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NSE Intra-day chart (12 July 2022)
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Market Commentary 13 July 2022
Benchmarks to open in green following Asian peers

 

Indian equity benchmarks traded under pressure and lost nearly a percent on Tuesday weighed by IT, TECK and Metal stocks amid weakness across global markets. After the weak start, the benchmarks drifted further lower and settled around the day's low ahead of the industrial growth data for May and retail inflation figures for June to be out later in the day. There are expectations that India's retail inflation likely held steady in June, but well above the Reserve Bank of India's tolerance limit for a sixth month as lower fuel and cooking oil prices offset higher services and food costs. Sentiments remained down-beat as Crisil Research said that India Inc is staring at the third consecutive quarter of a year-on-year drop in profit margins for the April-June 2022 period. Some pessimism also came with a private report stated that private equity investments into domestic companies fell 17 per cent to $6.72 billion on an annual basis in the June quarter. Benchmarks extended fall in final hour of trade, amid a private report stating that though there are signs of easing commodity prices, the economic outlook for the current financial year 2022-23 remains quite uncertain and will ride completely on the wheels of private consumption and investment demand. Some concern also came as exchange data showed foreign institutional investors (FIIs) remained net sellers on Monday as they offloaded shares worth Rs 170.51 crore. Market participants overlooked Commerce and Industry Minister Piyush Goyal's statement that the country's exports are likely to register a reasonable level of growth in the current financial year despite the global uncertainties on the trade front. Meanwhile, the Reserve Bank asked banks to put in place additional arrangements for export and import transactions in Indian rupees in view of increasing interest of the global trading community in the domestic currency. Finally, the BSE Sensex fell 508.62 points or 0.94% to 53,886.61 and the CNX Nifty was down by 157.70 points or 0.97% to 16,058.30.

 

The US markets ended in red on Tuesday, extending their previous session's losses, as traders looked ahead to the Labor Department's report on consumer price inflation in the month of June. Street currently expect the report to show an acceleration in the annual rate of consumer price growth to 8.8 percent in June from 8.6 percent in May. Further, concerns about the emergence of a new, more infectious Covid-19 strain in several parts of the world also continued to weigh on investors' minds. Many cities in China are already taking steps to stop the spread of the new strain, leading to worries about another round of painful lockdowns, especially in Shanghai or Beijing. A Covid-19 resurgence and the resumption of Chinese lockdowns could put further pressure on a global economy that is already being squeezed by aggressive monetary policy tightening by the world's central banks. On the sectoral front, energy stocks saw substantial weakness on the day, moving sharply lower along with the price of crude oil. Crude for August delivery plummeted $8.25 or 7.9 percent to $95.84 a barrel, closing below $100 a barrel for the first time in two months. Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 3.9 percent and the NYSE Arca Oil Index tumbled by 2.4 percent. Significant weakness was also visible among gold stocks, as reflected by the 2.4 percent slump by the NYSE Arca Gold Bugs Index. The index dove to its worst closing level in over two years amid a decrease by the price of the precious metal.

 

Crude oil futures ended deeply lower on Tuesday on weak demand outlook. The steep drop in crude oil prices reflected concerns that a slowdown or outright recession by the global economy will lead to reduced energy demand. Besides, concerns about the emergence of a new, more infectious Covid-19 strain in several parts of the world continue to weigh on investors' minds. Many cities in China are already taking steps to stop the spread of the new strain, leading to worries about another round of painful lockdowns, especially in Shanghai or Beijing. A Covid-19 resurgence and the resumption of Chinese lockdowns could put further pressure on a global economy that is already being squeezed by aggressive monetary policy tightening by the world's central banks. Benchmark crude oil futures for August delivery fell $8.25 or 7.9 percent to settle at $95.84 a barrel on the New York Mercantile Exchange. Brent crude for September delivery dropped $7.61 or 7.1 percent to settle at $99.49 a barrel on London's Intercontinental Exchange.

 

Continuing previous session drubbing, Indian rupee concluded substantially weaker against dollar on Tuesday on account of continued dollar demand from importers and banks. Sentiments were fragile amid a private report stating that though there are signs of easing commodity prices, the economic outlook for the current financial year 2022-23 remains quite uncertain and will ride completely on the wheels of private consumption and investment demand. Some concern also came as exchange data showed foreign institutional investors (FIIs) remained net sellers on Monday as they offloaded shares worth Rs 170.51 crore. Besides, losses in the local equity market also dampened sentiments. On the global front, euro fell against dollar weighed down by the likelihood of recession triggered by an energy crunch and an ECB rate rise campaign that lags far behind that of the Fed. Finally, the rupee ended at 79.59 (provisional), weaker by 14 paisa from its previous close of 79.45 on Monday.

 

The FIIs as per Tuesday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 5657.93 crore against gross selling of Rs 5298.77 crore, while in the debt segment, the gross purchase was of Rs 38.69 crore against gross selling of Rs 75.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.44 crore against gross selling of Rs 11.83 crore.

 

The US markets ended lower on Tuesday as growing signs of recession kept buyers out of the equities market ahead of inflation data. Asian markets are trading mostly in green on Wednesday despite persistent worries that steep hikes in pandemic-era interest rates might hurt economic growth. Indian markets ended lower for the second consecutive session on Tuesday as investors continued to dump IT, banking and FMCG stocks amid a bearish trend in global markets. Today, markets likely to get positive start following Asian peers. Traders will be getting encouragement as data by the National Statistical Office (NSO) showed that India's industrial production rose 19.6 per cent in May 2022. As per the Index of Industrial Production (IIP), the manufacturing sector's output grew 20.6 per cent in May 2022. Some support will come as Retail inflation dropped marginally to 7.01 per cent in June mainly due to slight easing in prices of vegetables and pulses, though it still remained above the Reserve Bank's comfort level for the sixth month in a row. The consumer price index (CPI) based inflation stood at 7.04 per cent in the preceding month of May. Traders may take note of report that Finance minister Nirmala Sitharaman has asserted that the pointed attack on inflation will need to continue, and that she has been monitoring price pressure item by item, as elevated inflation ultimately crimps growth. Besides, Governor Shaktikanta Das said India's central bank is for an orderly appreciation or depreciation in the currency and is intervening in all market segments to curb volatility. However, there may be some cautiousness with a private report that the country's current account deficit is likely to touch $105 billion or 3 per cent of the GDP this fiscal, mainly due to continuously widening trade deficit. Meanwhile, on July 12, 2022, Foreign Institutional Investors (FII) were once again net sellers of domestic stocks. FIIs pulled out Rs 1,565 crore. Power stocks will be in focus as India's power minister said the current global energy crisis is likely to go on for some time due to the cartelisation of the fossil fuel industry, not just because of the Ukraine conflict. There will be some reaction in banking industry stocks with CARE Ratings' report that even though the gross non-performing assets (GNPA) of scheduled commercial banks in India has hit a six year low of 5.9 per cent in FY22, it can improve further.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,058.30

16,006.71

16,134.31

BSE Sensex

53,886.61

53,728.89

54,140.41

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil and Natural Gas Corporation

252.16

124.00

122.75

126.00

NTPC

191.38

146.85

144.56

148.61

Hindalco Industries

168.96

346.30

339.94

354.34

ITC

140.74

292.40

290.41

294.86

ICICI Bank

102.19

759.00

755.31

765.06

 

  • IndusInd Bank is planning to raise funds through debt securities in any permitted mode on a private placement basis.
  • Bajaj Finserv's subsidiary company -- Bajaj Allianz Life Insurance has entered into a strategic partnership with City Union Bank to offer its life insurance solutions to the customers of bank.
  • Bharti Airtel has allotted 27,543 equity shares of face value of Rs 5 each on conversion of FCCBs of principle value of $200,000 on July 11, 2022.
  • Bajaj Auto has hiked prices across select models.
News Analysis