Indian equity
benchmarks ended at a record closing high for the second consecutive day on
Wednesday with the Nifty 50 index surpassed its important psychological level
of 16,250 and Sensex topped 54,300-mark for the first time on hopes of faster
economic recovery. Markets made a positive start and traded jubilantly for most
part of the session, as traders found support with ratings agency ICRA's
statement that IT services companies are expected to see growth in revenue,
driven by robust demand for digital technologies resulting in higher awards of
contracts. Further, the growth in the financial year 2021-22 will be supported
by the pent-up demand of the financial year 2020-21 that was lower due to the
initial impact of COVID-19. Additional optimism came with private report that
India's recruitment activity has been recovering steadily as the hiring rate in
June 2021 was around 42 percent above the pre-pandemic levels in 2019. However,
markets cut some of their gains in late morning session after India's services
sector remained in contraction territory for the third straight month in July,
as business activity, new orders and employment declined further largely due to
the COVID-19 pandemic and local restrictions. The seasonally adjusted India
Services Business Activity Index rose from 41.2 in June to 45.4 in July, but
was stuck in the red due to subdued demand conditions amid the COVID-19 crisis.
Some concern also came as the government expects the total debt as percentage
of gross domestic product (GDP) to increase to 61.7 per cent (provisional) in
2021-22 (FY22) from 60.5 per cent (provisional) in the previous fiscal. At the
same time, public debt would rise to 54.2 per cent in the current financial
year from 52 per cent in 20. But, markets regained traction to scale fresh
highs, following strong quarterly results from corporates and positive cues
from global equities. Traders remained energized as Union Minister of State for
Consumer Affairs, Food and Public Distribution, Ashwini Kumar Choubey in a
written reply to Lok Sabha informed that as per the National Association of
Software & Services Companies (NASSCOM), India's e-commerce market
continues to grow at the rate of five percent with estimated revenue of $56.6
billion in the financial year 2021 despite COVID-19 challenges. Finally, the
BSE Sensex rose 546.41 points or 1.02% to 54,369.77, while the CNX Nifty was up
by 128.05 points or 0.79% to 16,258.80.
The US markets ended mostly lower
on Wednesday on renewed concerns about the pace of US economic growth after
payroll processor ADP released a report showing private sector employment
increased by much less than expected in the month of July. ADP said private
sector employment rose by 330,000 jobs in July after surging by a downwardly
revised 680,000 jobs in June. Street had expected private sector employment to
spike by 695,000 jobs compared to the jump of 692,000 jobs originally reported
for the previous month. Besides, a steep drop by shares of General Motors (GM)
also weighed on Markets, with the auto giant plunging by 8.9 percent to a
five-month closing low. The decline by GM came after the company reported
second quarter earnings missed street estimates, although the automaker still
raised its full-year guidance. However, the negative sentiment was partly
offset by a report from the Institute for Supply management (ISM) showing
growth in US service sector activity accelerated much more than expected in
July. The ISM said its services PMI jumped to an all-time high of 64.1 in July
after pulling back to 60.1 in June, with a reading above 50 indicating growth
in the sector. Street had expected the index to inch up to 60.4. The bigger
than expected increase by the headline index came as the business activity
index surged up to 67.0 in July from 60.4 in June. The new orders index also
climbed to 63.7 in July from 62.1 in June, while the employment index rebounded
to 53.8 in July from 49.3 in June.
Crude oil futures ended deeply in
red on Wednesday, extending the sharp pullback seen over the two previous
sessions, on a surprise build in US crude stockpiles and as the spread of the
coronavirus Delta variant outweighed the impact of Mideast geopolitical
tensions. The US Energy Information Administration (EIA) said crude stockpiles
rose 3.6 million barrels during the week ended July 30, while street had
expected inventories to decrease by 3.1 million barrels. The EIA said
distillate fuel inventories also edged up by 0.8 million barrels, although
gasoline inventories tumbled by 5.3 million barrels. Crude oil futures for
September fell $2.41 or 3.4 percent to settle $68.15 barrel on the New York
Mercantile Exchange. October Brent crude dropped $2.03 or 2.8 percent to settle
at $70.38 a barrel on London's Intercontinental Exchange.
Rising for third straight
session, Indian rupee strengthened substantially against dollar on Wednesday,
owing to dollar sale by exporters and banks and healthy gains in domestic
equity markets. Sentiments remained positive as ICRA stated that the IT
services companies are expected to see growth in revenue, driven by robust demand
for digital technologies resulting in higher awards of contracts. Traders
ignored report that India's service sector remained into contraction territory
in the month of July, largely due to the COVID-19 pandemic and local
restrictions. As per the survey report, the seasonally adjusted Nikkei Services
Business Activity Index stood at 45.4 in July from 41.2 in June. On the global
front, sterling ticked higher against the dollar on Wednesday, buoyed by risk
sentiment in markets, optimism over the outlook for COVID-19 in Britain, and
anticipation of a hawkish turn from the Bank of England when it meets on
Thursday. Finally, the rupee ended 74.19, stronger by 9 paise from its previous
close of 74.28 on Tuesday.
The FIIs as per Wednesday's data
were net buyer in equity segment, while net seller in debt segment. In equity
segment, the gross buying was of Rs 9016.07 crore against gross selling of Rs
6918.02 crore, while in the debt segment, the gross purchase was of Rs 286.41
crore against gross selling of Rs 757.02 crore. Besides, in the hybrid segment,
the gross buying was of Rs 6.08 crore against gross selling of Rs 22.75 crore.
The US markets ended mostly lower
on Wednesday after the vice-chair of the Federal Reserve suggested rates could
rise by 2023 and mixed economic data for July showed US companies adding far
fewer jobs than expected. Asian markets are trading mostly in green on Thursday
despite hawkish remarks from a senior official at the US Federal Reserve that
boosted the dollar while weighing on risk appetite, and uncertainty about
Chinese policy. Indian markets ended at record closing highs Wednesday led by
financial stocks. However, broader markets, midcap and small cap indices
underperformed the front-liners to end a percent lower each. Today, the start
of session is likely to be cautious, after two days of relentless gains, amid
mixed global cues. High volatility could be in store on account of weekly
F&O expiry. Some respite may come later in the day with report that Spain
has opened its doors to fully vaccinated Indians, joining France, Germany and
Switzerland that did so a few weeks earlier. Delhi said on Wednesday it had
recorded no death from Covid-19 in 24 hours: the fifth time it happened so in
the second wave of the pandemic. Some support will come as Industry chamber
PHDCCI called for a 3-tier GST rate structure, with the highest slab at 18 per
cent, to help boost consumption and reduce evasion. It said this
rationalisation of rates will increase consumption and tax revenue, reduce
compliances, reduce tax evasion and help to make GST as good and simple tax, as
simplified tax regime is the need of hour to reduce litigation pertaining to
tax matters. Traders may take note of a private survey report stating that
digital adoption by small businesses accelerated since the outbreak of
Covid-19, with as many as 64 per cent micro small and medium enterprises'
(MSMEs) sales through online channels growing over the last 12 months.
Meanwhile, the Reserve Bank of India (RBI) gave banks time till October 31 to
comply with its guidelines on current account and overdraft facilities, by
which time banks must come to a resolution on the issue. Primary market
activity is also likely to remain heightened as all the issues will open for
subscription on Day 2. Exxaro Tiles IPO was subscribed 4.63 times on Day 1,
Windlas Biotech 3.15 times, Devyani International 2.69 times and Krsnaa
Diagnostics 1.16 times.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
16,258.80
|
16,193.24
|
16,307.29
|
BSE
Sensex
|
54,369.77
|
54,114.09
|
54,545.69
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
State Bank of India
|
1,297.61
|
456.95
|
443.15
|
469.10
|
ICICI Bank
|
287.30
|
714.65
|
699.44
|
723.64
|
Tata Motors
|
261.86
|
298.15
|
294.75
|
304.00
|
Bharti Airtel
|
214.14
|
574.40
|
567.50
|
584.10
|
Power Grid Corporation of India
|
174.92
|
175.25
|
173.86
|
176.61
|
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