a private report that inflation based on wholesale prices, which touched a 4-year high in June, seems to have peaked for this financial year, and is expected to glide down to around 4.1% by March 2019. Meanwhile, India's import bill of crude oil and petroleum products swelled 57% to $12.73 billion in June as compared to the same month last year. There will be some buzz in the PSU banking stocks with report that the finance ministry is likely to infuse about Rs 10,000 crore within a few days in some state-owned lenders including PNB, Corporation Bank and Central Bank of India, to help them meet regulatory capital requirement. There will be buzz in Textile sector stocks with report that the government doubled import duty on over 50 textile products -- like jackets, suits and carpets -- to 20%, a move that is aimed at promoting domestic manufacturing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,008.05

10,949.60

11,042.50

BSE Sensex

36,519.96

36,337.98

36,625.75

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

IOC

171.02

164.45

161.08

166.83

SBI

160.68

259.05

253.05

262.45

ICICI Bank

151.29

266.45

261.80

269.30

HPCL

141.69

281.30

273.03

286.53

Yes Bank

125.87

380.80

375.63

385.93

 

  • BEML and L&T has signed a MoU to jointly capitalise on the emerging opportunities in the domestic and export markets for defence products and systems. 
  • Tata Steel is looking to raise up to $3.1 billion through overseas loans in a bid to repay existing high-cost debt. 
  • Tata Motors has launched the Tata Nexon HyprDrive Self-Shift Gears - XMA, sporting the AMT gearbox in its best-selling XM variant.  
  • Adani Logistics, a subsidiary of Adani Ports & Special Economic Zone has signed an agreement with NYK Auto Logistics.
News Analysis

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Bharat Dynamics has secured export order worth $14.33 million towards supply of light weight torpedoes. With this, the company has achieved 65% of export target for the financial year 2018-19.

Bharat Dynamics is engaged i...