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NSE Intra-day chart (18 July 2022)
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Market Commentary 19 July 2022
Benchmarks to make negative start on weak global cues

 

Rising for a second straight session, Indian equity benchmarks ended on a buoyant note and gained nearly one and a half percent on Monday, taking positive cues from Asian and global markets. After the gap-up start, the benchmarks gradually inched higher, as traders got encouragement with SBI Research in its latest report stated that the income of farmers has grown in the range of 1.3-1.7 times in FY22 from the FY18 levels on average while grain exports soared to over $50 billion. For certain crops in some states (like soyabean in Maharashtra and cotton in Karnataka) farmers' income more than doubled in FY22 from FY18 levels. Traders were also getting support with Reserve Bank of India (RBI) in its article stating that the impact of US Federal Reserve's announcement in November last year to taper its asset purchases was moderate on Indian financial markets largely due to the country's strong external position in 2021. Some support also came after private report stated that India's real gross domestic product (GDP) growth for the financial year 2022-23 is expected to be above 7 percent despite global headwinds.  Domestic sentiments remained firm in second half of trading session, after the Reserve Bank of India said in its latest monthly bulletin that the Indian economy remains resilient despite formidable global headwinds and amidst fears of a recession. The bulletin said that in spite of geopolitical spillovers, 'There are sparks in the wind that ignite the innate strength of the economy and set it on course to becoming the fastest growing economy in the world, though besieged it might be by fears of recession'. Some support also came after Agriculture Minister Narendra Singh Tomar expressed hope that monsoon rains, which are crucial for Kharif sowing, will progress in the coming days and said it is too early to comment on the paddy acreage. Traders also took a note of the Reserve Bank of India (RBI) data showed that the RBI remained net buyer of the US currency in May, after it purchased $2.001 billion on net basis from the spot market. The RBI purchased $10.143 billion from the spot market and sold $8.142 billion. Traders overlooked Credit Rating Agency ICRA's report stated that states have budgeted 36 per cent higher capital expenditure during this financial year (FY23), which may lead to a sharp rise in their fiscal deficit to Rs 8.4 lakh crore.  Finally, the BSE Sensex rose 760.37 points or 1.41% to 54,521.15 and the CNX Nifty was up by 229.30 points or 1.43% to 16,278.50.

 

The US markets ended lower on Monday as traders continued to worry about the economic outlook ahead of next week's Federal Reserve meeting. Traders were also reluctant to make significant bets ahead of the release of earnings news from a slew of big-name companies later this week. However, the early strength on markets came as traders continued to pick up stocks at relatively reduced levels after the rally seen last Friday halted a recent downward trend. Positive sentiment was also generated in reaction to upbeat earnings news from Goldman Sachs, with the financial giant jumping by 2.5 percent. The advance by Goldman Sachs came after the company reported second quarter results that exceeded street estimates on both the top and bottom lines. On the economic data front, the National Association of Home Builders released a report showing a substantial deterioration in US homebuilder confidence in the month of July. The report showed the NAHB/Wells Fargo Housing Market Index plunged to 55 in July from 67 in June. Street had expected the index to edge down to 66. The HMI showed its second biggest single-month drop after a 42-point nosedive in April 2020, tumbling to its lowest level since May 2020. On the sectoral front, Healthcare stocks came under pressure over the course of the session, dragging the Dow Jones US Health Care Index down by 2.2 percent. Significant weakness also emerged among biotechnology stocks, as reflected by the 2.1 percent slump by the NYSE Arca Biotechnology Index.

 

Crude oil futures ended sharply higher on Monday on concerns over gas supply from Russia. Further, a weak dollar contributed significantly to the jump in oil prices. The dollar index dropped to 106.89 before recovering to 107.30, but still remained firmly down with a loss of more than 0.6%. Meanwhile, US President Joe Biden, who visited the Middle East, returned without getting assurances from key producer Saudi Arabia to boost oil supply. Saudi's foreign minister reportedly said that there was no discussion on oil at the US-Arab summit and that OPEC+ would continue to assess market conditions and what is necessary. Benchmark crude oil futures for August delivery rose $5.01 or 5.1 percent to settle at $102.60 a barrel on the New York Mercantile Exchange. Brent crude for September delivery surged $5.11 or 5 percent to settle at $106.27 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably weak against dollar on Monday due to a surge in crude oil prices and unrelenting foreign fund outflows. Foreign investors continue to be cautious about the Indian equity market and have pulled out over Rs 7,400 crore this month so far amid sustained strengthening of the dollar and increasing concerns over a recession in the US. This comes following a net withdrawal of Rs 50,203 crore from equities in June. Meanwhile, RBI remained net buyer of the US currency in May, after it purchased $2.001 billion on net basis from the spot market. The RBI purchased $10.143 billion from the spot market and sold $8.142 billion. On the global front, euro firmed to a one-week high on Monday, benefiting from the dollar's retreat after several Federal Reserve officials signaled they did not favor stepping up the rate hiking pace. Finally, the rupee ended at 79.98 (provisional), weaker by 16 paisa from its previous close of 79.82 on Friday.

 

The FIIs as per Monday's data were net sellers in both equity and debt segment.  In equity segment, the gross buying was of Rs 5297.86 crore against gross selling of Rs 6932.38 crore, while in the debt segment, the gross purchase was of Rs 118.77 crore against gross selling of Rs 130.84 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.85 crore against gross selling of Rs 8.68 crore. Thus, FIIs stood as net sellers of Rs 7.83 crore in hybrid segment.

 

The US markets ended lower on Monday after bank stocks erased earlier gains and Apple shares fell on a report saying the company plans to slow hiring and spending growth next year. Asian markets are trading mostly lower on Tuesday on the back of negative cues markets US markets. Indian equity markets ended sharply higher on Monday on the back of positive global cues. Today, the markets are likely to make negative start on weak cues from US markets amid rising crude oil prices. There may be cautiousness in the markets as a private report said that it has cut its FY23 real GDP expansion estimate for India by 0.40 per cent to 7.2 per cent on slower global growth. It said the GDP growth will slow down to 6.4 per cent in FY24, adding that this is lower by 0.30 per cent compared to the earlier estimate. Further, traders may be concerned as the ministry of food and public distribution has said that rice stocks in the central pool are likely to plunge below the buffer norm by 2.2 million tonne (MT) or 16%, if the free ration scheme - Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) - is extended to the whole of the second half of the current financial year. The ministry said running the scheme for October-March FY23 with the current grain composition will cost the exchequer a massive Rs 90,000 crore if not higher. However, some respite may come later in the day on report that retirement fund body EPFO is likely to approve this month a proposal to enhance its investments in equities to up to 20 percent of the investible deposits from the current limit of 15 percent. At present, EPFO can invest 5 to 15 percent of the investible deposits in equity or equity-related schemes. Traders may get some encouragement as Minister of State for Finance Pankaj Chaudhary said the government has taken several supply-side measures to tame rising inflation. There may be some buzz in road and construction sector stocks as rating agency Crisil said India's national highway construction will likely reach only 32-34 km per day during the current financial year as input prices are expected to remain elevated. It expects the pace of highway construction to pick up post monsoon.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,278.50

16,184.48

16,330.23

BSE Sensex

54,521.15

54,185.19

54,706.88

 

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

211.86

450.50

444.53

455.13

ONGC

210.10

130.00

127.73

131.48

Hindalco Industries

138.63

367.20

358.23

372.13

Axis Bank

124.65

683.50

668.63

693.18

Power Grid

113.67

210.45

208.77

212.27

 

  • Titan Company's flagship brand -- Tanishq has opened new store at Velachery, Chennai, in Tamil Nadu. As part of inauguration, the brand is extending special offers on jewellery purchase.
  •  Coal India (CIL) has awarded the contract to PT Bara Daya Energy consortium to import 7.91 lakh tonnes of coal for supplying to gencos during August and September.
  •  Maruti Suzuki India has launched new S-Presso with Next Gen K-Series 1.0L Dual Jet, Dual VVT engine with Idle-Start-Stop technology.
  •  L&T Realty, the real-estate development arm of Larsen & Toubro (L&T), is all set to expand its footprint in Mumbai market to drive growth.
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