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NSE Intra-day chart (26 July 2018)
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Market Commentary 27 July 2018
Markets to make a green start of the new series

Boisterous benchmarks once again logged new record highs with frontline indices surpassing their crucial 11,150 (Nifty) and 36,900 (Sensex) bastions on Thursday. The markets, on the July F&O expiry day, remained remarkably steady with Sensex confining itself to a range of around 100 points. Though, huge volatility was witnessed in last leg of trade but frontline gauges managed to log their new all-time closing highs. Overall, sentiments remained up-beat with Commerce and Industry Minister Suresh Prabhu's statement that India's exports would register healthy growth rates in the coming months and are expected to touch $350 billion in 2018-19. He also said that services sector is set to become a dominant driver of the Indian economy and will contribute $3 trillion to the GDP by 2025. Traders also took some encouragement with Housing and Urban Affairs Minister Hardeep Singh Puri's statement that India's economy will breach the $5 trillion mark by 2025. Some also support came in with the global rating agency Moody's Investor Service's statement that the fund infusion in five weak public sector banks will be credit positive and strengthen their capitalization. Sudden selloff witnessed in last leg of trade which dragged markets into red terrain ahead of F&O expiry amid report that as many as 59 mega central sector infrastructure projects, worth at least Rs 1,000 crore each, have reported cost overrun of Rs 1.36 lakh crore. But, the selloff proved short-lived and markets soon recovered to clock fresh record highs as traders took some support with a private report stating that India will remain the fastest-growing major economy this year supported by increased government spending ahead of next year's general election. Meanwhile, the Securities and Exchange Board of India (SEBI) said that the mutual fund industry, which is witnessing record growth, needs a good governance system. Finally, the BSE Sensex surged 126.41 points or 0.34% to 36,984.64, while the CNX Nifty was up by 35.30 points or 0.32% to 11,167.30.

 

After the strong upward move seen in the last session, the US markets ended mostly lower on Thursday. Sentiments were down after sharp losses in technology shares as Facebook posted its biggest one-day drop ever following disappointing quarterly results. The company revealed lower-than-expected quarterly revenue, slowing user growth and weak guidance. It was the biggest one-day percentage drop, wiping out about $120 billion of market value in a single day, the largest in history. Due to the social-media giant's size and weighting in equity indexes. However, losses remain capped as investors cheered Wednesday's upbeat meeting between Trump and the European Commission's president. The two leaders reached a trade agreement that has been called short on specifics, but still significant. Elsewhere, European Central Bank left interest rates unchanged and affirmed its plan to end its monthly bond-buying program in December, as had been expected. On the economic front, the Labor Department's report stated that first-time claims for unemployment benefits in the US showed a modest increase in the week ended July 21. The report said initial jobless claims rose to 217,000, an increase of 9,000 from the previous week's revised level of 208,000. A separate report released by the Commerce Department showed a notable increase in new orders for US manufactured durable goods in the month of June. The Commerce Department said durable goods orders jumped by 1.0% in June after falling by a revised 0.3% in May. The S&P 500 declined 8.63 points or 0.30 percent to 2837.44 and the Nasdaq was down by 80.05 points or 1.01 percent to 7852.19, while the Dow Jones Industrial Average gained 112.97 points or 0.44 percent to 25527.07.

 

Crude oil futures ended higher on Thursday, as Saudi Arabia temporarily ended oil shipments through the Bab-el-Mandeb strait, which joins the Red Sea to the Gulf of Aden, after Houthi rebels attacked two very large crude carriers operated by Saudi National Shipping Corp. in the Red Sea. The move is the latest clash in the war between an Arab military coalition and the rebels for control of Yemen. Saudi Arabia's decision to halt crude shipments through the Bab-el-Mandeb strait underscores just how serious the standoff with Iran could become with US sanctions against Iran set to snap back on August 6. Benchmark crude oil futures for September gained 31 cents or 0.5 percent to settle at $69.61 a barrel on the New York Mercantile Exchange. September Brent crude rose 61 cents or 0.8% at $74.54 a barrel on London's Intercontinental Exchange.

 

Extending its gaining streak for a second straight day, Indian rupee ended higher against dollar on Thursday, on sustained selling of the American currency by banks and exporters amid a strong domestic equity markets. Sentiment remained up-beat with Commerce and Industry Minister Suresh Prabhu's statement that India's exports would register healthy growth rates in the coming months and are expected to touch $350 billion in 2018-19. He also said that services sector is set to become a dominant driver of the Indian economy and will contribute $3 trillion to the GDP by 2025. Some comfort also came in with a private report stating that India will remain the fastest-growing major economy this year supported by increased government spending ahead of next year's general election. Moreover, dollar's weakness against some currencies overseas as the country's new home sales data came out disappointing supported the rupee. Finally, the rupee ended at 68.65, 14 paise stronger from its previous close of 68.79 on Wednesday.

 

The FIIs as per Thursday'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 4051.86 crore against gross selling of Rs 4676.27 crore, while in the debt segment, the gross purchase was of Rs 740.05 crore with gross sales of Rs 632.16 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.10 crore against gross selling of Rs 4.80 crore.

 

The US markets ended mostly lower on Thursday, as the worsening Sino-US trade dispute kept investors cautious, despite signs of rapprochement between the US and Europe. Asian markets were trading mixed in early deals on Friday, following subdued cues from Wall Street which saw technology stocks lag. Indian equity markets ended at fresh record highs on Thursday, as earnings optimism prevailed and trade tensions eased after the US and the EU agreed to work on lowering trade barriers. Today, the markets are likely to make a green start, ahead of the start of August series along with June corporate earnings of index heavyweight Reliance Industries and ICICI Bank, Bank of Baroda, HCL Technologies, among others. Traders will be getting support with report that foreign direct investment (FDI) from nations widely regarded as tax havens such as Cayman Islands and Hong Kong jumped in 2017-18, even as overall India-bound investments showed a slower rise, year-on-year (Y-o-Y). From the Cayman Islands, inflows rose in a single year from a low $71.03 million to a whopping $1.23 billion. Traders will be getting encouragement with Alice G Wells, Principal Deputy Assistant Secretary of State for South and Central Asia's statement that the US wants to reduce its trade deficit with India as quickly as possible, asserting that the Trump administration is aggressively pushing New Delhi on the issues of medical devices, pharmaceuticals, dairy products and agriculture. There will be some support with a report that the US and India are working together hand in glove diplomatically and militarily to build dimensions of the critical bilateral relationship ahead of the two-plus-two dialogue.However, there will be some cautiousness with a private report that even though timely rainfall will help contain price growth, inflation is expected to average 4.7% in the current fiscal, up from 3.6% last year, guiding Reserve Bank of India (RBI) to tighten the key interest rate in the coming months.

 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,167.30

11,133.38

11,193.53

BSE Sensex

36,984.64

36,870.91

37,080.00

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

SBI

534.97

287.70

278.13

293.33

ICICI Bank

366.31

285.65

277.10

290.35

Yes Bank

352.51

369.75

356.77

384.52

ITC

206.98

287.20

283.88

290.83

Power Grid

190.52

181.85

176.10

185.70

 

  • Dr. Reddy's Laboratories has launched Hervycta, a biosimilar of Roche's Herceptin in India, indicated for the treatment of HER2-positive cancers. 
  • NTPC is planning to raise funds up to Rs 12,000 crore through issuance of secured/unsecured, redeemable, taxable/tax-free, cumulative/ non-cumulative, NCDs. 
  • Hero MotoCorp has received an approval for investment of Rs 130,00,04,640 through Compulsorily Convertible Debentures in Ather Energy. 
  • Bharti Infratel has received clearance from Securities and Exchange Board of India (SEBI) for its merger with Indus Towers.
News Analysis