Tuesday brought positive vibes
for Indian equity markets, with Sensex and Nifty closing higher by around 0.75%
each. Key indices made a cautious start but soon gained momentum, aided with
Finance Minister Nirmala Sitharaman's statement that the government planned
steps to improve the state of the economy fairly quickly after getting inputs
from business leaders. Traders took a note of a report that India's economy
needs external capital flow to grow at nine per cent and touch $5 trillion in
the next five years. It also said that one of the positive thing in India is
the monsoon is good and expecting rural economy to pick up and therefore slowly
the country will see economy coming back to normalcy. Benchmarks extended their
gains in late afternoon session to trade near their intraday high points, on
account of positive European markets. The street remained optimistic, as the ASSOCHAM
expects the Reserve Bank of India (RBI) to cut the benchmark policy Repo rate
by 50 basis points or more, in the wake of a realistic assessment of the state
of economy which needs an immediate demand push and investment support by way
of reduced cost of borrowing. Meanwhile, the finance ministry has said that
banks have agreed to take measures as per RBI guidelines to review their
lending rates as they have not commensurately transmitted to borrowers benefits
of reduction in the policy rate by the RBI. Finally, the BSE Sensex gained
277.01 points or 0.75% to 36,976.85, while the CNX Nifty was up by 85.65 points
or 0.79% to 10,948.25.
The US markets ended in green
with gains of over one percent on Tuesday on account of bargain hunting, with
traders picking up stocks at reduced levels after the major averages ended
Monday's trading at their lowest closing levels in two months. A report stated
that the People's Bank of China set the midpoint for the Chinese currency at a
stronger than expected level also helped ease investor jitters. Traders were
too encouraged by China's central bank moving to restrain the fall in its
currency with a fix Tuesday at 6.9683 yuan. A breach of the 7-to-the dollar
level on Monday, interpreted by some as an intentional weakening of its
currency, helped to ignite a global stock market selloff and slump in bond
yields. A recent drop in the value of the Chinese yuan further fueled
speculation Beijing is devaluing its currency to counter President Donald
Trump's latest tariff threat. After refusing to do so several times in the
past, Treasury Secretary Steven Mnuchin officially declared China a currency
manipulator on Monday. The Treasury Department said Mnuchin will subsequently
engage with the International Monetary Fund to eliminate the unfair competitive
advantage created by China's latest actions. On the economic front, job
vacancies fell slightly to 7.35 million in June according to the US Labor
Dept's JOLTS report. Dow Jones Industrial Average surged 311.78 points or 1.21
percent to 26029.52, Nasdaq gained 107.22 points or 1.39 percent to 7833.27 and
S&P 500 was up by 37.03 points or 1.30 percent to 2881.77.
Crude oil futures end lower with
cut of over a percent on Tuesday as questions persisted over global demand for
energy, uncertainty that is tied to US tensions with major trade partners. Oil
prices remained weak as US government data for the sector forecast growth in
the Permian basin and other shale formations would largely offset production
losses from the Gulf of Mexico due to Hurricane Barry. The Energy Information
Administration (EIA) said in its short-term outlook issued that Brent crude
spot prices will average $64 a barrel in the second half of 2019 and $65 in
2020. The forecast of stable crude oil prices is the result of EIA's
expectations of a relatively balanced global oil market. EIA forecasted that
WTI crude oil prices will average $5.50 per barrel less than Brent prices from
the fourth quarter of 2019 through the end of 2020. Benchmark crude oil futures
for September dropped $1.06 or 1.9 percent to settle at $53.63 a barrel on the
New York Mercantile Exchange. October Brent declined 87 cents or 1.4 percent to
settle at $58.94 a barrel on London's Intercontinental Exchange.
Indian
rupee ended marginally lower against the American currency on Tuesday, due to
fresh dollar demand from banks and importers. Investors remained concerned
ahead of the Reserve Bank of India (RBI) monetary policy announcement due
tomorrow. Traders took note of a private report indicated that India's economy
needs external capital flow to grow at 9% and touch $5 trillion in the next
five years. However, positive trend in equity market helped in restricting the
slide in the Indian unit. On the global front, US dollar continued to decline
against a basket of currency majors due to tense trade relations between the US
and China. Finally, the rupee ended at 70.81, 8 paise weaker from its previous
close of 70.73 on Monday.
The
FIIs as per Tuesday's data were net sellers in both equity and debt segments.
In equity segment, the gross buying was of Rs 4736.41 crore against gross
selling of Rs 6907.37 crore, while in the debt segment, the gross purchase was
of Rs 1787.31 crore with gross sales of Rs 1893.09 crore. Besides, in the
hybrid segment, the gross buying was of Rs 2.15 crore against gross selling of
Rs 2.31 crore.
The US markets ended higher on
Tuesday after China backed off from a further escalation in the country's trade
and currency dispute with Washington. Asian markets are trading mostly lower on
Wednesday as investors waited for the People's Bank of China to set its daily
midpoint fix for the Chinese yuan. Indian markets settled higher on Tuesday on
report that government will soon hold discussions with representatives of foreign
portfolio investors, amid continuing overseas fund outflow from the markets
following the decision to impose surcharge on certain class of such investors.
Today, the markets are likely to make a negative start amid weakness in Asian
peers. Some cautiousness will come with economic think-tank NCAER's statement
that India's GDP growth is likely to be 6.2 per cent during the current fiscal,
down from 6.8 per cent in 2018-19, on account of flat growth in agriculture
sector. The prospects for agricultural sector in 2019-20 depend largely on the
south-west monsoon. It added that the country as a whole has received 7 per
cent below normal rainfall by August 5, 2019. It has also experienced temporal
variations in rainfall. Traders will be looking ahead to the outcome of the
Reserve Bank of India's (RBI) third bi-monthly policy of the ongoing fiscal
later in the day. With inflation under control, there are expectations of
another 25 basis points rate cut by the RBI for a fourth time in a row to boost
economic activities. Traders may take note of Former RBI Governor Bimal Jalan's
statement that the government should borrow only long-term fund from the
overseas market, and the quantum should not exceed 1.5% of GDP under any
circumstances. Jalan said that he does not have negative view about overseas
sovereign borrowing, but he thinks India does not need to borrow from abroad.
Meanwhile, amid concerns over banks citing 'client confidentiality' to resist
sharing of information on delayed loan repayments and possible defaults by
their borrowers, capital market regulator SEBI is planning to tighten its norms
to make it mandatory for companies to provide these details to credit rating
agencies. There will be some reaction in tyre stocks with ratings agency Icra's
statement that demand slowdown will curtail tyre industry's revenue growth to
3-4 per cent in 2019-20, and margins are expected to decline. It also said the
credit profile of Indian tyre industry is likely to weaken in FY2020 affected
by the ongoing slowdown in domestic automotive industry, rising raw material
(RM) prices and higher spend towards debt-funded capacity expansion. There will
be also some buzz in the aviation stocks with report that Aviation regulator
DGCA has directed all airport operators to carry out compulsory periodic
inspection of runway surface. There will be some earnings announcements too to
keep the markets buzzing.
Support and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,948.25
|
10,835.18
|
11,039.93
|
BSE Sensex
|
36,976.85
|
36,595.04
|
37,300.22
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in
Lacs)
|
Yes Bank
|
1,348.20
|
85.35
|
81.15
|
88.10
|
Tata Motors
|
347.90
|
122.50
|
120.65
|
125.45
|
ICICI Bank
|
306.65
|
410.25
|
403.60
|
414.20
|
SBI
|
304.43
|
301.40
|
297.68
|
304.68
|
Indiabulls Housing Finance
|
211.15
|
514.05
|
486.13
|
530.83
|
HCL Technologies and Oracle Health Sciences have collaborated to help life sciences companies execute and scale the next generation of digital clinical trials to reduce the time and cost of drug development.
Tata Motors has lowered production of small pick-up trucks at its Pantnagar facility to 15,000 units in August from 18,000 units last month amid sputtering sales.
SBI has invited bids for overseas oil and gas assets of Videocon Industries, as the government seeks to recover billions of dollars in loans from the beleaguered private firm.
Titan Company has reported a rise of 10.85% in its net profit at Rs 363.74 crore for Q1FY20 as compared to Rs 328.15 crore for Q1FY19.