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NSE Intra-day chart (19 July 2021)
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Market Commentary 20 July 2021
Benchmarks likely to continue weakness amid global sell-off

 

Indian equity benchmarks closed deep in red on Monday amid negative global cues. Markets have opened gap down, as traders got anxious with Niti Aayog CEO Amitabh Kant expressed concern over high food inflation due to higher prices of oilseeds and edible oils. Some cautiousness also came as India recorded 38,325 fresh Covid-19 cases in the last 24 hours, taking the total caseload to 31,143,595. The death count increased to 414,141 with 501 new fatalities. Traders were also worried amid reports that foreign portfolio investors (FPIs) have pulled out Rs 4,515 crore from the equities segment in the first half of July as they turn cautious towards the Indian market. But, key indices managed to reduce some losses at the end of the day, taking support from Services Export Promotion Council (SEPC) stating that the country's services exports are expected to grow 10 per cent in 2021-22 due to healthy growth of sectors such as professional and management consulting, audio visual, freight transport, and telecommunications. Some support also came with Finance Minister Nirmala Sitharaman's statement that India's continuous wide-ranging reforms make the country an attractive destination for foreign investments. She also mentioned about stimulus packages announced recently; as well as strong, calibrated relief and reforms during COVID leading to sharp decline in new infections with ramping up of the vaccination programme. 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. Finally, the BSE Sensex fell 586.66 points or 1.10% to 52,553.40, while the CNX Nifty was down by 171.00 points or 1.07% to 15,752.40.

 

The US markets ended lower on Monday on concerns about a resurgence of the coronavirus, as the delta variant contributes to a spike in infections in the US. According to data from the CDC, the 7-day average of Covid-19 cases in the US has jumped to nearly 30,000 after falling as low as 11,455 a month ago. The renewed virus concerns led to significant weakness among companies hit hardest by the pandemic, with cruise operators Carnival (CCL), Norwegian Cruise Lines (NCLH) and Royal Caribbean (RCL) posting steep losses. Airline stocks also moved substantially lower on the day, dragging the NYSE Arca Airline Index down by 4.7 percent to its lowest closing level in well over five months. Considerable weakness was also visible among energy stocks, which moved sharply lower along with the price of crude oil. On the economic data front, the National Association of Home Builders released a report showing an unexpected dip in US homebuilder confidence in the month of July. The report showed the NAHB/Wells Fargo Housing Market Index edged down to 80 in July from 81 in June. The modest decrease surprised participants, who had expected the index to inch up to 82. With the unexpected drop, the housing market index slipped to its lowest level since hitting 78 in August of 2020.

 

Crude oil futures ended deeply in red on Monday weighed down by concerns about oversupply in the market after the Organization of the Petroleum Exporting Countries and it allies, collectively known as OPEC+, agreed to boost output. As per the agreement reached, the cartel boost output by 400,000 barrels a day each month from August, continuing until all of its halted output has been revived. Further, Oil prices were also hurt by rising concerns about outlook for energy demand due to the rapidly spreading delta variant of the coronavirus and fresh restrictions on movements in several countries across the world. Crude oil futures for September fell $5.21 or 7.3 percent to settle at $66.35 barrel on the New York Mercantile Exchange. September Brent crude dropped $5.24 or 7.1 percent to settle at $68.36 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably weaker against dollar on Monday with fresh dollar demand by banks and importers. Traders got cautious, amid reports that foreign portfolio investors (FPIs) have pulled out Rs 4,515 crore from the equities segment in the first half of July as they turn cautious towards the Indian market. Sentiments were also impacted as Niti Aayog CEO Amitabh Kant expressed concern over high food inflation due to higher prices of oilseeds and edible oils. Market participants paid no heed towards Services Export Promotion Council (SEPC) stating that the country's services exports are expected to grow 10 per cent in 2021-22 due to healthy growth of sectors such as professional and management consulting, audio visual, freight transport, and telecommunications. On the global front; pound fall to a three-month low on Monday, as a cautious tone in global markets meant riskier currencies lost out in favor of the safe-haven dollar. Finally, the rupee ended 74.88, weaker by 31 paise from its previous close of 74.57 on Friday.

 

The FIIs as per Monday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 5018.41 crore against gross selling of Rs 5442.06 crore, while in the debt segment, the gross purchase was of Rs 990.60 crore with gross sales of Rs 1170.22 crore. Besides, in the hybrid segment, the gross buying was of Rs 14.15 crore against gross selling of Rs 35.29 crore.

 

The US markets ended lower on Monday as a rise in worldwide coronavirus cases and increasing US deaths drove investors out of risky assets, crushing bond yields and share prices. Asian markets are trading in red on Tuesday following an overnight tumble for stocks on Wall Street. Indian markets ended sharply lower on Monday as financials and metals dragged the indices amid weak global cues as signs of growing inflationary pressures. Today, the markets are likely to extend previous session's losses with negative start following weakness in global peers amid concerns over the resurgence of coronavirus cases in many countries. Traders may also choose to remain on the sidelines ahead of the market holiday on Wednesday on account of Bakri-Id, resulting in lower volumes. There will be some cautiousness 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. However, some respite may come later in the day with Union minister Pankaj Chaudhary's statement that Indian economy is showing signs of revival since the peaking of second COVID wave in the first half of May on the back of targeted fiscal relief, strong push for capital expenditure, and a rapid vaccination drive. Additionally, notwithstanding the second wave of COVID-19, Chief Economic Adviser (CEA) K V Subramanian expressed hope that economic growth during the current financial year 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. Some support may come as at 29,424, daily Covid-19 cases in India fell below the 30,000-mark to its lowest count in 125 days while the deaths from the virus dipped to a 111-day low of 373. The total caseload stands at 31,173,019 and death toll at 414,513. Aviation industry stocks will be in focus as the country's aviation regulator said around 31.13 lakh domestic passengers travelled by air in June, 47 per cent higher than the 21.15 lakh who travelled in May. According to the Directorate General of Civil Aviation (DGCA), 57.25 lakh people had travelled within the country by air in April. 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

15,752.40

15,694.30

15,823.70

BSE Sensex

52,553.40

52,365.81

52,781.09

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

213.46

308.85

306.46

310.76

ITC

164.64

207.75

206.24

209.39

State Bank of India

144.26

427.90

421.35

431.95

Oil & Natural Gas Corporation

143.95

114.60

113.69

116.04

NTPC

143.64

121.40

119.31

122.66

 

  • HDFC Bank's subsidiary -- HDFC Securities is creating its own discount broking architecture to compete with new-age firms like Zerodha which are eating into market shares of entrenched players in the business. 
  • L&T's construction arm -- L&T construction has won a slew of orders in India and abroad for its various businesses. 
  • M&M has declared proactive inspection and replacement of diesel engines in some of its vehicles manufactured at Nashik factory for suspicion of premature wear of engine parts. 
  • Maruti Suzuki India has tied up with Bank of Maharashtra for offering inventory financing to its dealer partners.
News Analysis