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NSE Intra-day chart (23 August 2022)
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Market Commentary 24 August 2022
Markets to get flat-to-negative start amid weak global cues

 

Indian equity benchmarks snapped two-day losing streak and ended higher on Tuesday aided by market heavyweight Mahindra & Mahindra, Bajaj Finserv and Titan Company. After making cautious start, key gauges traded in green terrain, as the finance ministry has notified the consolidated rules for overseas investment by Indian entities to promote ease of doing business. The Foreign Exchange Management (Overseas Investment) Rules, 2022 will subsume extant regulations pertaining to Overseas Investments and Acquisition and Transfer of Immovable Property Outside India Regulations, 2015. Some support also came with a private report stating that the Centre may release about Rs 30,000 crore soon as GST (goods and services tax) compensation for June 2022, the last month of the five-year guaranteed compensation pledged by the Union government. However, key gauges slipped into red terrain in afternoon deals, as foreign institutional investors sold Rs 453.77 crore in the Indian markets on August 22. Some cautiousness also came in as a recent study by the Reserve Bank of India (RBI) shows project loan demand by Indian companies for capex in 2021-22 (FY22) did not pick up like it did in the preceding years. Domestic sentiments remained pessimistic, as the government introduced new set of rules for domestic entities, including companies and large family offices and start-ups, opting for overseas direct investment route (ODI), which could impact their acquisition decisions in a big way. But, key gauges erased losses to end higher, taking support from private report stating that The Reserve Bank's rate setting panel is likely to opt for slowing down the pace of hikes and increase the repo rate by 0.25 per cent in September. The central bank has already hiked the repo rate by 1.40 per cent in three consecutive actions since May this year, in response to the uncomfortably high inflation which has been consistently breaching upper end of the tolerance band set by the government to the RBI. Finally, the BSE Sensex rose 257.43 points or 0.44% to 59,031.30 and the CNX Nifty was up by 86.80 points or 0.50% to 17,577.50.

 

The US markets ended in red on Tuesday as worries about economic slowdown and tighter monetary policy weighed on sentiment. Data showing US business activity dropping for a second straight month and at the fastest pace as well since May 2020 weighed. Data from Markit Economics showed the S&P Global US Composite PMI came in with a score of 45 for August, down from a reading of 47.7 in July. The Manufacturing PMI fell to 51.3 in August from 52.2 a month earlier, while the Services PMI dropped to 44.1 in the month from 47.3 in July. Data from the Commerce Department showed new home sales in the U.S. dropped 12.6% month-over-month to a seasonally adjusted 511,000 in July, the lowest reading since January 2016. According to a report from the Federal Reserve Bank of Richmond, the Richmond Fed composite manufacturing index fell to -8 in August from 0 in the previous month. Meanwhile, Redbook Research Inc. said that the Redbook index increased by 13.5 percent in the week ending August 20, 2022 over the same week in the previous year. Besides, investors also looked ahead to Fed Chair Jerome Powell's speech at the central bank's annual Jackson Hole economic symposium later this week for clues about the bank's outlook for the economy and interest rates.

 

Crude oil futures ended sharply higher with rally over three and half percent on Tuesday. Traders weighed the prospects of the Organization of the Petroleum Exporting Countries and allies (OPEC+) cutting output to support prices in the event of Iranian crude entering the market.  Saudi Arabia has warned that OPEC could cut output to correct the recent oil price fall. Saudi's oil minister Prince Abdulaziz bin Salman said that the Organization of the Petroleum Exporting Countries stands ready to reduce production as future prices don't reflect the underlying fundamentals of supply and demand. Benchmark crude oil futures for September delivery surged $3.38 or about 3.7 percent to settle at $93.74 a barrel on the New York Mercantile Exchange. Brent crude for October delivery rose $3.74 or 3.87 percent to settle at $96.48 a barrel on London's Intercontinental Exchange.

 

Rupee ended weaker against dollar on Tuesday on account of continued dollar demand from importers and banks. Traders were worried as foreign institutional investors (FIIs) were net sellers in the capital market as they offloaded shares worth Rs 453.77 crore on Monday, exchange data showed. However, downfall remain capped with private report stating that The Reserve Bank's rate setting panel is likely to opt for slowing down the pace of hikes and increase the repo rate by 0.25 per cent in September. On the global front, euro hit a fresh two-decade low on Tuesday, dealt a fresh blow by renewed concern that an energy shock will keep inflation elevated and makes a recession in Europe all but certain. Finally, the rupee ended at 79.87 (Provisional), weaker by 3 paisa from its previous close of 79.84 on Monday.

 

The FIIs as per Tuesday's data were net sellers in equity and net buyers in debt segment. In equity segment, the gross buying was of Rs 6651.39 crore against gross selling of Rs 6997.73 crore, while in the debt segment, the gross purchase was of Rs 335.65 crore against gross selling of Rs 257.28 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.51 crore against gross selling of Rs 6.43 crore.

 

The US markets ended lower on Tuesday as investors focused on data showing a slowing economy ahead of a US Federal Reserve gathering later this week in Jackson Hole, Wyoming. Asian markets are trading mostly in red on Wednesday following overnight losses on Wall Street. Indian markets snapped their two-day losing streak and managed to close a volatile trading session with gains on Tuesday tracking gains in European markets. Today, domestic equity markets likely to get flat-to-negative start amid weakness in global markets. There will be some cautiousness as Standard and Poor's (S&P) said credit profiles could deteriorate for up to $114 billion of debt in the books of Indian companies tackling rising interest rates and inflation. Besides, the Securities and Exchange Board of India (Sebi) has imposed prudential limits on investments by portfolio managers in their own associates or related parties. However, some respite may come as Commerce Secretary BVR Subrahmanyam said India's merchandise exports are likely to be around $470-480 billion in the current fiscal against $420 billion in 2021-22. The secretary also said the trade deficit, which crossed $100 billion in the first four months of the current fiscal, is not going to cross a discomfort level. Traders may take encouragement with SBI Ecowrap report stating that India's GDP is expected to be much higher in Q1FY23 and growth is expected around 15.7 per cent with a large possibility of an upward bias because several indicators have shown good progress in the Indian economy. Also, Icra in its report said India's GDP growth in the first quarter of the current fiscal is expected to grow in double digits at 13% owing to a low base and robust recovery in the contact-intensive sectors following the widening vaccination coverage. Some support may come with a private report that Reserve Bank of India Governor Shaktikanta Das seeks to slow India's inflation to 4 per cent within two years after hitting its peak in the last few months. There will be some buzz in metal stocks after Union Minister Jyotiraditya M Scindia exuded confidence that India will become the number one producer of steel in the world in the days to come. Oil & gas sector stocks will be in focus with government data showing that India's crude oil production fell 3.8 per cent in July on lower output from fields operated by state-owned ONGC and private sector firms. Production of crude oil, which is refined to produce fuels such as petrol and diesel, fell to 2.45 million tonnes in July from 2.54 million tonnes a year back. There will be some reaction in aviation industry stocks as Jyotiraditya Scindia, Union Minister for Civil Aviation said Growth opportunities for airlines are tremendous as passenger volume will double from 200 million currently to 400 million over the next seven to 10 years. Electric vehicle restated companies stocks will be in limelight as India Energy Storage Alliance (IESA) in its report said India's electric vehicle market is expected to expand at a compounded annual growth rate of 49 per cent between 2021-2030, with the segment's volumes set to cross annual sales of 17 million by 2030.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,577.50

17,406.61

17,686.96

BSE Sensex

59,031.30

58,402.81

59,429.44

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

705.31

107.90

104.85

109.60

Oil & Natural Gas Corporation

242.68

134.00

131.34

135.44

Tata Motors

177.79

461.20

451.84

466.34

NTPC

143.62

158.90

156.64

160.19

Adani Port & Special Economic Zone

135.15

836.00

809.00

860.10

 

  • NTPC has started Commercial Operation of first part capacity of 10 MW out of 20 MW Gandhar Solar PV Project at Gandhar, Gujarat, with effect from August 23, 2022. 
  • Bajaj Finance's subsidiary -- Bajaj Housing Finance has hiked its lending rate by 0.50% and the lowest priced product for the salaried and professional applicants will be 7.70% now.
  • IndusInd Bank has launched two Digital Banking Units at Jalandhar (Punjab), and Chengalpattu (Tamil Nadu) to commemorate the 75th Year of India's Independence.
  • Infosys scaled back average variable payout of employees to around 70 per cent for the June quarter amid margin squeeze and high employee costs.
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