*ABM Morning Update*
*NIFTY EXTENDS GAINS @ THE START OF THE WEEK. HOWEVER, ROAD TURNING BUMPY FOR BROADER MARKET!*
*Global markets :*
US markets climbed higher on Monday despite disappointing economic data coming from China, where retail sales were up 8.5% YoY during July, which was short of the 11.5% jump economists expected. While rising COVID case growth is likely fueling the slowdown seen in China and the decline in manufacturing sentiment, but the economic impact — at least in the US and Europe — is unlikely to be significant, as reflected in steady risk-asset moves.
The earnings season has been about more hits than misses and that bodes well for the near to medium term movement in equities. However, the closely watched retail sales data will be released on Tuesday, with the Street expecting a slowdown in July (0.3% vs 0.6% last month) due the delta variant spread. Amongst other asset classes, crude oil has seen a sharp decline overnight (-1.8%) continuing its near week long fall from ~73 to near 68 at one pt in trade yesterday.
*Domestic markets :*
Lcl markets made yet another fresh record closing high as Nifty ended on positive side (up 33 points) for 6th consecutive day. RIL and Tata Steel led the show. Former got the boost after media reports that Aramco is in advanced talks to buy stock worth $25 bn in its oil business. Meanwhile, the broader markets continued to remain weak with Midcap 50 down 0.4% and Nifty small cap 100 down 0.8%.
*Macro update -* India’s wholesale inflation eased for the second straight month even as prices of manufactured products rose. WPI stood at 11.2% in July (est was 11.3%) compared with 12.1% in June 2021 (up 0.6% MoM). Retail inflation, too, fell to its lowest since April, led by lower food prices. The Union FM stated that she expected retail inflation would be contained between 2% and 6%, the target set by the RBI.
Meanwhile, reports are suggesting Indian economy likely grew 19-20% in the June quarter, aided by the strong base effect from a year ago, when it contracted by almost a quarter, offsetting the effects of the 2nd COVID wave. The full-year GDP is expected to grow 7.9-9.6%.
FM on Monday ruled out a cut in excise duty on petrol and diesel to ease prices, which have touched an all-time high, saying payments in lieu of past subsidised fuel pose limitations. Separately, as per IMD, after a break, the SW Monsoon has started reviving & rainfall activity has started to increase over south India.
Overall, expect markets at Index level to consolidate with positive bias while broader markets may stay range-bound with lot more stock-specific action. Going ahead, with limited triggers, expect our markets to trade in sync with global indices.
For today, SGX Nifty indicates 15 points gap down opening for Nifty.
*Quote for the day: “We are reviewing capital expenditure on a regular basis… We want to push capex. There is no message to ministries other than to spend.” – N. Sitharaman, FM of India.*
*Focus for the day:*
1. Eurozone GDP
2. US Retail sales & Industrial Prodn
3.Japan Trade Bal
*Key corporate developments/policy actions:*
1. Aarti industries to consider demerger of pharma business on 19th Aug. This could unlock value for shareholders.
2. As per media reports, Nalco has increased price of Aluminium Metal Products by Rs 5,000/- PMT
3. Sagar Cement commenced its grinding operations & despatch from its integrated cement plant in MP.
4. Tata Motors has joined hands with Bank of Maharashtra to offer car loan facilities for its New Forever range of PVs. Here, interest rate will start from as low as 7.15%.
5. Intellect Design announces digital transaction banking on cloud the world’s first, cloud-native, fully-integrated cash management platform, powered by microservices and open banking apis for banks in ME and North Africa.
6. FIEM Industries is a sole Supplier to Ola Electric for Head Lamps, Tail Lamps, Indicators, Rear Fender Assembly and Mirrors. In addition to other existing EV clients, this is a landmark client addition for FIEM.
*NIFTY EXTENDS GAINS @ THE START OF THE WEEK. HOWEVER, ROAD TURNING BUMPY FOR BROADER MARKET!*
*Global markets :*
US markets climbed higher on Monday despite disappointing economic data coming from China, where retail sales were up 8.5% YoY during July, which was short of the 11.5% jump economists expected. While rising COVID case growth is likely fueling the slowdown seen in China and the decline in manufacturing sentiment, but the economic impact — at least in the US and Europe — is unlikely to be significant, as reflected in steady risk-asset moves.
The earnings season has been about more hits than misses and that bodes well for the near to medium term movement in equities. However, the closely watched retail sales data will be released on Tuesday, with the Street expecting a slowdown in July (0.3% vs 0.6% last month) due the delta variant spread. Amongst other asset classes, crude oil has seen a sharp decline overnight (-1.8%) continuing its near week long fall from ~73 to near 68 at one pt in trade yesterday.
*Domestic markets :*
Lcl markets made yet another fresh record closing high as Nifty ended on positive side (up 33 points) for 6th consecutive day. RIL and Tata Steel led the show. Former got the boost after media reports that Aramco is in advanced talks to buy stock worth $25 bn in its oil business. Meanwhile, the broader markets continued to remain weak with Midcap 50 down 0.4% and Nifty small cap 100 down 0.8%.
*Macro update -* India’s wholesale inflation eased for the second straight month even as prices of manufactured products rose. WPI stood at 11.2% in July (est was 11.3%) compared with 12.1% in June 2021 (up 0.6% MoM). Retail inflation, too, fell to its lowest since April, led by lower food prices. The Union FM stated that she expected retail inflation would be contained between 2% and 6%, the target set by the RBI.
Meanwhile, reports are suggesting Indian economy likely grew 19-20% in the June quarter, aided by the strong base effect from a year ago, when it contracted by almost a quarter, offsetting the effects of the 2nd COVID wave. The full-year GDP is expected to grow 7.9-9.6%.
FM on Monday ruled out a cut in excise duty on petrol and diesel to ease prices, which have touched an all-time high, saying payments in lieu of past subsidised fuel pose limitations. Separately, as per IMD, after a break, the SW Monsoon has started reviving & rainfall activity has started to increase over south India.
Overall, expect markets at Index level to consolidate with positive bias while broader markets may stay range-bound with lot more stock-specific action. Going ahead, with limited triggers, expect our markets to trade in sync with global indices.
For today, SGX Nifty indicates 15 points gap down opening for Nifty.
*Quote for the day: “We are reviewing capital expenditure on a regular basis… We want to push capex. There is no message to ministries other than to spend.” – N. Sitharaman, FM of India.*
*Focus for the day:*
1. Eurozone GDP
2. US Retail sales & Industrial Prodn
3.Japan Trade Bal
*Key corporate developments/policy actions:*
1. Aarti industries to consider demerger of pharma business on 19th Aug. This could unlock value for shareholders.
2. As per media reports, Nalco has increased price of Aluminium Metal Products by Rs 5,000/- PMT
3. Sagar Cement commenced its grinding operations & despatch from its integrated cement plant in MP.
4. Tata Motors has joined hands with Bank of Maharashtra to offer car loan facilities for its New Forever range of PVs. Here, interest rate will start from as low as 7.15%.
5. Intellect Design announces digital transaction banking on cloud the world’s first, cloud-native, fully-integrated cash management platform, powered by microservices and open banking apis for banks in ME and North Africa.
6. FIEM Industries is a sole Supplier to Ola Electric for Head Lamps, Tail Lamps, Indicators, Rear Fender Assembly and Mirrors. In addition to other existing EV clients, this is a landmark client addition for FIEM.
7. As per media reports, Japanese major, Kubota Corp might be looking to increase its stake by 5% to 7% in Escorts. Kubota currently has a ~9% stake in Escorts.
8. Tyre stocks to be in focus – According to ATMA, the industry is lobbying the government to remove restrictions on import of natural rubber.
*Fund Flow:*
FII: (-) Rs 10.88 bn; DII : (+) Rs 5.06 bn
*Stocks to focus :*
Large Cap : Abbott India, Bajaj Finance, Divis Lab, HDFC Bank, HCL Tech, HUL, Infosys, ICICI Lombard, Maruti, Nestle, Tata Steel
Mid Cap : AAVAS Financiers, Amber Ent, Apollo Tyres, Gmm Pfaudler, GNFC, Mrs Bectors Food, Nalco, Poly Medicure, Westlife Development.
8. Tyre stocks to be in focus – According to ATMA, the industry is lobbying the government to remove restrictions on import of natural rubber.
*Fund Flow:*
FII: (-) Rs 10.88 bn; DII : (+) Rs 5.06 bn
*Stocks to focus :*
Large Cap : Abbott India, Bajaj Finance, Divis Lab, HDFC Bank, HCL Tech, HUL, Infosys, ICICI Lombard, Maruti, Nestle, Tata Steel
Mid Cap : AAVAS Financiers, Amber Ent, Apollo Tyres, Gmm Pfaudler, GNFC, Mrs Bectors Food, Nalco, Poly Medicure, Westlife Development.