NSE Intra-day chart (05 July 2019)
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Market Commentary 08 July 2019
Benchmarks to get a negative start amid weakness in Asian peers

 

Union Budget failed to cheer Indian equity benchmarks on Friday, with both the larger peers, Sensex and Nifty, closing lower by 395 and 135 points, respectively. Markets made a positive start of the day, aided by Former Finance Minister Arun Jaitley's statement that Indian economic growth graph was on an upward trajectory after past policy uncertainties have been replaced by certainties. Some support also came with reports that Ministry of Commerce and Industry has started an exercise to review the current Foreign Trade Policy 2015-20, in order to boost exports & domestic manufacturing and to reduce trade deficit. However, in noon deals, markets turned negative to end in red terrain, after announcement of Union Budget. Domestic sentiments got hampered after Moody's said there are risks of India missing 3.3 per cent fiscal deficit target for the current financial year if tax revenue falls short of projection. The Budget 2019-20 lowered fiscal deficit projection for the current financial year to 3.3 per cent from 3.4 per cent targeted in the Interim Budget 2019-20 in February. The street remained pessimistic, as the US dragged India to the WTO by filing a complaint against New Delhi's move to increase customs duties on 28 American goods, alleging the decision is inconsistent with the global trade norms. Finally, the BSE Sensex lost 394.67 points or 0.99% to 39,513.39, while the CNX Nifty was down by 135.60 points or 1.14% to 11,811.15.

 

The US markets ended slightly lower on Friday, but recovered from day's low points, after the monthly government payrolls report estimated the economy added a better-than-expected 224,000 jobs in June, reducing the chances of multiple Federal Reserve rate cuts by the end of the year. The Labor Department report showed a substantial reacceleration in the pace of US job growth in the month of June. The report said employment surged up by 224,000 jobs in June after edging up 72,000 jobs in May. Street had expected employment to increase by about 160,000 jobs. While the data points to a rebound in the labor market following the weakness seen in May, the report dampened investor hopes for a near-term interest rate cut by the Federal Reserve. Despite the stronger than expected job growth, the report said the unemployment rate inched up to 3.7 percent in June from 3.6 percent in May. The unemployment rate had been expected to hold steady. The uptick in the unemployment rate reflected an increase in the size of the labor force, which expanded by 335,000 people compared to the 247,000-person jump in the household survey measure of employment. Besides, Fed Chairman Jerome Powell sits down for two days of Congressional testimony and the central bank releases the minutes of its latest monetary policy meeting in the next week. Dow Jones Industrial Average declined 43.88 points or 0.16 percent to 26922.12, Nasdaq fell 8.44 points or 0.10 percent to 8161.79 and S&P 500 was down by 5.41 points or 0.18 percent to 2990.41.

 

Crude oil futures ended higher on Friday as tensions over Iran and an extension to output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies supported the prices. Iran threatened to capture a British ship after British forces seized an Iranian tanker in Gibraltar over accusations the ship was violating EU sanctions on Syria. Besides, the OPEC and allied producers agreed to extend their production-cut agreement through March 2020. However, a jump in the US dollar, following strong US jobs data, capped the gains in crude prices. The US Labor Department said nonfarm employers added 224,000 jobs last month, the most in five months. Benchmark crude oil futures for August rose 17 cents or 0.3 percent to settle at $57.51 a barrel on the New York Mercantile Exchange. September Brent gained 93 cents or 1.5 percent to settle at $64.23 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally higher against dollar on Friday, as bankers and exporters took to selling of American currency. Sentiments were positive with Former Finance Minister Arun Jaitley's statement that Indian economic growth graph was on an upward trajectory after past policy uncertainties have been replaced by certainties. However, gains remain capped as cautiousness remained in markets after Moody's said there are risks of India missing 3.3 per cent fiscal deficit target for the current financial year if tax revenue falls short of projection. The Budget 2019-20 lowered fiscal deficit projection for the current financial year to 3.3 per cent from 3.4 per cent targeted in the Interim Budget 2019-20 in February. On the global front, the dollar was steady on Friday as traders held off on making big bets ahead of the closely-watched US non-farm jobs report that could influence the course of near-term Federal Reserve policy. Finally, the rupee ended at 68.42, 8 paise stronger from its previous close of 68.50 on Thursday.

 

The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 3645.23 crore against gross selling of Rs 3089.27 crore, while in the debt segment, the gross purchase was of Rs 1023.94 crore with gross sales of Rs 720.42 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.16 crore against gross selling of Rs 0.78 crore.

 

The US markets ended marginally in red on Friday following an unexpectedly strong US payrolls report that led investors to reassess how dovish a stance the Federal Reserve may take at its next meeting. Asian markets are trading lower on Monday after a strong jobs report last Friday stateside moderated expectations that the US Federal Reserve could soon be making a move on interest rates. Indian markets snapped four-day gaining streak and ended lower on Friday mainly on the back of late hour selloff as Budget proposals failed to cheer investors sentiment. Today, the start of new week is likely to be pessimistic mirroring weakness in Asian peers. Traders will be eyeing on the release of India's industrial production (IIP) and Consumer price index (CPI) data for the month of May and June respectively, on June 12. With the start of the first quarter earnings season market participants will be watching some important results to be released later in the week. IT bellwethers TCS and Infosys will report their quarterly numbers on July 9 and June 12, respectively. There will be some cautiousness with report that foreign institutional investors (FIIs) sold shares worth Rs 89 crore on a net basis in the cash market, while domestic institutional investors (DIIs) bought shares worth Rs 276 crore. Also, Moody's said there are risks of India missing 3.3 percent fiscal deficit target for the current financial year if tax revenue falls short of the projection. The Budget 2019-20 lowered fiscal deficit projection for the current financial year to 3.3 percent from 3.4 percent targeted in the Interim Budget 2019-20 in February. Meanwhile, Cabinet Secretary P.K. Sinha has called meeting to discuss $5 trillion economy vision. Sinha has asked various departments of Finance Minsitry for a meeting to discuss the vision, policy intervention, investment and departmental responsibilities towards achieving the target of a $5 trillion economy by 2025. The vision to create India, a $5 trillion economy was announced by Finance Minister Nirmala Sitharaman during her Union Budget 2019 spech on Friday. There will be some buzz in the non-banking finance companies (NBFCs) with report that quickly acting on a Budget proposal to offer credit guarantee to higher-rated asset pools of financially sound non-banking finance companies, the Reserve Bank on Friday allowed banks to offer additional liquidity against their excess G-secs holdings, with immediate effect. The move will release an additional liquidity worth Rs 1.34 trillion to banks, which can be used for on-lending to shadow banking companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,811.15

11,745.45

11,929.30

BSE Sensex

39,513.39

39,292.38

39,883.41

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

2,205.47

88.15

84.75

94.20

ITC

370.47

279.45

271.02

284.87

SBIN

300.19

370.65

366.57

374.17

Indiabulls Housing Finance

218.68

727.35

705.32

747.42

NTPC

214.59

136.50

133.33

141.73

 

  • Hero MotoCorp is working on several electric vehicle projects even as it has asked the government for a more cautious, clear and realistic roadmap towards the adoption of such technology in the country. 
  • Maruti Suzuki India has reported 15.61% fall in its production to 111,917 vehicles in June 2019, as compared to 132,616 vehicles in June 2018. 
  • Tata Motors owned JLR has unveiled major investment plans for the production of its new electric car models in the UK. 
  • Yes Bank has acquired over 9 percent shares of Eveready by invoking pledged shares following loan default by a group company.
News Analysis