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NSE Intra-day chart (27 July 2022)
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Market Commentary 28 July 2022
Markets likely to get optimistic start on firm global cues

 

Indian equity benchmarks bounced back on Wednesday after a two-day decline and ended with gains of around a percent, led by strong buying support in healthcare, Capital Goods and IT stocks. Benchmarks made cautious start, as the International Monetary Fund (IMF) in its World Economic Outlook update July 2022 has cut India's growth rate by 0.8 percentage point to 7.4 per cent for fiscal year 2022, reflecting mainly less favourable external conditions and more rapid policy tightening. In April, the IMF had projected a fairly robust growth of 8.2 per cent for India in 2022. Some concern also came amid a private report stating that the global economy is in the grips of a serious slowdown, with some key economies at high risk of recession and only sparse meaningful cooling in inflation over the next year. However, key gauges erased initial losses to enter in green terrain in morning deals, as traders found some solace with Minister of State for Finance Bhagwad Karad stated that the amount involved in fraud cases reported by public sector banks (PSBs) has come down to Rs 3,204 crore in the last fiscal from Rs 28,884 crore in 2017-18. Sentiments remained up-beat as ECGC has introduced a new scheme to provide enhanced export credit risk insurance cover to the extent of 90% to support small exporters under the Export Credit Insurance for Banks Whole Turnover Packaging Credit and Post Shipment (ECIB- WTPC & PS).  The scheme is expected to benefit a number of small-scale exporters availing of export credit with banks which hold the ECGC WT-ECIB covers. Finally, the BSE Sensex rose 547.83 points or 0.99% to 55,816.32 and the CNX Nifty was up by 157.95 points or 0.96% to 16,641.80.

 

The US markets ended higher with Nasdaq settling over four percent on Wednesday following the Federal Reserve's monetary policy decision.  The Federal Reserve raised interest rates by 75 basis points, as expected. The hike follows the 75 basis point increase in rates last month, and marks the fourth straight central bank meeting that has resulted in a rate hike. Powell said as the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation. The Fed's next monetary policy meeting is scheduled for September 20-21, with CME Group's FedWatch tool currently indicating a 59.2 percent chance of a 50 basis point rate hike and a 36.7 percent chance of another 75 basis points rate hike. On the economic data front, reflecting a sharp increase in orders for transportation equipment, the Commerce Department released a report showing an unexpected surge in new orders for US manufactured durable goods in the month of June. The Commerce Department said durable goods orders shot up by 1.9 percent in June after climbing by 0.8 percent in May. The continued increase surprised participants, who had expected durable goods orders to dip by 0.4 percent. However, pending home sales in the US pulled back sharply in the month of June, according to a report released by the National Association of Realtors (NAR). NAR said its pending home sales index plunged by 8.6 percent to 91.0 in June after rising by 0.4 percent to a revised 99.6 in May. Street had expected pending home sales to slump by 1.5 percent compared to the 0.7 percent increase originally reported for the previous month.

 

Crude oil futures ended sharply higher with rally over two percent on Wednesday as data showed a drop in crude inventories in the US in the week ended July 22nd. Data from US Energy Information Administration (EIA) showed crude stockpiles in the US dropped 4.52 million barrels last week. The EIA data also showed that distillate stockpiles fell by 784,000 barrels last week, as against an expected drop of about 500,000 barrels. Besides, data from the American Petroleum Institute showed US crude stocks dropped by about 4 million barrels last week, nearly four times the fall expected by market participants. Benchmark crude oil futures for September delivery surged $2.28 or about 2.4 percent to settle at $97.26 a barrel on the New York Mercantile Exchange. Brent crude for September delivery rose $2.22 or 2.1 percent to settle at $106.62 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended weaker against dollar on Wednesday due to increased demand for American currency from importers and banks. The sentiments were under pressure as the International Monetary Fund (IMF) in its World Economic Outlook update July 2022 has cut India's growth rate by 0.8 percentage point to 7.4 per cent for fiscal year 2022, reflecting mainly less favourable external conditions and more rapid policy tightening. Renewed outflows by FIIs also put pressure on the rupee. However, the positive tone in domestic equities cushioned the downside. On the global front, the dollar edged further away from recent 20-year highs on Wednesday ahead of the U.S. Federal Reserve policy meeting, at which the central bank is expected to raise rates by another 75 basis points to tame soaring inflation. Finally, the rupee ended at 79.91 (provisional), weaker by 13 paisa from its previous close of 79.78 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity, while net buyers in debt segment. In equity segment, the gross buying was of Rs 4034.03 crore against gross selling of Rs 5311.75 crore, while in the debt segment, the gross purchase was of Rs 1122.07 1122.07 crore against gross selling of Rs 941.38 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.85 crore against gross selling of Rs 22.74 crore.

 

The US markets ended higher on Wednesday after Fed announced another 75 basis point interest rate, as widely expected, and Powell hinted at a slowdown in the pace of rate hikes at future meetings. Asian markets are trading mostly in green on Thursday following the broadly positive cues from Wall Street overnight. Indian markets bounced back on Wednesday after a two-day decline, with the Sensex and Nifty climbing nearly 1 percent each, tracking heavy buying in IT and banking stocks. Today, markets likely to start session on optimistic note mirroring positive cues from global markets. There will be some volatility ahead of the expiry of monthly derivative (futures and options) contracts due by the end of the session. However, some cautiousness may come as Moody's Analytics, the research arm of the rating agency Moody's Investor Services, warned that the decade-long dream run of low inflation for emerging economies in Asia is about to end and there will be consequences. Traders may take note of a private report that the Reserve Bank of India's rate-setting panel will go for a 0.35 per cent hike in the key repo rate at its meeting next week. Meanwhile, capital markets regulator Sebi has come out with new guidelines on settlement of running accounts of clients' funds lying with stock brokers, to be applicable from October 1. Under the guidelines, the settlement of the running account of funds of the client will be done by the trading member after considering the End of the day (EOD) obligation of funds as on the date of settlement across all the exchanges on the first Friday of the quarter for all the clients. Also, Sebi has extended the deadline by three months to November 1, for commencing the validation of all KYC records by KYC Registration Agencies (KRAs). Telecom industry stocks will be in action as India's first 5G auction received bids worth Rs 1.49 trillion on day two, as aggressive bidding across bands by players like Reliance Jio and Bharti Airtel pushed the sale over to the third day. There will be some reaction in gold related stocks as the World Gold Council said a sharp fall in purchases by investors pulled global gold demand down 8% in the second quarter compared to the same period in 2021. IT industry stocks will be in limelight with a private report that after a big jump in the margins and profits in the quarters immediately after the break-out of the Covid-19 pandemic in March 2020, the export-driven IT services companies are now facing their biggest earnings challenge in more than a decade. Investors will be eyeing a slew of companies to report their June quarter results (Q1FY23) later in the day.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,641.80

16,502.55

16,717.25

BSE Sensex

55,816.32

55,365.17

56,060.27

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil and Natural Gas Corporation

201.87

128.60

127.54

129.94

State Bank of India

151.01

528.20

516.99

534.69

Tata Motors

100.81

444.05

438.44

447.34

ICICI Bank

95.36

800.50

795.50

804.65

ITC

93.46

304.15

301.50

305.90

 

  • ONGC has signed a MoU with Greenko ZeroC to jointly pursue opportunities in Renewables, Green Hydrogen, Green Ammonia and other derivatives of green hydrogen. 
  • Tata Motors has tied up with Indian Bank to facilitate easy financing for its passenger vehicles customers.
  • Wipro has extended five-year strategic engagement with Nokia, the world's leading multinational, networking, telecommunications and consumer electronics company.
  • Dr. Reddy's Laboratories has launched Bortezomib for Injection 3.5 mg, the generic equivalent of Velcade (bortezomib) Injection, in the U.S. market approved by the USFDA.
News Analysis