NSE Intra-day chart (14 August 2018)
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Market Commentary 16 August 2018
Markets to make a cautious start amid weak global cues

 

Bulls made come back on Dalal Street after two sessions of disappointments, with frontline gauges recapturing their crucial 37,800 (Sensex) and 10,400 (Nifty) levels. Sentiments remained jubilant since beginning of the trade as traders took encouragement with better-than-expected macro-economic data. The Central Statistics Office's (CSO) data showed that India's Retail inflation fell to nine-month low of 4.17% in July on account of slowdown in prices of vegetables and fruits. Its previous low was in October 2017 at 3.58%. Retail inflation, measured by Consumer Price Index (CPI) had hit a five-month high of 5% in June. Traders also took some support with a private report that India's foreign reserves are in a comfortable range and another 5-8% fall in reserves will not jeopardise the situation. Traders got some relief with a report that micro and small enterprises (MSEs) are getting more and more optimistic about their business prospects. The CriSidEx index, which measures sentiment among MSEs rose to a three-quarter high of 127 in the first quarter of the current financial year, up from 121 in the fourth quarter of the previous financial year. Buying accelerated in later part of the trade after Wholesale price index (WPI) inflation eased to 5.09% in the month of July 2018, supported by fall in the prices of minerals, crude petroleum & natural gas. However, the markets trimmed some of their gains in dying hour of the trade, as the Reserve Bank of India (RBI) in its annual inspection of banks' books examined 200 stressed accounts dating back to 2011. Some concerns came after the Prime Minister's Office directs the Finance Ministry to take action against tax evaders under the GST regime. Finally, the BSE Sensex surged 207.10 points or 0.55% to 37,852.00, while the CNX Nifty was up by 79.35 points or 0.70% to 11,435.10.

 

The US markets ended lower on Wednesday after Turkey slapped levies on the US imports, bringing geopolitical tensions between the US and its trading partners back on investors' radars. Turkey raised tariffs on a number of American products, in the latest escalation in tensions between the two countries. President Donald Trump raised duties on Turkish aluminum and steel last week; the latest tariffs from Turkey were in response to those conscious attacks. While the Turkish economy is relatively small and few US companies have significant direct exposure to it, the situation is seen as adding to the uncertain geopolitical environment, one highlighted by worsening trade relations between the US and its major partners. However, the markets pared some of their early losses after Qatar reportedly pledged to invest $15 billion in Turkey following a meeting between Turkish President Recep Tayyip Erodgan and Qatar's Sheikh Temim bin Hamed Al Sani. The report that helped the lira rebound strongly against the buck to trade at 5.888. On the economic front, the Federal Reserve released a report showing production edged slightly higher in the month of July. The Fed said industrial production inched up by 0.1% in July after jumping by an upwardly revised 1.0% in June. The uptick in production reflected growth in manufacturing output, which rose by 0.3% in July after climbing by 0.8% in June. Besides, a report released by the Commerce Department showed a modest uptick in US business inventories in the month of June. Dow Jones Industrial Average dropped 137.51 points or 0.54 percent to 25162.41, the S&P 500 declined 21.59 points or 0.76 percent to 2818.37 and Nasdaq was down by 96.78 points or 1.23 percent to 7774.12.

 

Crude oil futures ended lower on Wednesday after data showed an unexpected and surge in US crude inventories. The Energy Information Administration (EIA) said crude inventories rose 6.8 million barrels in the week ended August 10. Besides, prices have been on a downward trend after the release of the American Petroleum Institute (API) data on Tuesday afternoon. The American Petroleum Institute said stocks had risen by 3.7 million barrels. The confirmation by the EIA drove prices lower as traders continue to monitor the situation between the US and Turkey. Certainly, concerns about Turkey and the possibility that spillover effects from the country's currency crisis could affect global growth and demand for crude have been cited as a weight on overall commodity prices. Benchmark crude oil futures for September plunged $2.03 or 3 percent to settle at $65.01 a barrel on the New York Mercantile Exchange. October Brent crude dropped $1.70 or 2.4 percent at $70.76 a barrel on London's Intercontinental Exchange.

 

Snapping three day falling streak, Indian rupee ended marginally higher against dollar on Tuesday, on the back of better-than-expected macro-economic data. India's retail inflation cooled down to 4.17% in the month of July 2018, mainly on the back of slowdown in prices of vegetables and fruits, while Wholesale price index (WPI) inflation eased to 5.09% in the month of July 2018, supported by fall in the prices of minerals, crude petroleum & natural gas. Moreover, a strong rebound in domestic equities too supported the rupee. However, dollar's strength against major global currencies overseas restricted the local unit's further up move. On the global front, euro hovered near one-year lows against the dollar on Tuesday as the Turkish lira wobbled, on worries economic troubles in Turkey could hit European banks and spread to other emerging economies. Finally, the rupee ended at 69.89, 2 paise stronger from its previous close of 69.91 on Monday.

 

The FIIs as per Tuesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3503.16 crore against gross selling of Rs 4428.93 crore, while in the debt segment, the gross purchase was of Rs 385.68 crore with gross sales of Rs 1686.52 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.15 crore against gross selling of Rs 0.64 crore.

 

The US markets fell on Wednesday as investors turned risk-averse on disappointing earnings and escalating global tariff worries. Asian markets were trading mostly in red on Thursday, taking cues from losses on Wall Street after Chinese internet giant Tencent reported a fall in quarterly profit - a disappointing result that weighed on the tech space stateside. The Indian markets before going for a holiday had shown a smart bounce back on Tuesday from previous two sessions' losses, with Sensex and Nifty gaining more than half a percent each on the back of positive macroeconomic data. Today, the markets are likely to make a cautious start amid weak global cues. There will be some cautiousness with report that India's trade deficit soared to a near five-year high of $18 billion. The commerce ministry data showed that the country's exports rose by 14.32% to $25.77 billion in July mainly on account of better performance of gems and jewellery sector as well as petroleum products, while imports during July were valued at $43.79 billion, a growth of 28.81% compared to $33.99 billion in the year ago period. Also, there will be negative reaction on India Ratings' report that if the steep decline in the household savings rate -- which has fallen to 16.3% from 23.6% between fiscals 2012 and 2017 -- continues, it may pose a serious challenge to overall growth and the macroeconomic stability. However, traders may react to some positive statements by the Prime Minister Narendra Modi that structural reforms of four years by his government have transformed the Indian economy from being among world's fragile five to an elephant that has started to run and made it a destination of multi-trillion dollar investment. There will be some support with FICCI's latest Economic Outlook Survey stated that the Indian economy is expected to grow at 7.4% in the current fiscal, higher than the previous year. Traders will also be reacting to Union Minister Arun Jaitley's statement that India has comfortable foreign exchange reserves to deal with any undue volatility in the currency market and developments are being closely monitored.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,435.10

11,386.45

11,468.10

BSE Sensex

37,852.00

37,717.01

37,959.70

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

SBI

252.95

294.90

292.52

298.12

Sun Pharmaceutical Industries

250.02

601.80

571.27

621.17

Tata Steel

240.31

578.95

565.33

589.78

ICICI Bank

153.14

332.45

326.93

335.73

Yes Bank

123.51

382.50

372.33

388.48

 

  • Sun Pharma has reported consolidated net profit at Rs 982.51 crore for Q1FY19 as against net loss of Rs 424.92 crore for Q1FY18.  
  • Infosys will set up a new software development centre in Kolkata with an investment of Rs 100 crore. 
  • Tata Steel has received approval for raising funds through issue of debt securities of up to Rs 12,000 crore in the form of NCDs on private placement basis in one or more tranches. 
  • Grasim Industries has reported a rise of 25.34% in its consolidated net profit of Rs 1,116.07 crore for Q1FY19 as compared to Rs 890.45 crore for Q1FY18.
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