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NSE Intra-day chart (12 August 2021)
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Market Commentary 13 August 2021
Benchmarks likely to get pessimistic start amid weak Asian cues

 

Indian equity benchmarks were back to their winning ways on Thursday, the day of weekly F&O expiry, amid solid buying in utilities, power and industrials stocks. Markets made positive start and stayed in green throughout the session, as traders took encouragement with Commerce Secretary BVR Subrahmanyam's statement that the country's merchandise exports are expected to touch $1 trillion by 2027-28 and the government has laid down a road map, including district as an export hub scheme, to achieve that number. Additional optimism also came as Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey said that disinvestment of public sector companies is back on track after the COVID-induced setbacks, and DIPAM is aiming to conclude a host of transactions by March-end. Sentiments remained positive with Prime Minister Narendra Modi's statement that the country's economic growth is picking up pace again and the domestic industry needs to enhance its risk-taking appetite. Noting the recent reforms taken by the government, he said that bringing reforms is a matter of conviction for his government, which is ready to take all risks in the national interest. Benchmarks added more gains in late afternoon session, taking support from report that free vaccination drive rolled out by the government is likely to create a positive impact on the job market and on the overall economy as most respondents believed that it will help them in providing a safe work ecosystem to their employees with steady work opportunities. Traders also took note of Commerce and Industry Secretary BVR Subrahmanyam's statement that India will fast-track free trade agreements (FTAs) with at least six nations - including the UAE, the UK, Australia, Canada, and the EU - over the next few months, in line with its revamped foreign trade strategy. However, gains remain capped as market participants awaited macro-economic data -- Industrial production for June and CPI inflation for August to be released later in the day. Finally, the BSE Sensex rose 318.05 points or 0.58% to 54,843.98, while the CNX Nifty was up by 82.15 points or 0.50% to 16,364.40.   

 

The US markets ended higher on Thursday, pushing the Dow Jones Industrial Average and S&P 500 to fresh records during an otherwise tame session. Data showing an acceleration in producer prices and a drop in jobless claims suggested the economy is well and truly on the recovery track. The Labor Department said initial jobless claims edged down to 375,000 in the week ended August 7th, a decrease of 12,000 from the previous week's revised level of 387,000. Street had expected jobless claims to dip to 375,000 from the 385,000 originally reported for the previous week. The Labor Department said the less volatile four-week moving average crept up to 396,250, an increase of 1,750 from the previous week's revised average of 394,500. Meanwhile, the Labor Department released a separate report showing US producer prices increased more than expected in the month of July. The Labor Department said its producer price index for final demand surged up by 1.0 percent in July, matching the jump seen in the previous month. Street had expected producer prices to climb by 0.6 percent. With the bigger than expected monthly increase, the annual rate of growth in producer prices accelerated to 7.8 percent in July from 7.3 percent in June. The year-over-year spike in producer prices reflected the largest advance since 12-month data were first calculated in November 2010.

 

Crude oil futures ended lower on Thursday on concerns about outlook for energy demand after a report from the International Energy Agency (IEA) said oil demand growth will likely slowdown in the second half of the year. The IEA said in its report that it sees a significant drop in global oil demand for the rest of this year due to imposition of new coronavirus restrictions in several major oil consumer countries, particularly in Asia. It said we now estimate that demand fell in July as the rapid spread of the COVID-19 Delta variant undermined deliveries in China, Indonesia and other parts of Asia. Crude oil futures for September fell $0.16 or 0.2 percent to settle $69.09 barrel on the New York Mercantile Exchange. October Brent crude dropped $0.13 or 0.2 percent to settle at $71.31 a barrel on London's Intercontinental Exchange.

 

Erasing prevision session losses, Indian Rupee ended fairly higher against US dollar on Thursday, on the back of selling of the American currency by exporters. Besides, gains in domestic equity markets also provided support to the rupee. Sentiments were buoyant with Commerce Secretary BVR Subrahmanyam's statement that the country's merchandise exports are expected to touch $1 trillion by 2027-28 and the government has laid down a road map, including district as an export hub scheme, to achieve that number. Adding more optimism, Prime Minister Narendra Modi's stated that the country's economic growth is picking up pace again and the domestic industry needs to enhance its risk-taking appetite. On the global front, dollar stood just below a four-month peak against major peers on Thursday as currency traders digested data from the previous day showing U.S. inflation may be coming off the boil. Finally, the rupee ended 74.25, stronger by 19 paise from its previous close of 74.44 on Wednesday.

 

The FIIs as per Thursday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 7348.18 crore against gross selling of Rs 7051.06 crore, while in the debt segment, the gross purchase was of Rs 844.88 crore with gross sales of Rs 553.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.84 crore against gross selling of Rs 15.29 crore.

 

The US markets ended higher on Thursday as investors warmed to jobs data showing a steady U.S. economic recovery. Asian markets are trading mostly in red on Friday as the spread of the delta Covid-19 variant and China's regulatory curbs restrained sentiment. Indian markets darted up to fresh all-time highs on Thursday as investors lapped up power, IT and banking stocks amid mixed global cues. Today, start of session is likely to be pessimistic following weakness in Asian peers. Traders will be concerned as India recorded 40,078 new Covid-19 cases and 583 deaths in the past 24 hours, taking its tally to 32,117,052 and the death toll to 430,285. Kerala reported 21,445 new infections, Maharashtra 6,388, followed by Andhra Pradesh (1,859), Tamil Nadu (1,964), Karnataka (1,857), West Bengal (747) and Delhi (49). There will be some cautiousness with a private report that monsoon rains in India in the week through Wednesday were below average for the second straight week, the weather office said, raising concerns over production of summer-sown crops such as cotton, soybean, corn and rice. However, promising inflation and industrial production data may limit the downside. Some respite may come as Industrial output for the month of June rose 13.6 per cent, in a sign that the low base effect of the last year is waning. Factory output, measured by the Index of Industrial Production (IIP) had contracted 16.6 per cent in the same month of last year and rose by 29.3 per cent in May. Industrial production surged mainly due to a low-base effect and good performance by manufacturing, mining and power sectors but the output remained below the pre-pandemic level. Some support may come as retail price inflation rate fell to a three-month low of 5.59 per cent in July from 6.26 per cent the previous month, due to a slower price rise in food items, particularly vegetables. Also, fuel inflation remained elevated in July despite some moderation from the previous month. Traders may take note of report that expressing the government's commitment to continue with reforms, Finance Minister Nirmala Sitharaman has assured India Inc that it is ready to do everything required to revive and support economic growth hit by the COVID-19 pandemic. There will be some buzz in aviation stocks as the civil aviation ministry hiked the maximum and minimum limit on domestic airfares by 12.5 percent. The government has also allowed domestic airlines to deploy more capacity as the demand in the domestic market has started improving owing to better consumer sentiment. Auto stocks will be in focus as auto industry body SIAM said passenger vehicle wholesales in India increased by 45 per cent to 2,64,442 units in July against 1,82,779 units in the same month last year. Besides, Niti Aayog has released a handbook to help state governments and local bodies in framing policies for setting up charging networks for electric vehicles. There will be some reaction in sugar industry stocks as trade body AISTA said sugar mills have exported 5.11 million tonnes of the sweetener so far in the ongoing 2020-21 marketing year ending September, with maximum shipments to Indonesia.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,364.40

16,309.04

16,397.64

BSE Sensex

54,843.98

54,629.06

54,966.51

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Power Grid Corporation of India

435.80

187.00

179.64

191.04

Tata Motors

336.52

306.00

299.74

309.84

ITC

276.92

208.90

206.76

212.61

State Bank of India

168.47

427.15

424.61

430.06

Oil & Natural Gas Corporation

135.19

116.25

115.06

117.66

 

  • Cipla has received final approval for its ANDA for Difluprednate Ophthalmic Emulsion 0.05% from the USFDA. 
  • Wipro has entered into partnership with IP Infusion, a leader in disaggregated network solutions, to jointly develop offerings that enable faster innovation in IP and optical networks. 
  • Power Grid Corporation has received approval to infuse fresh equity up to Rs 425 crore in Energy Efficiency Services, a Joint Venture Company of Power Grid, NTPC, PFC and REC. 
  • IndusInd Bank has launched its mega Currency Chest at Chandigarh.
News Analysis