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NSE Intra-day chart (26 July 2022)
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Market Commentary 27 July 2022
Markets likely to get weak start amid weak global cues

 

Falling for the second day running, Indian equity benchmarks ended with losses of around a percent on Tuesday, ahead of earnings reports from several large-cap companies, with investors also bracing for a likely sharp interest rate hike in the United States this week.  Key gauges made a weak start and stayed in red for whole day, as traders got anxious with Minister of State for Finance Pankaj Chaudhary's statement that Central government's total liabilities are seen rising to Rs 155.33 lakh crore in FY23. This would represent an increase of 12 percent over the FY22 figure of Rs 138.88 lakh crore. The Centre is set to borrow a record Rs 14.95 lakh crore on a gross basis from the market through the issuance of bonds in FY23. Some concern also came as foreign portfolio investors (FPIs) turned sellers of domestic stocks to the tune of Rs 844.78 crore, data available with NSE suggested. However, in the afternoon deals, key indices managed to trim some losses, as traders took some support with a private report stating that India is poised to be the fastest-growing major economy in the world and an engine of global growth despite global headwinds.  Some optimism also came with Commerce Minister Piyush Goyal's statement that with strong gross domestic product (GDP) growth, the country is on the path to become a $30 trillion economy in the next 30 years. He added that the country is currently $3-3.5 trillion economy and soon will achieve $5 trillion. But, markets failed to hold recovery and fell sharply in late afternoon deals, as some pessimism remained among traders with private report that while the monsoon in India is tracking at 11% above normal, the distribution is uneven across the country and could pose a threat to this year's foodgrain production and may worsen the inflation outlook. Finally, the BSE Sensex fell 497.73 points or 0.89% to 55,268.49 and the CNX Nifty was down by 147.15 points or 0.88% to 16,483.85.

 

The US markets ended lower on Tuesday with Nasdaq settling deeply in red.  A steep drop by shares of Walmart weighed on the markets, with the retail giant plunging by 7.6 percent to its lowest closing level in almost a month. Walmart came under pressure after lowering its guidance for the second quarter and full year primarily due to pricing actions aimed to improve inventory levels. Auto giant General Motors (GM) also moved to the downside after reporting second quarter earnings that missed street estimates. Further, the weakness on markets also came as traders looked ahead to the Federal Reserve's monetary policy announcement on Wednesday. The Fed is widely expected to announce another 75 basis point rate hike as part of its efforts to combat elevated inflation. On the economic data front, the Commerce Department released a report showing new home sales pullback by more than expected in the month of June. The report said new home sales plunged by 8.1 percent to an annual rate of 590,000 in June after jumping by 6.3 percent to a revised rate of 642,000 in May. Street had expected new home sales to tumble by 5.2 percent to an annual rate of 660,000 from the 696,000 originally reported for the previous month. With the bigger than expected decrease, new home sales slumped to their lowest annual rate since hitting 582,000 in April 2020. Meanwhile, a separate report released by the Conference Board showed consumer confidence in the US deteriorated by more than expected in the month of July. The Conference Board said its consumer confidence index slid to 95.7 in July from a downwardly revised 98.4 in June. Street had expected the index to drop to 96.8 from the 98.7 originally reported for the previous month.

 

Crude oil futures ended lower on Tuesday after the Energy Department and the White House said that the president had authorized the sale of a further 20 million barrels from the Strategic Petroleum Reserve by October, an addition to the already scheduled release of 180 million barrels. Further, the dollar's rebound from recent losses contributed as well to the drop in oil prices. The dollar climbed higher with traders looking ahead to the Federal Reserve's policy announcement, due on Wednesday. Benchmark crude oil futures for September delivery fell $1.72 or about 1.8 percent to settle at $94.98 a barrel on the New York Mercantile Exchange. Brent crude for September delivery lost $0.79 or 0.8 percent to settle at $99.40 (Provisional) a barrel on London's Intercontinental Exchange.

 

Indian rupee ended flat on Tuesday against dollar amid muted domestic equities and firm crude oil prices. Traders also remained on sidelines ahead of the US Federal Reserve's monetary policy outcome on July 27. Investors' took note of Commerce Minister Piyush Goyal's statement that with strong gross domestic product (GDP) growth, the country is on the path to become a $30 trillion economy in the next 30 years. He added that the country is currently $3-3.5 trillion economy and soon will achieve $5 trillion. Meanwhile, Minister of State for Finance Pankaj Chaudhary states that the Central government's total liabilities are seen rising to Rs 155.33 lakh crore in FY23. This would represent an increase of 12 percent over the FY22 figure of Rs 138.88 lakh crore. On the global front, Sterling reached more than two-week highs against dollar on Tuesday amid prospect of a 50 bps rate hike by the Bank of England against the backdrop of a worsening economic outlook. Finally, the rupee ended flat from its previous close of 79.78 on Monday. The currency touched a high and low of 79.81 and 79.72 respectively.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 13631.48 crore against gross selling of Rs 14206.24 crore, while in the debt segment, the gross purchase was of Rs 194.86 crore against gross selling of Rs 1115.49 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.52 crore against gross selling of Rs 27.84 crore.

 

The US markets ended lower on Tuesday as steep drop by shares of Walmart weighed on the markets. Asian markets are trading mostly lower on Wednesday following the broadly negative cues from global markets overnight, as traders cautiously await the US Federal Reserve's monetary policy decision and accompanying statement later today. Indian equity benchmarks witnessed bloodbath on Tuesday with frontline gauges settling below their crucial 16,500 (Nifty) and 55,300 (Sensex) levels.  Today, markets are likely to make weak start on weak on weak global cues, ahead to the Federal Reserve's monetary policy announcement.  Traders may remain concerned as the International Monetary Fund (IMF) slashed India's growth forecast for 2022-23 (FY23) by 80 basis points to 7.4 per cent, citing less favourable external conditions and rapid policy tightening by the central bank. In its update to the April World Economic Outlook, the IMF said that though a global recession in 2022 was ruled out with a growth estimate of 3.2 per cent, the balance of risks was squarely to the downside, driven by a wide range of factors that could adversely affect the global economic performance. Meanwhile, traders make take note of report that Finance Minister Nirmala Sitharaman said the Indian rupee has strengthened against the British Pound in 2022 though it has depreciated against the US dollar.  She said global factors -- such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions -- are the major reasons for the weakening of the Indian Rupee against the US Dollar. Defence industry stocks may be in action as the defence ministry approved the procurement of military equipment and weapons worth Rs 28,000 crore, including swarm drones and close-quarter battle carbines, to bolster the overall combat prowess of the armed forces along the northern and western borders.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,483.85

16,419.40

16,592.20

BSE Sensex

55,268.49

55,036.48

55,667.43

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil and Natural Gas Corporation

221.72

128.65

127.06

130.91

Axis Bank

141.35

706.40

697.81

719.21

Coal India

128.53

201.90

199.86

203.61

Tata Steel

126.26

947.95

937.10

967.75

Tata Motors

115.63

440.70

437.40

446.35

  • Hero MotoCorp has launched its latest edition of the iconic Super Splendor in Canvas Black Edition.
  • Axis Bank has reported a rise of 84.85% in its consolidated net profit at Rs 4,389.22 crore for Q1FY23 as compared to Rs 2,374.50 crore for the same quarter in the previous year.
  • Sun Pharma and Cassiopea have signed addendums to the License and Supply Agreements for WINLEVI cream 1% expanding the territory to include Japan, Australia, New Zealand, Brazil, Mexico and Russia.
  • Tata Steel has reported a fall of 21.03% in its consolidated net profit at Rs 7,714 crore for Q1FY23 as compared to Rs 9,768.34 crore for the same quarter in the previous year.
News Analysis