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NSE Intra-day chart (23 July 2021)
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Market Commentary 26 July 2021
Markets likely to open in red amid weak Asian cues

 

Indian equity benchmarks ended Friday's trading session with gains, led by gains in ICICI Bank, ITC, SBI and HCL Technologies. Benchmarks made positive start, as traders took some support with the Ministry of External Affairs stating that India has been in touch with the various countries regarding the possibility of import of vaccines to supplement domestic production. Traders also took a note of Deputy Governor T Rabi Sankar's statement that the RBI is working on phased introduction of its own digital currency and is mulling pilot projects in wholesale and retail segments in the near future. However, key indices gave up opening gains and turned volatile, as traders got anxious with Former World Bank chief economist Kaushik Basu stating that India's wholesale price-based inflation is at a 30-year high, leading to a very alarming situation for the country. He, however, doesn't see any risk of hyperinflation, but cautioned that if retail inflation follows wholesale prices, it might lead to inflationary crisis. Benchmarks bounced back from day's low and were trading firmly in green in afternoon deals, as India has significantly improved its ranking in terms of trade facilitation due to various reforms undertaken by various departments especially customs under the Central Board of Indirect Taxes (CBIC). India has scored 90.32 per cent in United Nation's Economic and Social Commission for Asia Pacific's (UNESCAP) latest Global Survey on Digital and Sustainable Trade Facilitation. Traders found support with private report that employees in India will see bigger pay rises next fiscal year as firms expect to emerge from lockdowns and the supply of applicants lags demand. Meanwhile, Minister for Road Transport & Highway -- Nitin Gadkari said the Road Transport and Highways ministry has constructed 13,327 km of National Highways in 2020-21 (FY21), which works out to about 37 km per day. Gadkari said to mitigate COVID-19 pandemic effect, his ministry took initiatives under Atmanirbhar Bharat and provided several COVID-19 relief measures to contractors, concessionaires and consultants, including extension of time for 3-9 months. Finally, the BSE Sensex rose 138.59 points or 0.26% to 52,975.80, while the CNX Nifty was up by 32.00 points or 0.20% to 15,856.05. 

 

The US markets extended their gains and ended higher on Friday. With the continued advance, the major averages all reached new record closing highs. The four-day winning streak represents a remarkable turnaround for the markets following the sell-off on Monday, which dragged the major averages down to their lowest closing levels in almost a month. The continued strength on Wall Street partly reflected a positive reaction to upbeat earnings news from several big-name companies. Shares of Snap (SNAP) soared after the Snapchat parent reported an unexpected second quarter profit on better than expected revenues. Social media giant Twitter (TWTR) also moved notably higher after reporting second quarter results that exceeded analyst estimates and providing upbeat revenue guidance. Shares of American Express (AXP) also moved to the upside after the financial services company reported second quarter results that beat expectations on both the top and bottom lines. On the other hand, shares of Intel (INTC) came under pressure after the semiconductor giant reported better than expected second quarter results but provided disappointing guidance. Housing stocks moved sharply higher over the course of the session, driving the Philadelphia Housing Sector Index up by 2.3 percent. Significant strength also emerged among utilities stocks, as reflected by the 1.3 percent advance by the Dow Jones Utilities Average. Networking, software and pharmaceutical stocks also saw notable strength on the day, while oil service stocks fell sharply despite amid a modest increase by the price of crude oil. Meanwhile, the Federal Reserve's monetary policy decision is likely to be in focus next week, with traders paying close attention to any comments regarding the central bank's asset purchase program.

 

Extending gains to a fourth straight session, crude oil futures settled slightly higher on Friday, with traders betting on hopes demand for energy will see a significant increase in coming months, driven by the continued fall in oil stocks and rising rates of vaccinations. According to a report from Baker Hughes, the number of oil and gas rigs in the US rose by 7 this week to 491, which is up 240 from the same time last year The US oil rig count rose by 7 this week to 387, while the number of gas rigs stayed unchanged at 104. Meanwhile, the Energy Information Administration estimates oil production in the US for the week ending July 16 remained the same at an average of 11.4 million barrels per day, still well below the 13.1 million barrels per day seen in February 2020. Crude oil futures for September rose $0.16 or about 0.2 percent to settle at $72.07 barrel on the New York Mercantile Exchange. September Brent crude surged $0.22 or 0.31 percent to settle at $74.01 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended higher for third straight session against dollar on Friday due to fresh selling of the American currency by banks and exporters. The rupee also derived its strength from strong gains in the local equity markets. Rupee got support as India has significantly improved its ranking in terms of trade facilitation due to various reforms undertaken by various departments especially customs under the Central Board of Indirect Taxes (CBIC). However, upside remain capped as former world bank chief economist Kaushik Basu stated that India's wholesale price-based inflation is at a 30-year high, leading to a very alarming situation for the country. On the global front, sterling fell on Friday despite better-than-expected retail sales data as investors weighed up the risk of a further rise in COVID-19 cases and the impact of self-isolation on Britain's food and travel industries. Finally, the rupee ended 74.40, stronger by 6 paise from its previous close of 74.46 on Thursday.

 

The FIIs as per Friday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 12829.31 crore against gross selling of Rs 8519.27 crore, while in the debt segment, the gross purchase was of Rs 490.16 crore with gross sales of Rs 1357.83 crore. Besides, in the hybrid segment, the gross buying was of Rs 28.61crore against gross selling of Rs 42.95 crore.

 

The US markets ended higher on Friday after a rocky week in which investors fretted over the Delta coronavirus variant and cheered an economic recovery. Asian markets are trading mostly in red on Monday as super-strong US corporate earnings sucked funds out of emerging markets and into Wall Street, where records were falling almost daily. Indian markets ended Friday's volatile session higher led by gains in banking and financial stocks. Today, the start of new week is likely to be pessimistic following a muted trend in the Asian peers. Besides, there might be some volatility in the markets due to the scheduled derivatives expiry of July month contracts. Fears of a third wave and the spread of Delta and Delta plus variant may dampen sentiments in markets. Also, investors will keep a close watch on the US Federal Reserve's monetary policy meeting scheduled for July 27-28. There will be some cautiousness as the provisional commerce ministry data showed that the country's exports grew 45.13 per cent to $22.48 billion during July 1-21 on account of healthy growth in sectors such as gems and jewellery, petroleum and engineering. Imports also rose 64.82 per cent to $31.77 billion in the said period, leaving a trade deficit of $9.29 billion. Also, traders will be concerned as the health ministry India reported 39,742 new Covid-19 cases in the last 24 hours. The Covid-19 death toll rose by 535 deaths in the last 24 hours, with the total reaching 420,551. However, some respite may come later in the day as Commerce and Industry Minister Piyush Goyal expressed confidence that India will continue to attract high foreign direct investment (FDIs) in the current financial year. Traders may take note of report that Niti Aayog CEO Amitabh Kant said digitisation has provided an impetus to the startup ecosystem in India and IPOs will drive the country's startup revolution. He said IPOs will drive our start-up revolution. Indian start-ups will raise money in Indian markets from the Indian public. This is truly Aatmanirbhar Bharat. Digitization has provided an impetus to the start-up ecosystem in India. Besides, RBI data showed the country's foreign exchange reserves rose by $835 million to touch a record high of $612.73 billion in the week ended July 16, 2021. Telecom stocks will be in focus as the Supreme Court said the Adjusted Gross Revenue (AGR) related dues payable by telecom majors, including Vodafone Idea and Bharti Airtel, cannot be a subject matter of any future litigation. A bench headed by Justice L Nageswara Rao stated this while dismissing the plea of telcos seeking rectification of alleged errors in the calculation of AGR. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

15,856.05

15,783.04

15,914.44

BSE Sensex

52,975.80

52,714.82

53,175.75

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

ITC

445.26

212.40

208.06

215.16

Tata Motors

334.35

295.55

293.06

299.96

Bharti Airtel

325.88

548.30

533.81

561.71

ICICI Bank

192.98

676.65

658.99

686.09

State Bank of India

177.04

428.90

422.29

432.74

 

  • Hero MotoCorp has launched an updated version of its Maestro Edge 125 scooter model with prices starting from Rs 72,250 (ex-showroom Delhi). 
  • UltraTech Cement has prepaid its long term loans amounting to Rs 5,000 crore. 
  • IOC is planning to build India's first green hydrogen plant at its Mathura refinery. 
  • JSW Steel has reported consolidated net profit attributed to the owners at Rs 5904 crore for Q1FY22 as against net loss of Rs 561 crore for the same quarter in the previous year.
News Analysis