Indian equity
benchmarks swung between gains and losses in a volatile session and managed to
end in green on Tuesday, tracking gains in index majors Tech Mahindra, TCS and
Nestle. After a cautious start, domestic equities witnessed lackluster movement
for most part of the day, as traders got anxious with Federation of Indian
Export Organisations (FIEO) Director General Ajay Sahai's statement that with
Kabul falling into the hands of the Taliban, bilateral trade between
Afghanistan and India will get impacted significantly in these uncertain times.
Some concern also came as a private report stating that consumer confidence on
financial preparedness for the future has dropped in the last two years with
the onset of the coronavirus pandemic, even as the financial awareness and need
for insurance has increased. Besides, the microfinance industry's gross loan
portfolio (GLP) marginally declined by around 4 per cent to Rs 2,14,528 crore
as of June 30 this year, against Rs 2,24,205 crore as of June 20, 2020,
according to a report by Sa-Dhan. Sa-Dhan is an RBI recognised self-regulatory
organisation for microfinance institutions. However, key indices turned sharply
higher in the last hour of trade, taking support from Finance Minister Nirmala
Sitharaman's statement that she expects inflation to remain in the prescribed
range during the current fiscal. The RBI has been mandated to keep inflation at
4 per cent, with tolerance level of 2 per cent on either side. Some support
also came with report that investments by private equity and venture capital
funds doubled to a record high of $9.5 billion in July mainly driven by higher
investor interest in the e-commerce sector. Private equity (PE) and venture
capital (VC) investments stood at $4.1 billion in the year-ago period. Some
comfort also came after Retailers Association of India (RAI) said Retail sales
across the country continued to recover in July, reaching 72 per cent of the
pre-pandemic levels of July 2019, and businesses are pinning hopes on the
festive seasons for a further boost. The rate of recovery was 50 per cent of
pre-pandemic levels in June 2021. Finally, the BSE Sensex rose 209.69 points or
0.38% to 55,792.27, while the CNX Nifty was up by 51.55 points or 0.31% to
16614.60.
The US markets ended lower on
Tuesday after the Commerce Department released a report showing US retail sales
tumbled by much more than expected in the month of July. The report said retail
sales slumped by 1.1 percent in July after climbing by an upwardly revised 0.7
percent in June. Street had expected retail sales to dip by 0.3 percent
compared to the 0.6 percent increase originally reported for the previous
month. Excluding a steep drop in sales by motor vehicles and parts dealers,
retail sales fell by 0.4 percent in July after jumping by 1.6 percent in June.
Ex-auto sales were expected to inch up by 0.1 percent. A steep drop by shares
of Home Depot (HD) also weighed on the markets, with the home improvement
retailer plunging by 4.3 percent after reporting second quarter earnings that
beat estimates but weaker than expected same-store sales growth. On the
sectoral front, steel stocks showed a substantial move to the downside amid
concerns about the global economic outlook, resulting in a 3.1 percent nosedive
by the NYSE Arca Steel Index. Considerable weakness was also visible among
housing stocks, as reflected by the 2.9 percent slump by the Philadelphia
Housing Sector Index.
Crude oil futures ended lower for
four straight day on Tuesday on concerns about the outlook for energy demand
due to a surge in cases of the Delta variant of the coronavirus. The Japanese
government is set to extend COVID-19 emergency control measures to more areas
and into September to suppress the fifth wave of infections. Besides, worries
about energy demand have risen after data showed China's industrial production
and retail sales fell short of expectations in July. Also, daily crude
processing in China dropped to its lowest level since mid-2020 last month. Crude
oil futures for September fell $0.70 or 1 percent to settle $66.59 barrel on
the New York Mercantile Exchange. October Brent crude dropped $0.48 or 0.7
percent to settle at $69.03 a barrel on London's Intercontinental Exchange.
Rupee ended substantially weaker
against dollar on Tuesday on account of continued dollar demand from importers
and banks. Sentiments got hurt as Federation of Indian Export Organisations
(FIEO) Director General Ajay Sahai stated that bilateral trade between
Afghanistan and India will get impacted significantly in these uncertain times.
He said domestic exporters should follow caution looking into the political
development in Afghanistan, particularly with regard to payments, for which
adequate credit insurance may be availed by them. Some concern also came as
foreign portfolio investors (FPIs) sold Rs 7,000 crore worth of equities in the
secondary markets in the June quarter. The holding of these investors
(including ADR and GDR) in the BSE-200 index declined to 23.9 per cent from
24.4 per cent in March 2021. On the global front; pound hits its lowest level
in three weeks against the dollar on Tuesday as weakening risk sentiment
weighed on global stock markets, hitting risk-correlated currencies. Finally,
the rupee ended 74.35, weaker by 11 paise from its previous close of 74.24 on
Friday.
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 12300.62 crore against gross selling of Rs 12414.57 crore,
while in the debt segment, the gross purchase was of Rs 221.84 crore against
gross selling of Rs 376.38 crore. Besides, in the hybrid segment, the gross
buying was of Rs 5.12 crore against gross selling of Rs 16.57 crore.
The US markets ended lower on
Tuesday with the most significant declines seen in mega-cap technology-related
and consumer discretionary stocks as investors scaled down their risk appetite.
Asian markets are trading mostly in green on Wednesday as investors look ahead
to the Reserve Bank of New Zealand's interest rate decision. Indian markets
staged a sharp recovery from the day's lows to end Tuesday's volatile session
higher led by strong buying in IT and FMCG stocks. Today, the start of session
is likely to be flat-to-positive tracking mixed global cues and ahead of a
market holiday on Thursday looms. Sentiments will get a boost as RBI article
said the economy is gaining traction with gradual pick up in manufacturing
activity and moderation in contraction of services, spurred by comfortable
liquidity conditions. Observing that the retreat of the second wave of
coronavirus pandemic has been slow, the RBI in an article on the State of
Economy said, the aggregate demand conditions are buoyed by the release of
pent-up demand post unlock, while the supply situation is improving with the
monsoon catching up to its normal levels and sowing activity gaining pace.
Traders will be getting some encouragement as the government announced the
much-awaited guidelines and tax refund rates for the export boosting scheme
Remission of Duties and Taxes on Export Products (RoDTEP) for 8,555 export
items. The outlay for the scheme is Rs 12,454 crore in the current fiscal, with
the refund rates ranging from 0.5 per cent to 4.3 per cent. Some support will
come as Retailers Association of India (RAI) said retail sales across the
country continued to recover in July, reaching 72 per cent of the pre-pandemic
levels of July 2019, and businesses are pinning hopes on the festive seasons
for a further boost. Traders may take note of Union Road Transport and Highways
Minister Nitin Gadkari's statement that the National Automobile Scrappage
Policy will accelerate economic growth and boost employment generation in the
country. However, there may be some cautiousness as India recorded 35,201 new
Covid-19 cases and 440 deaths in the past 24 hours, taking its tally to
32,285,101 and the death toll to 432. Meanwhile, the Indian government has
asked a federal court in Washington to dismiss Britain's Cairn Energy suit
seeking enforcement of a $1.2 billion arbitral award, saying it had sovereign
immunity under US law. Textile industry stocks will be in focus as Icra in a
report stated that home textile exporters are set to clock a 20-25 per cent
growth in 2021-22 with healthy margins. It said the pandemic-induced lifestyle
changes stemming from heightened consciousness about hygiene and increased
prevalence of stay-at-home options are likely to result in a robust performance
for Indian home textile exporters. There will be some reaction in sugar
industry stocks with report that India is expected to withdraw sugar export
subsidies from the new season beginning October as a sharp rise in global
prices makes it easier for Indian mills to sell the sweetener on the world
market.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
16,614.60
|
16,530.49
|
16,663.64
|
BSE
Sensex
|
55,792.27
|
55,500.88
|
55,969.27
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata Motors
|
255.39
|
297.70
|
292.74
|
302.74
|
State Bank of India
|
229.57
|
421.50
|
415.89
|
426.49
|
Tata Steel
|
189.70
|
1503.70
|
1,485.64
|
1,527.89
|
Indian Oil Corporation
|
171.29
|
105.70
|
104.19
|
107.74
|
Oil & Natural Gas Corporation
|
160.25
|
113.85
|
112.36
|
115.66
|
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