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NSE Intra-day chart (19 July 2022)
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Market Commentary 20 July 2022
Benchmarks to get gap-up opening following firm global cues

 

Indian equity benchmarks extended their winning run for the third straight session amid volatile trade on Tuesday. After making gap down opening, domestic indices swung between gains and losses during intraday deals, as traders were concerned with private report stating that American brokerage 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. Some cautiousness also came in the markets 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, key gauges gained some strength in late afternoon session to end in green on the back of fag-end buying interest in Realty, banking and Auto stocks.  Traders also found some solace with Minister of State for Finance Pankaj Chaudhary's statement that the government has taken several supply-side measures to tame rising inflation. Chaudhary stated the price situation of major essential commodities is monitored by the government on a regular basis and corrective action is taken from time to time. Some support also came as Minister of State for Finance Bhagwat Karad stated that concrete steps taken by the government and RBI helped banks recover bad loans worth over Rs 8.6 lakh crore in the last eight financial years. Finally, the BSE Sensex rose 246.47 points or 0.45% to 54,767.62 and the CNX Nifty was up by 62.05 points or 0.38% to 16,340.55.

 

The US markets ended higher on Tuesday as traders bet on strong corporate earnings reports. Investors were betting that stocks have reached a bottom after their steep declines this year, and as the latest round of earnings reports showed businesses are working through economic pressures better than feared in the second quarter. Toymaker Hasbro (HAS) and oil services giant Halliburton (HAL) posted notable gains after reporting better than expected quarterly earnings.  Meanwhile, traders largely shrugged off a report from the Commerce Department unexpectedly showing a continued decline in housing starts in the month of June. The Commerce Department said housing starts slumped by 2.0 percent to an annual rate of 1.559 million after plunging by 11.9 percent to a revised rate of 1.591 million in May. The continued decrease came as a surprise to participants, who had expected housing starts to jump by 2.3 percent to an annual rate of 1.585 million from the 1.549 million originally reported for the previous month. With the unexpected decrease, housing starts dropped to the lowest annual rate since hitting 1.505 million in April of 2021. The report showed building permits also fell by 0.6 percent to an annual rate of 1.685 million in June after tumbling by 7.0 percent to a rate of 1.695 million in May. On the sectoral front, Semiconductor stocks turned in some of the market's best performances on the day, resulting in a 4.6percent spike by the Philadelphia Semiconductor Index. Substantial strength was also visible among airline stocks, with the NYSE Arca Airline Index soaring by 4.1 percent.

 

Crude oil futures ended higher, extending their previous sessions' gains, amid signs of tighter supplies in the global oil market. The dollar's continued weakness contributed as well to the sharp rise in oil prices. The dollar index dropped to 106.40 before regaining some ground. Still, at 106.70, the index was down more than 0.6% a little while ago. However,  Oil prices traded lower earlier in the session on worries about the outlook for energy demand as new coronavirus cases in China jumped to almost 700 and data showed the eurozone's inflation accelerated as estimated in June to set a fresh record high, raising worries about a possible recession. Benchmark crude oil futures for August delivery rose $1.62 or 1.6 percent to settle at $104.22 a barrel on the New York Mercantile Exchange. Brent crude for September delivery surged $1.06 or 1 percent to settle at $107.33 a barrel on London's Intercontinental Exchange.

 

Erasing previous session losses, Indian rupee ended higher against dollar on Tuesday, on persistent selling of the American currency by exporters. Traders took some support with Minister of State for Finance Pankaj Chaudhary's statement that the government has taken several supply-side measures to tame rising inflation. However, gains remain capped with private report stating that American brokerage 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. On the global front, euro rallied on Tuesday after report that European Central Bank policymakers will discuss whether to raise interest rates by 25 or 50 points at their meeting on Thursday to tame record-high inflation. Finally, the rupee ended at 79.92 (provisional), stronger by 6 paisa from its previous close of 79.98 on Monday.

 

The FIIs as per Tuesday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 15103.95 crore against gross selling of Rs 14883.96 crore, while in the debt segment, the gross purchase was of Rs 685.01 crore against gross selling of Rs 124.27 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.55 crore against gross selling of Rs 7.48 crore.

 

The US markets ended higher on Tuesday as more companies joined big banks in reporting earnings that beat forecasts, offering respite to investors worried about higher inflation and a tightening Fed denting the corporate bottomline. Asian markets are trading in green on Wednesday mirroring a strong session on Wall Street overnight. Indian markets ended higher on Tuesday with much of the gains coming toward the fag-end of the session amid foreign funds inflow. Today, markets are likely to get gap-up opening tracking firm global cues. Traders will be taking encouragement with Finance ministry's statement that the economy is on course to achieve projected 8-8.5 per cent growth based on high-frequency indicators for the first quarter of the current fiscal. Some support will come as Foreign Institutional Investors (FII) were net buyers for the second day running on Dalal Street. FIIs pumped in Rs 976 crore on July 19. Traders may take note of Union Finance Minister Nirmala Sitharaman has said the mass consumption items such as pulses, wheat, rice, flour, and curd will not attract the 5 per cent goods and services tax (GST) when sold loose, and not pre-packed or pre-labelled. However, there may be some cautiousness with private report that a weak rupee and elevated fuel prices will keep India's current account deficit (CAD) under pressure with analysts seeing it at about 3% of GDP in FY23 compared to 1.2% in FY22 even as these will exert pressure on government finances. Besides, investment in the Indian capital markets through participatory notes (P-notes) declined to Rs 80,092 crore till June-end, making it the lowest level in 20 months, on aggressive rate hike by the US Federal Reserve. There will be some buzz in the auto industry stocks as the Society of Indian Automobile Manufacturers (SIAM) data showed that India's passenger vehicle exports rose by 26 per cent in the first quarter as compared with the April-June period of last fiscal which saw disruptions due to the second wave of COVID-19. Oil industry stocks will be in focus with a private report that India has cut a windfall tax on diesel and aviation fuel shipments by 2 rupees a liter. There will be some reaction in edible oil industry stocks as Solvent Extractors' Association (SEA) said that India's oilmeals export jumped over two-fold in June to 4,31,840 tonnes on record shipment of rapeseed meal. The exports stood at 2,03,868 tonnes in the same month last year. Investors awaited financial results from blue-chip companies including Wipro, IndusInd and Havells due later in the day for domestic cues.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,340.55

16,231.90

16,404.35

BSE Sensex

54,767.62

54,394.46

54,979.16

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil and Natural Gas Corporation

337.78

127.90

123.84

132.59

ICICI Bank

128.25

780.65

771.20

786.05

State Bank of India

117.24

497.95

491.11

501.66

Tata Motors

115.53

449.05

445.05

452.45

Power Grid Corporation of India

111.91

210.00

209.24

211.14

 

  • IndusInd Bank has received an approval for raising of funds through debt securities in any permitted mode on a private placement basis. 
  • Hero MotoCorp has launched an exclusive Rally Edition of its widely popular motorcycle Xpulse 200 4V.
  • NTPC and Indian Oil have signed an agreement for the formation of a joint venture company for meeting the power requirements of upcoming projects of Indian Oil refineries.
  • Bharti Airtel has added 10,27,881 customers in May, 2022.
News Analysis