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NSE Intra-day chart (16 July 2021)
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Market Commentary 19 July 2021
Markets likely to open in red amid weakness in global peers

 

Oscillating between gains and losses, Indian equity benchmarks pulled back from their all-time highs to settle on a flat note on Friday due to selloffs mainly in IT, TECK and Banking counters amid lack of directional cues from global markets. Indian market opened with gains, as traders took encouragement with the Reserve Bank of India's (RBI) report that the tapering of the second wave, coupled with an aggressive vaccination push, has brightened near-term prospects for the Indian economy, and the Indian economy may have grown 22.1 per cent in the April-June quarter. Some optimism also came with the data released by the Commerce Ministry showed that the country's exports rose by 48.34 per cent to $32.5 billion on account of healthy growth in shipments of petroleum products, gems and jewellery, and chemicals, leather and marine goods. However, markets failed to maintain gains and ended flattish as India recorded a spike of 39,072 fresh Covid-19 cases in the last 24 hours, taking the total caseload to 31,025,875, according to Worldometer. The death count increased to 412,563 with 544 new fatalities. Traders overlooked a private report stating that the June inflation data showed annual retail price growth steady at 6.26 percent versus 6.3 percent in May. This takes off pressures upon the central bank, which was battling apprehensions of higher inflation risks soon after its June 4 review. Meanwhile, Ministry of Finance has released Rs 75,000 crore to the States and Union Territories (UTs) with legislature under the back-to-back loan facility in lieu of Goods and Services Tax (GST) compensation. This release is in addition to normal GST compensation being released every 2 months out of actual cess collection. Finally, the BSE Sensex fell 18.79 points or 0.04% to 53,140.06, while the CNX Nifty was down by 0.80 points or 0.01% to 15,923.40.

 

The US markets wiped out initial gains and ended lower on Friday. The initial strength on Wall Street came after the Commerce Department released a report showing an unexpected increase in retail sales in the month of June. The Commerce Department said retail sales climbed by 0.6 percent in June after plunging by a revised 1.7 percent in May. The rebound surprised market participants, who had expected retail sales to fall by 0.4 percent compared to the 1.3 percent slump originally reported for the previous month. Excluding a steep drop in sales by motor vehicle and parts dealers, retail sales jumped by an even stronger 1.3 percent in June following a revised 0.9 percent decrease in May. Street had been expecting ex-auto sales to increase by 0.4 percent compared to the 0.7 percent drop originally reported for the previous month. However, stocks came under pressure after a separate report from the University of Michigan showed an unexpected slump in consumer sentiment amid concerns about inflation. The report showed the consumer sentiment index slid to 80.8 in July from 85.5 in June. The decrease surprised market participants, who had expected the index to inch up to 86.5. Surveys of Consumers chief economist Richard Curtin said rather than job creation, halting and reversing an accelerating inflation rate has now become a top concern, and noted that inflation has put added pressure on living standards and caused postponement of large discretionary purchases.

 

Snapping two successive days of sharp losses, crude oil futures ended higher on Friday, pressured by the possibility of more crude supplies on the global market and risks to the demand outlook. According to a report from Baker Hughes, oil and gas rigs count in the US rose for a third week in a row, increasing by 5 to 484 in the week to July 16, the highest level since April 2020. US oil rigs rose two to 380 this week, their highest since April 2020. Gas rigs increased by three to 104, their highest since March 2020, rising for five weeks in a row, the longest streak since March 2018. Crude oil futures for August rose 16 cents or 0.2 percent to settle at $71.81 barrel on the New York Mercantile Exchange. September Brent crude added 12 cents or 0.2 percent to settle at $73.59 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended lower against US dollar on Friday on account of buying of the American currency by banks and importers. Traders overlooked private report stating that the June inflation data showed annual retail price growth steady at 6.26 percent versus 6.3 percent in May. This takes off pressures upon the central bank, which was battling apprehensions of higher inflation risks soon after its June 4 review. Also, downfall remain capped as bank credit grew by 6 per cent to Rs 109.31 lakh crore and deposits increased by 9.76 per cent to Rs 154.51 lakh crore in the fortnight ended July 2, 2021, RBI data showed. On the global, dollar was headed for a weekly gain on Friday, supported by investors' drift toward safety as rising COVID-19 infections loomed over the pandemic recovery. Finally, the rupee ended 74.57, weaker by 3 paise from its previous close of 74.54 on Thursday.

 

The FIIs as per Friday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 6120.38 crore against gross selling of Rs 5737.22 crore, while in the debt segment, the gross purchase was of Rs 947.32 crore with gross sales of Rs 199.94 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.07 crore against gross selling of Rs 10.53 crore.

 

The US markets ended lower on Friday amid weakness in big technology companies like Apple and Amazon. Asian markets are trading in red on Monday on concerns about the impact of elevated inflation and Covid-19 outbreaks on economic prospects. Indian markets pared gains after hitting record high to end flat on Friday as gains in pharma, metal and heavyweight RIL were offset by losses in IT stocks and banks. Today, the start of holiday truncated week is likely to be negative following losses in global peers as fears of rising inflation and a relentless surge in Delta variant of the coronavirus in Asian countries dampened investors' risk appetite. Traders will be concerned as Niti Aayog CEO Amitabh Kant expressed concern over high food inflation due to higher prices of oilseeds and edible oils. He also said the state governments must take the lead in instituting labour reforms and rationalising costs of power to the industry. There will be some cautiousness as India recorded 38,325 fresh Covid-19 cases in the last 24 hours, taking the total caseload to 31,143,595, according to Worldometer. The death count increased to 414,141 with 501 new fatalities, the data showed. However, some respite may come later in the day with Chief Economic Advisor Krishnamurthy Subramanian's statement that the country's economy will start witnessing a growth of 6.5 to 7 per cent from fiscal 2023 onwards, helped by various reforms undertaken by the government so far and also as Covid-19 vaccination drive progresses. Some support may come as RBI data showed that the overseas direct investment of domestic companies more than doubled to $2.80 billion in June this year. India Inc had invested $1.39 billion in overseas ventures in the year-ago month. Meanwhile, RBI data showed that the country's foreign exchange reserves increased by $1.883 billion to touch a record high of $611.895 billion in the week ended July 9. Aviation sector stocks will be in focus as Union Civil Aviation Minister Jyotiraditya Scindia said the COVID-19 pandemic hit the aviation sector in the country hard but now the things are improving. There will be some reaction in oil & gas industry stocks as Commerce and Industry Minister Piyuh Goyal said India has set a target of 20 per cent ethanol-blending with petrol by 2023-24 and the ultimate goal is to have 100 per cent ethanol-run vehicles. Power stocks will be in limelight as total outstanding dues owed by electricity distribution utilities or discoms to power producers fell 15.25 per cent to Rs 82,305 crore in May 2021 from a year ago. There will be lots of earnings reaction based on the performance of the companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

15,923.40

15,883.25

15,962.90

BSE Sensex

53,140.06

52,994.49

53,288.21

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Wipro

369.07

577.75

567.61

588.56

ITC

290.19

207.90

206.85

209.30

Tata Motors

251.48

311.25

309.35

314.30

Oil & Natural Gas Corporation

196.91

116.80

115.90

117.55

NTPC

171.98

119.10

118.00

120.50

 

  • Grasim Industries has incorporated a Joint Venture Company viz. Birla Advanced Knits for undertaking Knits manufacturing business in partnership with CTIL. 
  • Tata Motors has partnered with the Garden Reach Shipbuilders & Engineers based in Kolkata to deploy 14 XPRES T EVs, as a part of its contract with EESL. 
  • Bharti Airtel and communications gear maker Cisco have launched connectivity solutions for enterprises based on Cisco's software-defined wide area network technology. 
  • TCS' strategic unit -- TCS iON has brought together an ecosystem of academia, corporates, publishers, and original equipment manufacturers as part of its innovative phygital model for vocational education, on the occasion of World Youth Skills Day.
News Analysis