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NSE Intra-day chart (18 July 2018)
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Market Commentary 19 July 2018
Markets likely to make positive start on firm global cues

Wednesday turned out to be a disappointing day of trade for Indian equity benchmarks, with frontline gauges settling below their crucial 11,000 (Nifty) and 36,400 (Sensex) levels, as traders opted to book profit in second half of trade after the opposition parties tabled a no-confidence motion against Prime Minister Narendra Modi's government. Markets started the session on an optimistic note with Confederation of Indian Industry's (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. Traders also took 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. Traders also got some confidence with the International Monetary Fund (IMF) saying that India's Gross Domestic Product (GDP) growth remains quite robust into the future, despite marginally trimming the country's growth projection for 2018 due to high oil prices and a tight monetary policy regime. However, markets took U-turn and entered into red terrain in second half of the day's trade after Lok Sabha Speaker Sumitra Mahajan accepted the no-confidence motion moved against the BJP Government on the first day of the Monsoon Session that began in Parliament on Wednesday. Some anxiety was also among the local traders with report that 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. In the sectoral landscape, all the indices except Oil & Gas and Energy were trading in the red. Traders also remained concerned with a private study report pointing out discrepancies in FDI data and also suggested that the RBI should regenerate foreign fund inflows and outflows data with detailed information at least for the past five years with a view to providing a more realistic picture of overseas investments. Finally, the BSE Sensex declined 146.52 points or 0.40% to 36,373.44, while the CNX Nifty was down by 27.60 points or 0.25% to 10,980.45.

 

The US markets ended mostly in green on Wednesday, as an anecdotal account of business conditions in the Federal Reserve's 12 districts painted an upbeat picture of the domestic economy. The Fed's Beige Book revealed a domestic economy that has rapidly expanded, but one that has run out of room to grow much faster as shortages of skilled workers and rising costs of raw materials risk impeding another leg of expansion. The anecdotal account of business conditions in the Fed's 12 districts showed that 11 regions of the country were growing at a modest pace or even faster. Only the states around St. Louis reported slight growth. Thus far, Wall Street moves have been influenced by economic reports and earnings. The most recent data, indicates that nearly 90% of the companies that have thus far reported quarterly results have beaten profit forecasts, establishing a solid trend for Wall Street. On the economic front, the Commerce Department released a report showing a sharp pullback in new residential construction in the US in the month of June. The Commerce Department said housing starts plunged by 12.3% to an annual rate of 1.173 million in June after jumping by 4.8% to a revised rate of 1.337 million in May. With the much bigger than expected decrease, housing starts fell to their lowest annual rate since hitting 1.158 million last September. Building permits, an indicator of future housing demand, also fell by 2.2% to an annual rate of 1.273 million in June after tumbling by 4.6% to a rate of 1.301 million in May. The Dow Jones Industrial Average surged 79.40 points or 0.32 percent to 25199.29 and the S&P 500 gained 6.07 points or 0.22 percent to 2815.62, while the Nasdaq was down by 0.67 points or 0.01 percent to 7854.44.

 

Crude oil futures ended higher on Wednesday, finding support from a bigger-than-expected decline in gasoline stocks, despite a surprise climb in domestic crude supplies and record weekly production. The Energy Information Administration (EIA) reported that domestic crude supplies climbed 5.8 million barrels for the week ended July 13.  The report also showed that domestic production climbed by 100,000 barrels a day to 11 million barrels a day. That's the highest weekly level on record, based on EIA data dating back to at least 1985. Benchmark crude oil futures for August gained 68 cents or 1 percent to settle at $68.76 a barrel on the New York Mercantile Exchange. September Brent crude rose 74 cents or 1 percent at $72.90 a barrel on London's Intercontinental Exchange.

 

In line with equity market, the Indian rupee ended lower against US dollar on Wednesday, due to fresh demand for the American currency from banks and importers. Traders remained cautious with report that 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. Some anxiety also spread among the local traders with a private study report pointing out discrepancies in FDI data and also suggested that the RBI should regenerate foreign fund inflows and outflows data with detailed information at least for the past five years with a view to providing a more realistic picture of overseas investments. The fall in the rupee was also triggered by dollar's strength against major global currencies overseas. On the global front, euro fell and yen slid to a six-month low on Wednesday as the dollar extended its rally following bullish comments from U.S. Federal Reserve Chairman Jerome Powell about the strength of the U.S. economy. Finally, the rupee ended at 68.62, 16 paise weaker from its previous close of 68.46 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4205.60 crore against gross selling of Rs 4790.75 crore, while in the debt segment, the gross purchase was of Rs 713.49 crore with gross sales of Rs 868.36 crore. Besides In the hybrid segment, the gross buying was of Rs 2.17 crore against gross selling of Rs 2.20 crore.

 

The US markets ended mostly higher on Wednesday, as the anecdotal account of business conditions in the Fed's 12 districts showed that 11 regions of the country were growing at a modest pace or even faster. Asian markets were trading in green on Thursday, taking cues from Wall Street's overnight advance as investors there parsed through stronger-than-expected corporate earnings. Indian equity markets ended lower after record rally in early trade on Wednesday, due to sustained selling in metal, auto and telecom stocks amid reports that the Modi government will face a no-trust vote on Friday. Today, the start is likely to be in green, following firm global cues. Traders may take note of a recent ASSOCHAM-Ashvin Parekh Advisory Services LLP (APAS) joint study stating that a developed corporate bond market is the need of the hour for India as an 8% economic growth cannot be achieved without a robust corporate capex cycle, more so as sole reliance on bank loans is not warranted, particularly when bank lending has been squeezed. Besides, retirement fund body The Employees' Provident Fund Organisation (EPFO) has invested Rs 489.46 billion in exchange-traded funds (ETFs) till June 30, 2018. Meanwhile, the government has initiated as many as 214 anti-dumping investigations up to December last year against China, with which India has a huge trade deficit. The trade deficit (difference between imports and exports) with China has increased to $63.12 billion in 2017-18 from $51 billion in the previous fiscal. There will be buzz in sugar sector related stocks with report that the government has decided to increase the minimum price sugar mills pay to cane growers by Rs 20 per quintal to Rs 275 per quintal for the next marketing year starting October. There will be buzz in PSU banking stocks with report that after approving capital support for five public sector banks (PSBs), the finance ministry is assessing the needs of 2-3 more banks and fund infusion in them would be done by the end of the second quarter of the current fiscal. There will be buzz in airline industry stocks with ICRA's latest report that the domestic airline industry is expected to post losses to the tune of Rs 3,600 crore in the current fiscal on rise in crude oil prices and falling rupee. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,980.45

10,932.43

11,052.33

BSE Sensex

36,373.44

36,213.62

36,640.57

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ICICI Bank

229.09

262.70

260.02

266.37

SBI

176.41

259.55

256.30

262.65

ONGC

165.72

160.30

156.50

164.45

Tata Steel

164.51

504.25

491.18

527.13

Yes Bank

104.72

383.65

378.43

388.43

 

  • TCS has signed a partnership agreement with Total to create a digital innovation center in India. 
  • ONGC has received board's approval to exit Pawan Hans by selling its entire 49% stake as it looks to cut debt and consolidate resources in core oil and gas business. 
  • Sun Pharmaceutical Industries including its subsidiaries and/or associate companies has received approval from the USFDA for Infugem Injection. 
  • HDFC Bank has raised Rs 8,500 crore by issuing over 3.9 crore shares on preferential basis to its parent HDFC.
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