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NSE Intra-day chart (20 July 2021)
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Market Commentary 22 July 2021
Markets to get positive start tracking firm global cues

 

Indian equity benchmarks fell for the second straight session on Tuesday, led by selling pressure in realty, metal and power stocks amid weak global cues. Key indices made negative start and traded lower for whole day, as traders remained cautious with a private report that investments by private equity and venture capital funds declined by 22 per cent to $5.4 billion in June, as compared to the $6.9 billion in the year-ago period. Some cautiousness also came in as ratings agency Crisil said the lull in monsoon over the past 15 days up to July 12 has impacted pace of sowing of kharif crops in 2021-22 crop year (July-June). Traders were also concerned with Minister of State for Finance Bhagwat K Karad stating that the recovery as a percentage of gross non-performing assets moderated to 12.8 percent in 2020-21 from 15.8 percent in the previous fiscal year against the backdrop of the pandemic. Traders also took a note of report where Parliament informed that over Rs 81,000 crore GST compensation is due to states for 2020-21, while for April-May this year, Rs 55,345 crore is outstanding. The economic impact of the pandemic has led to higher compensation requirement due to lower GST collection and at the same time lower collection of GST compensation cess. However, markets recouped some intra-day losses as traders found some solace with Union minister Pankaj Chaudhary's statement that Indian economy is showing signs of revival since the peaking of the second COVID wave in the first half of May on the back of targeted fiscal relief, strong push for capital expenditure, RBI's monetary policy measures, and a rapid vaccination drive. Some support also came as Chief Economic Adviser (CEA) K V Subramanian has expressed hope that economic growth during the current financial year (FY22) would be around 11 per cent as projected in the latest Economic Survey. He also said the overall impact of the second wave on the economy will not be very large. But, markets failed to erased all the losses and ended lower as Asian Development Bank (ADB) in its latest report has downgraded India's economic growth forecast for the current financial year to 10 percent, from 11 percent projected in April. Finally, the BSE Sensex fell 354.89 points or 0.68% to 52,198.51, while the CNX Nifty was down by 120.30 points or 0.76% to 15,632.10.

 

The US markets ended higher on Wednesday, extending the substantial rebound seen in the previous session. The continued strength on markets partly reflected a positive reaction to the latest batch of earnings reports from several big-name companies.  Dow components Coca-Cola and Verizon moved to the upside after reporting better than expected quarterly results and raising their full-year guidance. Healthcare giant Johnson & Johnson also closed higher after reporting second quarter results that exceeded street estimates. On the other hand, shares of Netflix fell sharply after the streaming giant reported weaker than expected second quarter earnings and forecast subscriber growth in the current quarter below street estimates. On the sectorl front, Energy stocks moved sharply higher on the day as the price of crude oil continued to recover from the steep drop seen on Monday. Reflecting the strength in the energy sector, the Philadelphia Oil Service Index skyrocketed by 4.8 percent and the NYSE Arca Oil Index surged up by 3.8 percent. Significant strength was also visible among airline stocks, as reflected by the 3.2 percent jump by the NYSE Arca Airline Index. The index continued to rebound after ending Monday's trading at a five-month closing low. Semiconductor stocks also turned in a particularly strong performance on the day, driving the Philadelphia Semiconductor Index up by 3.1 percent.

 

Crude oil futures ended higher on Wednesday  as a decline in crude stocks at the Cushing, Okla. storage hub to the lowest level since early 2020 provided support, outweighing any pressure from the first weekly US crude inventory rise since mid-May. The Energy Information Administration (EIA) reported that US crude inventories rose by 2.1 million barrels for the week ended July 16, marking the first weekly rise in nine weeks. The EIA data also showed crude stocks at the Cushing, Okla., storage hub declined by 1.4 million barrels for the week to 36.7 million barrels. Stocks at the storage hub haven't been this low since January 2020. The EIA also reported that gasoline supplies edged down by 100,000 barrels, while distillate stockpiles fell by 1.3 million barrels for the week. Crude oil futures for September rose $3.10 or about 4.6 percent to settle at $70.30 barrel on the New York Mercantile Exchange. September Brent crude gained $2.88 or 4.2 percent to settle at $72.23 a barrel on London's Intercontinental Exchange.

 

Reversing previous session losses, Indian rupee ended significantly higher against dollar on Tuesday, owing to dollar sale by exporters and banks. Sentiments were upbeat as Union minister Pankaj Chaudhary states that Indian economy is showing signs of revival since the peaking of the second COVID wave in the first half of May on the back of targeted fiscal relief, strong push for capital expenditure, RBI's monetary policy measures, and a rapid vaccination drive. Adding more optimism, unemployment rate fell to a six-month low of 5.98% for the week ended July 18 after inching up to 7.64% in the previous week. On the global front, pound hit a five-month low against the dollar and traded close to a five-week low against the euro on Tuesday, as broad demand for the safe-haven dollar amid a global surge in coronavirus infections kept investors jittery. Finally, the rupee ended 74.61, stronger by 27 paise from its previous close of 74.88 on Monday.

 

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 6322.33 crore against gross selling of Rs 8600.89 crore, while in the debt segment, the gross purchase was of Rs 336.47 crore against gross selling of Rs 435.46 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.13 crore against gross selling of Rs 17.19 crore.

 

The US markets ended higher on Wednesday as investors turned their attention to company earnings, which have started to roll in steadily. Asian markets are trading in green on Thursday tracking the optimism in US stocks, amid markets in Japan closed for a holiday. Indian markets closed lower Tuesday as media, financials, and metal stocks dragged the indices. Markets were shut Wednesday on account of Bakri Id. Today, domestic indices looks to resume trade in green after a one-day gap, thanks to a rally in US equities over the last two days. Traders may take note of report that in order to bring more discipline, transparency, and accountability into the corporate insolvency process, resolution professionals (RPs) will be required to inform the adjudicating authority about avoidance transactions of a corporate debtor, according to the amended Insolvency and Bankruptcy Board of India (IBBI) Regulations, 2016. However, there may be some concern as increasing commodity prices forced the government's crude oil import bill to swell by a massive 190.6% on-year basis in the first quarter to reach $24.7 billion. India's crude oil import value during the quarter stood at 51 million tonne, up 14.7% from the previous year. There may be some cautiousness as the health ministry said India reported its highest death toll in a month on Wednesday--3,998--after Maharashtra reconciled its death count with 3,509 previously unreported fatalities. Meanwhile, the government has decided not to impose anti-dumping duty on imports of a certain type of fibre board, used to make furniture and cabinets, from Vietnam, Malaysia, Thailand, and Indonesia, as per an office memorandum of the Department of Revenue. Real estate industry stocks will be in focus as Durga Shanker Mishra, Secretary, Ministry of Housing and Urban Affairs said the size of real estate sector is expected reach $1 trillion by 2030 from $200 billion at present. There will be some reaction  in auto industry stocks with a private report that India's automotive electronics market is expected to cross $18 billion by 2027 with a compound annual growth rate (CAGR) of 17 per cent, driven by rising income levels and increasing customer preference for in-vehicle digital experience. Besides, Policybazzar is planning to raise Rs 6,500 crore. PB Fintech, the parent company of Policybazaar in a regulatory filing approved a resolution to raise the said amount via a fresh issue of equity. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

15,632.10

15,564.29

15,714.19

BSE Sensex

52,198.51

51,986.33

52,437.85

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

276.72

302.15

299.46

306.41

ITC

236.56

206.80

205.70

208.60

Oil & Natural Gas Corporation

186.34

112.60

111.71

113.36

State Bank of India

146.23

420.90

417.54

425.64

ICICI Bank

131.69

641.90

636.91

649.06

 

  • Wipro has sold its entire stake in IntSights Cyber Intelligence, a cyberthreat intelligence service provider, for a consideration of $19.17 million. 
  • Tata Steel's subsidiary company -- Tata Steel Mining and Jindal Stainless have signed MoU to jointly unearth chrome ore locked up in the boundary between their mines located at Sukinda in Odisha's Jajpur district. 
  • Bajaj Finance's wholly owned subsidiary -- Bajaj Housing Finance is offering Amazon gift vouchers worth up to Rs.10,000 to customers who apply for a home loan via their website. 
  • Hero MotoCorp has launched Xtec avatar of its popular motorcycle - Glamour. The Glamour Xtec is a combination of Style, Safety, and Connectivity.
News Analysis