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Market Commentary 29 July 2022
Markets to open in green territory on supportive global cues

 

Indian equity benchmarks continued upward momentum for the second consecutive day on Thursday with Sensex ending 1,000 points up and Nifty ending above 16,900 mark on back of positive cues from global market. Key gauges made a gap up opening and traded jubilantly throughout the day, as traders took encouragement with the Reserve Bank of India (RBI) report showed that digital payments across the country registered a growth of nearly 29 per cent in a year through March 2022. The RBI's digital payment index (RBI-DPI) stood at 349.3 in March 2022 against 270.59 in March 2021. Traders also took a note of Union Minister of Commerce and Industry Piyush Goyal's statement that India has not imposed any country-specific ban on imports. He said India and China, are both members of the WTO, and any trade restriction imposed must be WTO compliant. He said the government has from time to time reviewed and taken WTO compliant measures to address the concerns raised by various stakeholders to have a holistic global trade strategy. Key indices extended gains in second half of trading session, after the Ministry of Commerce & Industry in its latest report showed that Singapore (27.01%) and USA (17.94%) have emerged as top 2 sourcing nations in FDI equity flows into India in FY2021-22 followed by Mauritius (15.98%), Netherland (7.86%) and Switzerland (7.31%). Some optimism also came from the Ministry of Commerce & Industry stated that the overall (merchandise plus services) exports increased from $52.8 billion in June 2021 to $64.9 billion in June 2022.  The overall (merchandise plus services) imports increased from $52.9 billion in June 2021 to $82.4 billion in June 2022. Meanwhile, SEBI has extended the deadline by three months to November 1, for commencing the validation of all KYC records by KYC Registration Agencies (KRAs). Finally, the BSE Sensex rose 1041.47 points or 1.87% to 56,857.79 and the CNX Nifty was up by 287.80 points or 1.73% to 16,929.60.

 

The US markets ended higher with gains of over one percent on Thursday, magnifying their previous session's gains, even after US economic activity unexpectedly saw a continued contraction in the second quarter of 2022, according to a report released by the Commerce Department. The Commerce Department said real gross domestic product decreased by 0.9 percent in the second quarter after slumping by 1.6 percent in the first quarter. Street had expected GDP to increase by 0.5 percent. With GDP unexpectedly declining for the second consecutive quarter, the data signals the U.S. economy is in a technical recession. The drop in GDP in the second quarter reflected decreases in private inventory investment, residential fixed investment, government spending and non-residential fixed investment. The report showed a huge drag from the change in private inventories, which subtracted 2.0 percent from GDP in the quarter. Increases in exports and consumer spending helped limit the downside, although the pace of consumer spending growth continued to slow to 1.0 percent in the second quarter from 1.8 percent in the first quarter. Meanwhile, after reporting modest increases in first-time claims for US unemployment benefits over the three previous weeks, the Labor Department released a report showing a slight pullback in initial jobless claims in the week ended July 23rd. The report showed initial jobless claims edged down to 256,000, a decrease of 5,000 from the previous week's revised level of 261,000. Street had expected jobless claims to inch up to 253,000 from the 251,000 originally reported for the previous week.

 

Crude oil future erased early rally and ended lower on Thursday as worries about the outlook for energy demand due to slowing global economic growth weighed on prices. The US Commerce Department reported the world's biggest economy unexpectedly contracted in the second quarter, fuelling concerns about a recession that could hit energy demand. However, Russia's decision to cut gas supplies via Nord Stream 1, its main gas link to Europe, to just 20% of capacity, contributed as well to the uptick in oil prices earlier in the day. Benchmark crude oil futures for September delivery fell $0.84 or about 0.9 percent to settle at $96.42 a barrel on the New York Mercantile Exchange. However, Brent crude for September delivery rose $0.52 or 0.48 percent to settle at $107.14 a barrel on London's Intercontinental Exchange.

 

Indian rupee strengthened substantially against dollar on Thursday after US Federal Reserve Chair Jerome Powell eased investors' concerns over continued aggressive monetary tightening. Sentiments were upbeat as Ministry of Commerce & Industry in its latest report has showed that the overall (merchandise plus services) exports increased from $52.8 billion in June 2021 to $64.9 billion in June 2022. As per the Ministry of Commerce & Industry, the overall (merchandise plus services) imports increased from $52.9 billion in June 2021 to $82.4 billion in June 2022. On the global front, dollar struggled against its other major rivals on Thursday as markets ramped up bets on a softening in the pace of rate hikes. Finally, the rupee ended at 79.69 (provisional), stronger by 22 paisa from its previous close of 79.91 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 4892.17 crore against gross selling of Rs 4986.17 crore, while in the debt segment, the gross purchase was of Rs 155.07 crore against gross selling of Rs 693.60 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.51 crore against gross selling of Rs 24.67 crore.

 

The US markets ended higher on Thursday as data showing a second consecutive quarterly contraction in the economy fueled investor speculation the Federal Reserve may not need to be as aggressive with interest rate hikes as some had feared. Asian markets are trading mostly in green on Friday after a rally on Wall Street overnight. Indian markets scaled three-month closing highs on the last day of the July derivatives series on Thursday.  Today, domestic indices are likely to start trade on a positive note amid supportive global cues. Traders will be getting encouragement as the commerce ministry said the manufacturing sector attracted foreign direct investments worth $21.34 billion in 2021-22, an increase of 76 per cent year-on-year. It said the government has implemented several reforms under the FDI policy regime across sectors such as insurance, defence, telecom, financial services, pharmaceuticals, retail trading, and e-commerce. Traders may take note of commerce and industry minister Piyush Goyal's statement that increasing cooperation in seven emerging areas like digital payments, space, agri, dairy and pharma between India and Uzbekistan will help boost economic ties. Also, foreign institutional investors (FIIs) have net bought shares worth Rs 1,637.69 crore on July 28, as per provisional data available on the NSE. Meanwhile, the markets regulator has deferred implementation of a key clause in the new framework on exchange-traded funds that came into effect this month. There will be some buzz in the power stocks as Power Minister R K Singh said power deficit came down from 2 per cent in April to 0.4 per cent in May and 0.6 per cent in June despite significant rise in demand of electricity. Telecom stocks will be in focus with report that the 5G spectrum auction will now enter the fourth day as telcos are engaged in an unexpected competition to get airwaves used for both 2G and 4G services. After 16 rounds of bidding for 5G spectrum auction, the government has fetched bids worth Rs 1,49,623 crore on the third day. There will be some reaction in sugar stocks with report that the Centre is expected to allow an additional 1.2 million tonnes (MT) of sugar exports in the 2021-22 season, which will end in September, over and above the 10 MT already fixed, due to higher-than-anticipated domestic production. Auto industry stocks will be in limelight with a private report that passenger vehicle sales are expected to be robust in July, driven by a large order book and production ramp-up, while commercial vehicle volumes may remain in an uptrend. Besides, a slew of companies are slated to report their June quarter results (Q1FY23) later in the day includes - Sun Pharma, Cipla, Indian Oil Corporation, and HDFC.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,929.60

16,801.35

17,002.75

BSE Sensex

56857.79

56,424.76

57,102.53

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

1,371.56

100.35

97.66

102.51

Tata Motors

363.80

442.25

430.01

451.86

Oil and Natural Gas Corporation

257.36

130.25

128.84

131.09

State Bank of India

121.60

532.45

528.84

536.79

HDFC Life Insurance Company

115.04

531.60

522.16

538.51

 

  • TCS has entered into partnership with The Walton Centre NHS Foundation Trust, to develop digital solutions. 
  • Coal India has planned to dispatch coal to the tune of 700 MT in the year 2022-23, out of which 565 MT is earmarked for Power Sector. 
  • Nestle India has received an approval for acquisition of Pet Foods Business from Purina PetCare India through business transfer, proposed with effect from October 1, 2022. 
  • Bajaj Finserv has reported a rise of 57.23% in its consolidated net profit at Rs 1,309.38 crore for Q1FY23 as compared to Rs 832.77 crore for the same quarter in the previous year.
News Analysis