Domestic Market View
Markets likely to make a cautious start
Sharp selloff in the dying hours of trade dragged equity benchmarks lower on Monday. Sentiments remained dampened, as India’s wholesale inflation grew 5.77% in June, a four-and-half year high, due to rise in prices of some food items and fuel prices. Today, the markets are likely to make a cautious start amid subdued global cues. There will be some cautiousness with report that the International Monetary Fund (IMF) trimmed India’s growth projection by 0.1 percentage point to 7.3% for 2018-19 against the earlier estimate of 7.4%, owing to high oil prices and a tight monetary policy regime. IMF said that India’s growth rate is expected to rise to 7.3% in 2018 (2018-19) and 7.5% in 2019 (2019-20), the projection is 0.1 and 0.3 percentage point lower for 2018 and 2019, respectively.
Traders will also be concern about the IHS Markit Business Outlook survey stating that the Indian business sentiment regarding future activity remained subdued in June amid intense competition, high fuel prices and strong cost pressures. Also, there will be negative reaction on rating agency Moody's Investor Service in its latest report warning that interest costs on loan against property (LAP) are set to rise due to the hardening rates and will adversely affect small business, which are already reeling under note-ban and Goods and Services Tax (GST) impact.
Domestic Market Overview
Late hour selloff drag markets near intraday lows
Monday turned-out to be a disappointing day of trade for Indian equity benchmarks with frontline gauges ending near intraday low levels, breaching their crucial 36,400 (Sensex) and 10,950 (Nifty) mark. Markets started the session with cautious tone ahead of more corporate earnings this week. Sentiments turned pessimistic and markets extended losses in second half of the trade on the back of high Wholesale Price Index (WPI) data. India's wholesale inflation grew 5.77% in June, a four-and-half year high, driven by some food items and fuel prices. Traders remained cautious with commerce ministry’s report showing that India’s trade deficit widened to its highest level in more than five years in June, driven largely by a surge in oil prices and a weaker rupee. The trade deficit widened to $16.6 billion from $14.62 billion in May, though merchandise exports rose 17.57% year-on-year in June, on account of healthy growth in sectors such as petroleum and chemicals, while imports rose 21.31% to $44.3 billion during the month. Anxiety also prevailed in the markets with Reserve Bank of India’s data that the country’s foreign exchange reserves declined by $248.20 million to $405.81 billion in the week to July 6, despite a rise in the foreign currency assets.
Markets continued southward moment in last leg of trade with foreign investors pulling out nearly Rs 1,200 crore from the debt markets in the first two weeks of the month on higher fuel prices and possibilities of rate hike by the US Federal Reserve. Traders paid no heed towards Economic Affairs Secretary Subhash Chandra Garg’s statement that the Indian economy is at a take off stage and is expected to be the world’s third largest by 2030 with GDP worth $10 trillion. Investors failed to get any support with the Union Minister Arun Jaitley exuding confidence that India will pip Great Britain to become the fifth largest economy in the world next year if economic expansion continues at the projected rate. Finance Minister Piyush Goyal’s statement that the Centre is looking at simplify the companies law to provide relief to businesses, too failed to provide any relief to the market participants.
Global Market Overview
Asian markets end mostly lower on Monday
Asian equity markets ended mostly lower on Monday as a raft of Chinese data proved to be a mixed bag and investors awaited Federal Reserve Chairman Jerome Powell's semi-annual congressional testimonies on Tuesday and Wednesday for directional cues. Chinese shares ended lower after official data showed China's GDP growth slowed to 6.7 percent in the second quarter, its slowest pace since 2016. That matched forecasts but was a tad lower than 6.8 percent in the first quarter of 2018. Retail sales numbers for June exceeded expectations and fixed asset investment grew in line with expectations while industrial output growth came in shy of forecasts. Meanwhile, the Japanese market was closed in observance of Marine Day.
US markets end mostly lower on Monday
After strong upward move seen last week, the US markets end mostly lower on Monday as traders seemed reluctant to make significant moves ahead of the release of quarterly financial results from a number of big-name companies this week. Goldman Sachs (GS), Johnson & Johnson (JNJ), Morgan Stanley (MS), American Express (AXP), IBM Corp. (IBM), Microsoft (MSFT), and General Electric (GE) are among the companies due to report their results in the coming days. Further, the sell-off by energy stocks also restricted the markets to go up amid a sharp drop by the price of crude oil, as crude for August delivery plunged $2.95 to $68.06 a barrel. Meanwhile, investors also watched President Donald Trump and Russian President Vladimir Putin convene for a summit in Helsinki, Finland but reaction to a joint conference with the two leaders was muted.
The S&P 500 declined 2.88 points or 0.10 percent to 2798.43 and the Nasdaq was down by 20.26 points or 0.26 percent to 7805.72, while The Dow Jones Industrial Average gained 44.95 points or 0.18 percent to 25064.36.
Index closed a day at 10937 with loss of 82 points on Monday session and formed a bearish candle pattern on daily chart. Overall its buy on dip market until trading above its strong support of 10870-10830. Immediate resistance is coming near 10980-11010 and it’s suggested to book profit near said levels.
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