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NSE Intra-day chart (17 August 2021)
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Market Commentary 18 August 2021
Markets likely to get flat-to-positive start amid mixed global cues


Indian equity benchmarks swung between gains and losses in a volatile session and managed to end in green on Tuesday, tracking gains in index majors Tech Mahindra, TCS and Nestle. After a cautious start, domestic equities witnessed lackluster movement for most part of the day, as traders got anxious with Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai's statement that with Kabul falling into the hands of the Taliban, bilateral trade between Afghanistan and India will get impacted significantly in these uncertain times. Some concern also came as a private report stating that consumer confidence on financial preparedness for the future has dropped in the last two years with the onset of the coronavirus pandemic, even as the financial awareness and need for insurance has increased. Besides, the microfinance industry's gross loan portfolio (GLP) marginally declined by around 4 per cent to Rs 2,14,528 crore as of June 30 this year, against Rs 2,24,205 crore as of June 20, 2020, according to a report by Sa-Dhan. Sa-Dhan is an RBI recognised self-regulatory organisation for microfinance institutions. However, key indices turned sharply higher in the last hour of trade, taking support from Finance Minister Nirmala Sitharaman's statement that she expects inflation to remain in the prescribed range during the current fiscal. The RBI has been mandated to keep inflation at 4 per cent, with tolerance level of 2 per cent on either side. Some support also came with report that investments by private equity and venture capital funds doubled to a record high of $9.5 billion in July mainly driven by higher investor interest in the e-commerce sector. Private equity (PE) and venture capital (VC) investments stood at $4.1 billion in the year-ago period. Some comfort also came after Retailers Association of India (RAI) said Retail sales across the country continued to recover in July, reaching 72 per cent of the pre-pandemic levels of July 2019, and businesses are pinning hopes on the festive seasons for a further boost. The rate of recovery was 50 per cent of pre-pandemic levels in June 2021. Finally, the BSE Sensex rose 209.69 points or 0.38% to 55,792.27, while the CNX Nifty was up by 51.55 points or 0.31% to 16614.60.   


The US markets ended lower on Tuesday after the Commerce Department released a report showing US retail sales tumbled by much more than expected in the month of July. The report said retail sales slumped by 1.1 percent in July after climbing by an upwardly revised 0.7 percent in June. Street had expected retail sales to dip by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month. Excluding a steep drop in sales by motor vehicles and parts dealers, retail sales fell by 0.4 percent in July after jumping by 1.6 percent in June. Ex-auto sales were expected to inch up by 0.1 percent. A steep drop by shares of Home Depot (HD) also weighed on the markets, with the home improvement retailer plunging by 4.3 percent after reporting second quarter earnings that beat estimates but weaker than expected same-store sales growth. On the sectoral front, steel stocks showed a substantial move to the downside amid concerns about the global economic outlook, resulting in a 3.1 percent nosedive by the NYSE Arca Steel Index. Considerable weakness was also visible among housing stocks, as reflected by the 2.9 percent slump by the Philadelphia Housing Sector Index.


Crude oil futures ended lower for four straight day on Tuesday on concerns about the outlook for energy demand due to a surge in cases of the Delta variant of the coronavirus. The Japanese government is set to extend COVID-19 emergency control measures to more areas and into September to suppress the fifth wave of infections. Besides, worries about energy demand have risen after data showed China's industrial production and retail sales fell short of expectations in July. Also, daily crude processing in China dropped to its lowest level since mid-2020 last month. Crude oil futures for September fell $0.70 or 1 percent to settle $66.59 barrel on the New York Mercantile Exchange. October Brent crude dropped $0.48 or 0.7 percent to settle at $69.03 a barrel on London's Intercontinental Exchange.


Rupee ended substantially weaker against dollar on Tuesday on account of continued dollar demand from importers and banks. Sentiments got hurt as Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai stated that bilateral trade between Afghanistan and India will get impacted significantly in these uncertain times. He said domestic exporters should follow caution looking into the political development in Afghanistan, particularly with regard to payments, for which adequate credit insurance may be availed by them. Some concern also came as foreign portfolio investors (FPIs) sold Rs 7,000 crore worth of equities in the secondary markets in the June quarter. The holding of these investors (including ADR and GDR) in the BSE-200 index declined to 23.9 per cent from 24.4 per cent in March 2021. On the global front; pound hits its lowest level in three weeks against the dollar on Tuesday as weakening risk sentiment weighed on global stock markets, hitting risk-correlated currencies. Finally, the rupee ended 74.35, weaker by 11 paise from its previous close of 74.24 on Friday.


The FIIs as per Tuesday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 12300.62 crore against gross selling of Rs 12414.57 crore, while in the debt segment, the gross purchase was of Rs 221.84 crore against gross selling of Rs 376.38 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.12 crore against gross selling of Rs 16.57 crore.


The US markets ended lower on Tuesday with the most significant declines seen in mega-cap technology-related and consumer discretionary stocks as investors scaled down their risk appetite. Asian markets are trading mostly in green on Wednesday as investors look ahead to the Reserve Bank of New Zealand's interest rate decision. Indian markets staged a sharp recovery from the day's lows to end Tuesday's volatile session higher led by strong buying in IT and FMCG stocks. Today, the start of session is likely to be flat-to-positive tracking mixed global cues and ahead of a market holiday on Thursday looms. Sentiments will get a boost as RBI article said the economy is gaining traction with gradual pick up in manufacturing activity and moderation in contraction of services, spurred by comfortable liquidity conditions. Observing that the retreat of the second wave of coronavirus pandemic has been slow, the RBI in an article on the State of Economy said, the aggregate demand conditions are buoyed by the release of pent-up demand post unlock, while the supply situation is improving with the monsoon catching up to its normal levels and sowing activity gaining pace. Traders will be getting some encouragement as the government announced the much-awaited guidelines and tax refund rates for the export boosting scheme Remission of Duties and Taxes on Export Products (RoDTEP) for 8,555 export items. The outlay for the scheme is Rs 12,454 crore in the current fiscal, with the refund rates ranging from 0.5 per cent to 4.3 per cent. Some support will come as Retailers Association of India (RAI) said retail sales across the country continued to recover in July, reaching 72 per cent of the pre-pandemic levels of July 2019, and businesses are pinning hopes on the festive seasons for a further boost. Traders may take note of Union Road Transport and Highways Minister Nitin Gadkari's statement that the National Automobile Scrappage Policy will accelerate economic growth and boost employment generation in the country. However, there may be some cautiousness as India recorded 35,201 new Covid-19 cases and 440 deaths in the past 24 hours, taking its tally to 32,285,101 and the death toll to 432. Meanwhile, the Indian government has asked a federal court in Washington to dismiss Britain's Cairn Energy suit seeking enforcement of a $1.2 billion arbitral award, saying it had sovereign immunity under US law. Textile industry stocks will be in focus as Icra in a report stated that home textile exporters are set to clock a 20-25 per cent growth in 2021-22 with healthy margins. It said the pandemic-induced lifestyle changes stemming from heightened consciousness about hygiene and increased prevalence of stay-at-home options are likely to result in a robust performance for Indian home textile exporters. There will be some reaction in sugar industry stocks with report that India is expected to withdraw sugar export subsidies from the new season beginning October as a sharp rise in global prices makes it easier for Indian mills to sell the sweetener on the world market.


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



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Nifty Top volumes





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Tata Motors





State Bank of India





Tata Steel





Indian Oil Corporation





Oil & Natural Gas Corporation






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