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NSE Intra-day chart (02 August 2022)
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Market Commentary 03 August 2022
Benchmarks likely to get flat-to-positive start amid mixed global cues

 

Indian equity benchmarks ended flat with positive bias after a volatile trading session on Tuesday led by gains in Indusind Bank, Asian Paints shares amid weak global trends. After making negative start, key indices extended losses in morning deals as sentiments remained dampened as private report stated that the Reserve Bank of India will deliver two more rate increases with the first of 25-30 bps later this week. Some concern also came as Crisil Research pegged the headline consumer price inflation to come at 6.8 per cent in FY23 - marginally higher than the Reserve Bank's 6.7 per cent estimate - because of the pressures on the food front, where the increase in prices has been double that of FY22. Market participants also remained on sidelines ahead of the Reserve Bank of India's (RBI) monetary policy decision on interest rates on August 05. However, markets erased all their losses and traded near neutral lines with positive bias in late afternoon session, taking support from finance minister Nirmala Sitharaman's statement that India's macroeconomic fundamentals are intact and there is no risk of the economy entering into recession or stagflation. She said the government is trying to keep inflation below 7%.  Some support also came as after Union Minister of State for Finance Pankaj Chaudhary said that as per provisional estimates released by National Statistical Office (NSO), Indian economy in 2021-22 has fully recovered the pre-pandemic real GDP level of 2019-20. Besides, exchange data showed, Foreign Institutional Investors (FIIs) were net buyers in the capital market on Monday, purchasing shares worth Rs 2,320.61 crore. Finally, the BSE Sensex rose 20.86 points or 0.04% to 58,136.36 and the CNX Nifty was up by 5.40 points or 0.03% to 17,345.45.

 

The US markets ended lower on Tuesday, with Dow Jones Industrial Average ending over cut of one percent, as rising tensions between the US and China, and signs of slowing global growth weighed on sentiment. Tensions between the US and China have risen due to US House Speaker Nancy Pelosi's visit to Taiwan. It is feared that Pelosi's trip to Taiwan would raise tensions between the two economic superpowers. Chinese foreign ministry spokesman Zhao Lijian said that Pelosi's visit would lead to very serious developments and consequences. The White House has warned China against turning her visit into a crisis. On the economic data front, data from the Labor Department showed the number of job openings in the US fell by 605,000 from a month earlier to 10.7 million in June of 2022, the lowest in nine months and below market expectations of 11 million. Stock specific developments, Uber Technologies shares soared nearly 19 percent after the company said that gross bookings reached an all-time high of $29.1 billion in the second quarter this year, up 33 percent over the corresponding quarter last year. Pinterest zoomed 12.25 percent, buoyed by news about Elliott Investment Management becoming the largest shareholder of the company.  

 

Crude oil futures ended higher on Tuesday ahead of a meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) this week that may not lead to a further boost in crude supply amid concerns a possible global recession could limit energy demand. The OPEC+ meet is scheduled to take place on Wednesday. The group is widely expected to keep output level unchanged. Meanwhile, markets looked ahead to weekly inventory reports from the American Petroleum Institute (API) and US Energy Information Administration (EIA). Benchmark crude oil futures for September delivery rose $0.53 or 0.6 percent to settle at $94.42 a barrel on the New York Mercantile Exchange. Brent crude for October delivery gained $0.41 or 0.41 percent to settle at $100.44 a barrel (provisional) on London's Intercontinental Exchange.

 

Indian rupee appreciated to hit a one-month high, strengthening for the fourth straight session against dollar on Tuesday amid foreign fund inflows and a weak dollar against key rivals overseas. Besides, softening crude oil prices strengthened domestic forex. Sentiments were upbeat after Union Minister of State for Finance Pankaj Chaudhary said that as per provisional estimates released by National Statistical Office (NSO), Indian economy in 2021-22 has fully recovered the pre-pandemic real GDP level of 2019-20. Meanwhile, Finance Minister Nirmala Sitharaman asserted there is no collapse in rupee and it is actually finding its natural course. On the global front, pound weakened against the dollar on Tuesday as traders turned to safe-haven currencies amid rising U.S.-China tensions over Taiwan. Finally, the rupee ended at 78.63 (provisional), stronger by 43 paisa from its previous close of 79.06 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 19375.96 crore against gross selling of Rs 14029.06 crore, while in the debt segment, the gross purchase was of Rs 451.61 crore against gross selling of Rs 62.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.24 crore against gross selling of Rs 10.91 crore.

 

The US markets ended lower on Tuesday on rising tensions between the US and China amid US House Speaker Nancy Pelosi's visit to Taiwan. Asian markets are trading mostly in green on Wednesday as hawkish comments from Fed officials prompted a jump in Treasury yields. Indian markets finished a volatile session barely in the green on Tuesday, as gains in heavyweights such as Hindustan Unilever, Asian Paints and SBI were offset by losses in the HDFC twins and Infosys. Today, markets are likely to get flat-to-positive start amid mixed global cues. Investors will be eyeing the services PMI data to be out later in the day. Traders will be taking encouragement with Centre for Monitoring Indian Economy (CMIE) data showing that the country's unemployment rate fell from 7.80 per cent in June to 6.80 per cent in July, the lowest level in the last six months, amid rising agriculture activities during monsoon. Some support will come with a private report that the corporate earnings growth during the first quarter of the current fiscal is largely led by the banking, financial services and insurance (BFSI) sector and also helped by credit cost moderation. However, there may be some cautiousness as India's trade deficit widened to a record $31 billion in July with a sequential decline in exports and somewhat flat imports owing to growing recessionary trends in developed economies and elevated commodity prices. The data released by the commerce ministry showed merchandise exports declined to a five-month low at $35.2 billion in July while imports eased sequentially to $66 billion. Meanwhile, the Reserve Bank of India (RBI) will commence their 3-day monetary policy meeting (MPC) on Wednesday, to mull rate hike trajectory. There are expectation of the rate hike to be in the range of 30 to 50 basis points. Oil & gas and aviation industry stocks will be in focus as the government increased the windfall tax on domestically produced crude to Rs 17,750 a tonne from Rs 17,000 a tonne earlier, a move that will hit producers like ONGC and Vedanta. Also, government lowered the export tax on diesel and aviation turbine fuel in line with softening international petroleum product prices. There will be some reaction in insurance industry stocks as the Insurance Regulatory and Development Authority of India (Irdai) proposed a single limit for the expenses of general and health insurance firms. This move is expected to bring relief to non-life insurers, especially private players. FMCG companies stocks will be in limelight with a private report that consumption of fast-moving consumer goods (FMCG) like packaged foods, beverages, and toiletries revived in the April-June quarter in urban markets but was negative in rural India as people opted for smaller packs. Investors awaited more of corporate earnings from India Inc.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

17,345.45

17,244.15

17,418.45

BSE Sensex

58,136.36

57,811.23

58,394.94

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

649.35

107.00

105.56

108.21

ITC

389.82

309.95

306.55

315.00

Tata Motors

190.65

476.25

470.36

481.01

NTPC

182.78

159.55

157.36

160.91

State Bank of India

168.45

542.10

533.84

547.64

 

  • Tech Mahindra has entered into partnership with Union Bank of India.
  • Bharti Airtel has acquired 19,800 MHz spectrum in 5G auction by securing a pan India footprint of 3.5 GHz and 26 GHz bands. 
  • Adani Ports and Special Economic Zone has handled 31.23 MMT of cargo in July 2022, implying a 13% implying Y-o-Y increase.
  • ITC has reported a rise of 33.46% in its consolidated net profit at Rs 4,462.25 crore for Q1FY23 as compared to Rs 3,343.44 crore for the same quarter in the previous year.
News Analysis