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Market Commentary 09 July 2024
Markets to get flat-to-positive start tracking gains in global markets

Indian equity benchmarks witnessed a range-bound session throughout the day and ended flat on Monday owing to select profit-taking in Consumer Durables, Metal and Telecom shares. After making a cautious start, key gauges slipped into red and consolidated during the day as traders remained on sidelines ahead of corporate earnings reactions with TCS kick-in the Q1 result season on Thursday. Traders were concerned as the Reserve Bank of India (RBI) said India's forex reserves dropped $1.713 billion to $651.997 billion for the week ended June 28. Some cautiousness came with a private report that India will struggle to create enough jobs for its growing workforce over the next decade even if the economy grows at a rapid pace of 7 per cent, and it suggested the world's most-populous nation will need more concerted steps to boost employment and skills. However, downside remained capped as traders found some support with report that foreign investors infused over Rs 7,900 crore in Indian equities in the first week of the month amid a healthy economic and earnings growth momentum. With this, total FPI investment in equities reached Rs 1.16 trillion so far this year. Some optimism also came with Ministry of Electronics and Information Technology, Secretary, S Krishnan's statement that India has the talent and deep expertise to become a global player in the semiconductor industry which is a vital sector for the country. Meanwhile, with an aim to resolve the pending issues and close the negotiations, India and the UK will hold the next round of talks this month for the proposed free trade agreement (FTA) amid the new government taking charge in Britain. The India-UK talks for the proposed FTA began in January 2022. The 14th round of talks stalled as the two nations stepped into their general election cycles. Finally, the BSE Sensex fell 36.22 points or 0.05% to 79,960.38, and the CNX Nifty was down by 3.30 points or 0.01% points to 24,320.55.

The US markets ended mostly higher on Monday. Optimism about the outlook for interest rates aided stocks earlier in the session. However, the mood turned a bit cautious as the day progressed with investors looking ahead to the data on consumer and producer prices, and Federal Reserve Chair Jerome Powell's congressional testimony this week. Networking stocks found good support. Shares of semiconductor and hardware companies also moved higher, contributing significantly to the gains of the Nasdaq.  In the stock specific developments, Nvidia gained nearly 2 percent. Advanced Micro Devices Inc. shares rallied 4 percent. Intel surged more than 6 percent, and Dell Technologies climbed 5 percent. On the economic data front, a leading indicator for payroll employment in the U.S. decreased in June, extending the declining trend over the past several months, and a signaled a slowdown in payroll hiring in the second half of the year, survey data from the Conference Board showed. The Conference Board Employment Trends Index fell to 110.27 in June from a downwardly revised 111.04 in May. When the Index increases, employment is likely to grow as well, and vice versa, and turning points in the index indicate that a change in the trend of job gains or losses is about to occur in the coming months.

Crude oil futures ended lower on Monday as geopolitical tensions eased a bit. According to reports, Hamas has given its initial approval of a U.S.-backed proposal to end the nine-month-old war in Gaza, helping ease tensions in the Middle East. Talks are reportedly under way and being mediated by Qatar and Egypt. However, the impact of Hurricane Beryl that has resulted in the shutting down of some oil export facilities near Houston limited the downside in oil prices a bit. Benchmark U.S. crude oil futures for August delivery declined $0.83 or 1% to $82.33 per barrel on the New York Mercantile Exchange. Brent crude for September delivery fell $0.79 or about 0.91% to $85.75 per barrel on London's Intercontinental Exchange.

Indian rupee pared initial gains and ended almost flat on Monday, as muted domestic equities weighed on investor sentiments. Traders remained concerned as the Reserve Bank of India (RBI) stated that India's forex reserves dropped $1.713 billion to $651.997 billion for the week ended June 28. In the previous reporting week, the overall kitty had dropped $2.922 billion to $652.895 billion. The reserves had touched an all-time high of $655.817 billion as on June 7 this year. However, traders took some support with report stating that foreign investors infused over Rs 7,900 crore in Indian equities in the first week of the month amid a healthy economic and earnings growth momentum. With this, total FPI investment in equities reached Rs 1.16 trillion so far this year. On the global front, the U.S. dollar steadied on Monday ahead of key inflation data, while the euro edged higher as traders digested the results of the French parliamentary elections. Finally, the rupee ended at 83.50 (Provisional), weaker by 1 paisa from its previous close of 83.49 on Friday.

The FIIs as per Monday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 15188.31 crore against gross selling of Rs 12018.86 crore, while in the debt segment, the gross purchase was of Rs 753.45 crore with gross sales of Rs 256.56 crore. Besides, in the hybrid segment, the gross buying was of Rs 34.93 crore against gross selling of Rs 29.67 crore.

The US markets ended mostly in green on Monday ahead of US Fed chief Jerome Powell's testimony. Asian markets are trading mostly higher on Tuesday following the positive momentum from Wall Street. Indian markets ended flat with negative bias on Monday even as broader mid and small cap indices hit fresh record highs. Today, start of the session is likely to be flat-to-positive tracking gains in global markets. Foreign fund inflows likely to aid sentiments. Foreign institutional investors (FIIs) were net buyers in the cash segment for the fourth day in a row yesterday. They net purchased stocks worth Rs 61 crore on July 08. Some support will come as the Reserve Bank of India's KLEMS database showed that the total number of employed people as a ratio of the total population has increased to 44.2 per cent in FY24 from 34.7 per cent in FY18, with the workforce growing by 168 million during the period at 643.3 million. Total employment was 596.7 million in FY23, thereby adding 46.6 million in FY24. Traders may take note of report that India's informal sector grew post-pandemic, with Andhra Pradesh, Bihar, and Chhattisgarh logging big output gains in fiscal 2022-23. The number of informal firms in India increased 9 percent to 65 million in 2022-23 from 59.7 million in 2022-21, according to the Annual Survey of Unincorporated Sector Enterprises data released by the Ministry of Statistics and Programme Implementation. Besides, the Indian government has reopened application window for the product-linked incentive (PLI) scheme for white goods (ACs and LED Lights) for 90 days starting July 15, 2024 to October 12, 2024. There will be some buzz in the fuel related stocks as data from the Petroleum Planning and Analysis Cell of the oil ministry showed India's fuel consumption rose by 2.6% year-on-year to 19.99 million metric tonnes in June from a year earlier. Shares of auto companies - Maruti Suzuki in particular will be in focus after the UP government in its bid towards promoting green energy waived registration fee in the state. Also, two-wheelers industry stocks will be in limelight as CareEdge Ratings report noted that the two-wheeler industry is expected to sustain a steady volume growth this fiscal driven by improved domestic sales and good traction in executive and premium segment motorcycles. There will be some reaction in insurance industry stocks with report that first-year premium of life insurance companies posted nearly 23 per cent year-on-year (Y-o-Y) growth in the April-June period of the current financial year (FY25), tracking healthy double-digit growth among the public and private sector insurers. Meanwhile, Emcure Pharma to debut on the bourses on Tuesday.

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

Index

Previous close

Support

Resistance

NSE Nifty

24,320.55

24,259.20

24,363.25

BSE Sensex

79,960.38

79,772.32

80,107.95

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

ONGC

531.36

300.15

290.66

306.31

Tata Steel

314.80

172.49

171.23

174.61

ITC

205.21

443.80

436.79

447.69

HDFC Bank

195.44

1636.35

1624.01

1651.81

Tata Motors

133.12

1002.90

993.86

1014.26

  • Larsen & Toubro's Renewable arm has finalised mega orders with a leading developer in the Middle East to build two Gigawatt scale Solar PV plants.
  • Tata Motors' wholly owned subsidiary -- Jaguar Land Rover (UK) has reported an increase in sales for Q1FY25 compared to a year ago.
  • Nestle India's shareholders have approved the continuation of the current rate of 4.5 per cent as royalty payment to its Swiss parent in the company's annual general meeting.
  • Bajaj Finserv's subsidiaries -- Bajaj Allianz General Insurance Co. and Bajaj Allianz Life Insurance Co have reported their provisional figures for June.

News Analysis