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NSE Intra-day chart (27 July 2021)
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Market Commentary 28 July 2021
Benchmarks likely to get cautious start amid weak global cues


Indian equity benchmarks wiped off early gains to close in red on Tuesday, tracking losses in index majors Dr. Reddy's Lab, Axis Bank and Kotak Mahindra Bank amid global sell-off. Markets made positive start, as traders took encouragement with Care Ratings' report that the country's gross domestic product (GDP) growth is likely to be 8.8 to 9 per cent in the current financial year, driven by agriculture and industry sectors. The country's economy had contracted by 7.3 per cent in fiscal 2020-21. Some support came in as the government's total tax collection in the April-June quarter grew about 86 per cent to more than Rs 5.57 lakh crore. Out of the total amount, collection of net direct tax stood at Rs 2.46 lakh crore and of indirect tax was at Rs 3.11 lakh crore. Sentiments also remained positive with Minister of State for Finance Bhagwat K Karad's statement that non-performing assets (NPAs) or bad loans of banks have declined by Rs 61,180 crore to Rs 8.34 lakh crore at the end of March 31, 2021, as result of various steps taken by the government. However, key indices erased gains to trade in red terrain in afternoon trade, as some concern came with private report stated that business resumption activities, which had been gathering pace after the end of the second wave, moderated for the week ended July 25. It said resumption Index declined to 95.3 from the previous week's high of 96.4, stressing that it continues to be above the pre-second wave levels. Traders also remained cautious with Moody's Analytics in its report titled APAC Economic Outlook: The Delta Roadblock stated that the second wave of COVID-19 may have a more lasting damage on the Indian economy and exports will once again be the foundation for recovery. It said social distancing is weighing on the current quarter, but economic recovery will resume by the year-end. Finally, the BSE Sensex fell 273.51 points or 0.52% to 52,578.76, while the CNX Nifty was down by 78.00 points or 0.49% to 15,746.45. 


The US markets ended lower on Tuesday. The pullback on markets partly reflected uncertainty ahead of the Federal Reserve's monetary policy announcement on Wednesday. Negative sentiment has also been generated in reaction to news that the CDC has recommend that people vaccinated for the coronavirus resume wearing masks indoors in areas of substantial or high transmission, particularly the South and West. The revised guidance comes amid the rapid spread of the delta variant of the coronavirus in regions with low vaccination rates. On the economic data front, the Commerce Department released a report showing new orders for US manufactured durable goods saw continued growth in the month of June, although the increase came in well below expectations. The report said durable goods orders climbed by 0.8 percent in June after spiking by an upwardly revised 3.2 percent in May. Street had been expecting orders to surge up by 2.1 percent compared to the 2.3 percent jump that had been reported for the previous month. Excluding orders for transportation equipment, durable goods orders rose by 0.3 percent in June following a 0.5 percent increase in May. Ex-transportation orders were expected to climb by 0.8 percent. A separate report from the Conference Board showed consumer confidence in the US saw a slight improvement from an upwardly revised level in the month of July. The Conference Board said its consumer confidence index inched up to 129.1 in July from an upwardly revised 128.9 in June. Street had expected the index to drop to 124.9 from the 127.3 originally reported for the previous month.


Crude oil futures ended lower on Tuesday with traders weighing demand prospects and looking ahead to weekly inventory data. Oil prices also weak after the United States issued travel warnings to Spain and Portugal due to rising Covid-19 cases. However, Signs of tight supply and improving vaccination rates offset worries about the spread of the delta variant of the coronavirus and supported crude prices a bit early on in the day. Crude oil futures for September fell $0.26 or 0.4 percent to settle $71.65 barrel on the New York Mercantile Exchange. September Brent crude declined $0.33 or 0.44 percent to settle at $73.37 a barrel on London's Intercontinental Exchange.


Indian rupee ended weaker against the US dollar on Tuesday, on increased demand for the greenback from importers and banks. Traders were cautious, amid private report stating that business resumption activities, which had been gathering pace after the end of the second wave, moderated for the week ended July 25. It said resumption Index declined to 95.3 from the previous week's high of 96.4, stressing that it continues to be above the pre-second wave levels. However, downfall remain limited as Care ratings in its latest report has said that India's GDP growth is likely to be 8.8 to 9 percent in the FY22, driven by agriculture and industry sectors. On the global front, sterling dipped against the dollar on Tuesday as global stock markets sank led by a heavy sell-off in Chinese shares, which sapped risk sentiment and drove a bid for dollars ahead of a U.S. Federal Reserve policy meeting. Finally, the rupee ended 74.47, weaker by 5 paise from its previous close of 74.42 on Monday.


The FIIs as per Tuesday's data were net sellers in equity segment, white net buyer in debt segment. In equity segment, the gross buying was of Rs 5743.28 crore against gross selling of Rs 7963.19 crore, while in the debt segment, the gross purchase was of Rs 75.85 crore against gross selling of Rs 17.94 crore. Besides, in the hybrid segment, the gross buying was Nil against gross selling of Rs 10.13 crore.


The US markets ended lower on Tuesday as investors were cautious before results from top tech and internet names and Wednesday's Federal Reserve announcement. Asian markets are trading mixed on Wednesday tracking a weak Wall Street. Indian benchmark indices, Sensex and Nifty, closed half a percent lower Tuesday for the second session in a row as investors digested a slew of quarterly earnings. Today, the start of session is likely to be cautious amid weak global cues. There will be some volatility in the run-up to Thursday's F&O expiry. Traders will be concerned as the International Monetary Fund (IMF) sharply scaled down India's economic growth projection by 300 basis points to 9.5 per cent for the current financial year from 12.5 per cent estimated earlier in April. IMF said the downward revision is owing to lack of access to vaccines and possibility of renewed waves of coronavirus. There will be some cautiousness as Periodic Labour Force Survey (PLFS) conducted by National Statistical Office (NSO) showed that unemployment rate for women fell to 4.2 per cent in 2019-20 from 5.1 per cent in 2018-19. Meanwhile, the Directorate General of GST Intelligence (DGGI) has detected tax evasion worth Rs 278 crore by bidders who were awarded railway tenders since 2017. However, traders will be taking encouragement with Minister of State for Finance Pankaj Chaudhary's statement that increased tax collection in the first quarter this fiscal shows that the economy is on the recovery path. Net direct tax collection in the April-June quarter of the current fiscal is over Rs 2.46 lakh crore, as against more than Rs 1.17 lakh crore during the same period of the previous fiscal. Some support will come as Union Health minister Mansukh Mandaviya said Covid-19 vaccination for children is likely to begin by September.  There will be some buzz in the pharma stocks with report that the production linked incentive scheme (PLI) for pharmaceutical products has export generation potential of Rs 1,96,000 crore over a period of six years. Aviation industry stocks will be in focus as the International Air Transport Association (IATA) wants India to restart scheduled international flights and end capacity and fare capping in domestic market as these distort competition and hurt consumers. There will be some reaction in tourism industry stocks with report that tourism economy fell by nearly 43 per cent and an estimated 14.5 million jobs were lost in the first quarter of 2020-21 as the COVID-19 pandemic and resultant lockdown decimated the sector which directly employed 34.8 million people in the country the year before. There will be some important earnings announcements too to keep the markets buzzing.


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



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  • Tata Motors has rolled out the 10,000th unit of the new version of its SUV Safari. 
  • Reliance Industries' philanthropic arm -- Reliance Foundation has administered over 10 lakh COVID-19 vaccine doses to company employees and their families as well as associates and partners. 
  • Adani Ports and Special Economic Zone has successfully priced a $750 million senior unsecured USD notes issuance with 20 years and 10.5 years tranches at a fixed coupon of 5.0% and 3.8% respectively. 
  • HDFC Bank has subscribed to 50,000 Equity Shares of the face value of Rs 10 each fully paid up of IBBIC for a consideration of Rs 10 per equity share constituting 5.55% of the issued and paid-up capital of IBBIC.
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