MARKET BOUNCES BACK: NIFTY CLOSES ABOVE 19,300; VIX AT 12.40

Published on Aug 28, 2023 17:17

Domestic equity benchmarks managed to make slight gains on Monday, breaking a two-day losing streak. The Nifty index recovered from its morning low of 19,249.70 and closed above the 19,300 mark. However, the gains were limited due to profit-taking in Reliance Industries before the company`s AGM, which countered the positive global cues. The market sentiment remained affected by concerns of a potential interest rate hike by the US Federal Reserve, as well as inflation and stagflation in China. Additionally, the fluctuating flow of foreign institutional investments in the domestic market added to the overall cautious sentiment. The Nifty Realty, Pharma, and Healthcare indices outperformed the Nifty50, while the Nifty IT, FMCG, and Oil & Gas indices underperformed.

The barometer index, the S&P BSE Sensex gained 110.09 points or 0.17% to 64,996.60. The Nifty 50 index added 40.25 points or 0.21% to 19,306.05.

Larsen & Toubro (up 2.09%), M&M (up 1.95%) and HDFC Bank (up 1.01%) boosted the indices higher.

The broader market outperformed the frontline indices. The S&P BSE Mid-Cap index rose 0.59% while the S&P BSE Small-Cap index gained 0.67%.

The market breadth was positive. On the BSE 2,026 shares rose and 1,722 shares fell. A total of 159 shares were unchanged.

The NSE`s India VIX, a gauge of the market`s expectation of volatility over the near term, advanced 2.60% to 12.40.

Economy:

India`s foreign exchange reserves declined by $7.273 billion to a near two-month low of $594.89 billion as of Aug. 18 and posted their steepest weekly fall in more than six months, data from the country`s central bank showed on Friday.

Gold reserves were down by $515 million to $43.824 billion, the RBI said. The Special Drawing Rights (SDRs) were down by $119 million to $18.205 billion, the apex bank said.

The country`s reserve position with the IMF was also down by $25 million to $5.072 billion in the reporting week, the apex bank data showed.

Numbers to Track:

The yield on India`s 10-year benchmark federal paper declined 0.36% to 7.180 from its previous close of 7.206.

In the foreign exchange market, the rupee edged slightly higher against the dollar. The partially convertible rupee was hovering at 82.6225, compared with its close of 82.6400 during the previous trading session.

MCX Gold futures for 5 October 2023 settlement rose 0.13% to Rs 58,715.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was down 0.04% to 104.04.

The United States 10-year bond yield shed 0.12% to 4.238.

In the commodities market, Brent crude for October 2023 settlement added 4 cents or 0.05% to $84.44 a barrel.

Global Markets:

Markets in Europe and Asia experienced gains on Monday. This was attributed to China`s support for its equities market, which boosted positive sentiment. Additionally, Federal Reserve Chair Jerome Powell`s statement that the Fed would proceed cautiously in deciding whether to raise interest rates again contributed to the optimistic market outlook.

Chinese equities saw an increase after the government lowered stamp duty on stock trades for the first time since 2008. The Chinese government also pledged to slow the pace of initial public offerings.

However, there was negative news in the market as well. China Evergrande Group, the world`s most indebted property developer, saw its shares plummet by as much as 87% on Monday. This was the first day of trading for the company since March 21, 2022. In July, China Evergrande Group had filed for Chapter 15 bankruptcy protection in a U.S. court.

In the U.S., the stock market rallied on Friday following positive comments from Federal Reserve Chairman Jerome Powell at the annual central bank conference in Jackson Hole, Wyoming. Powell acknowledged that inflation remains "too high" and stated that the central bank is prepared to raise rates further if necessary. While progress has been made on inflation, Powell did not indicate an immediate readiness to lower rates.

Stocks in Spotlight:

Reliance Industries fell 1.11%. Reliance Jio plans to introduce Jio AirFiber on Ganesh Chaturthi, which falls on September 19th. During the 46th Annual General Meeting, Mukesh Ambani, the chairman of Reliance Industries, shared that Jio AirFiber will utilize a pan-India 5G network, eliminating the need for last-mile fiber. This technology has the potential to accelerate internet expansion, allowing for the connection of approximately 150,000 new users each day.

By December, Jio aims to achieve nationwide 5G coverage. With a target of having over 50 million 5G customers in India, Jio plans to connect almost 1 million phones to their 5G network by December 2023. Additionally, Jio intends to smoothly transition 4G users to 5G with minimal capital expenditure, ensuring a seamless upgrade for their customers.

In other news, Isha Ambani, Akash Ambani, and Anant Ambani have been selected as non-executive directors, pending shareholder approval. Nita Ambani, on the other hand, has resigned from the board to focus on guiding Reliance Foundation. Moving forward, Nita will be a permanent invitee to RIL board meetings, retaining her involvement in the decision-making process.

Furthermore, Reliance Retail has witnessed a significant growth in valuation. It has increased from Rs 4.28 lakh crore in 2020 to Rs 8.28 lakh crore at present.

Lastly, Jio Financial Services is planning to enter the insurance sector with the assistance of a global partner.

Procter & Gamble Hygiene & Health Care surged 6.23% after the company`s net profit zoomed to Rs 151.24 crore in June 2023 quarter as against Rs 42.55 crore posted in June 2022 quarter. The company said that the jump in profit after tax (PAT) was because of strong base business growth and one-time help. Revenue from operations rose 9.8% to Rs 852.53 crore in the quarter ended June 2023 as compared with a year ago, driven by strong brand fundamentals and integrated growth strategy.

HDFC Bank rose 1.01% after the bank announced that its board has approved the re-appointment of Sanmoy Chakrabarti as the chief risk officer (CRO) of the Bank, for a further period of 5 years, with effect from 14 December 2023 to 31 December 2028.

Patel Engineering was locked in an upper circuit of 5% after the company along with JV partner has received letter of award (LoA) for Dibang multipurpose project for construction of civil works for Lot-4. The LoA is received from NHPC, which was declared as L1 earlier. The project is to be completed in 86 months. The value of the project stood at Rs 3,637.12 crore. The company being 50% partner in the JV, its share in the project is Rs 1,818.56 crore.

Sprayking Agro Equipment rose 1.04% after the company received repeat order worth Rs 1.5 crore for supplying Brass parts.

Gland Pharma gained 1.62%. The US drug regulator conducted a pre-market inspection covering its quality system/current good manufacturing practice regulations for medical devices (21 CFR Part 820) at the company`s Pashamylaram Facility at Hyderabad from 23 August 2023 to 26 August 2023. The inspection concluded with two observations on Form 483 with respect to ANDA filed for the product to be manufactured in a PEN device.

Bharat Electronics (BEL) added 1.12%. BEL said that it has received order worth Rs 1,075 crore from Hindustan Shipyards for supply of CMS, Communication Systems, EW Systems and other sensors for Fleet Support Ships.

BEML gained 3.2% after the company received contract for export order from KAMSS, Russia, for BEML Dozer BD355 valuing at $19.71 million. The contract is to be executed in different phases starting from August 2023, for which purchase order has been received by the company.

Venus Remedies rallied 4.45% after the company has received marketing approval from Saudi Arabia, the largest pharmaceutical market in the Gulf Cooperation Council (GCC) region, for its product Enoxaparin in pre-filled syringes.

CCL Products (India) fell 1.85% after the company reported the breakdown of a key equipment at its wholly-owned subsidiary, Ngon Coffee Company in Vietnam. In a recent announcement, CCL Products (India) has revealed a significant setback at its wholly-owned subsidiary, Ngon Coffee Company in Vietnam. The company reported the breakdown of a key equipment, which is expected to result in a temporary interruption of production during the upcoming quarter.