Delayed US tariffs lift market sentiments

Sensex and Nifty settled with gains on August 14, tracking positive cues from other Asian markets after the US delayed tariffs on some Chinese imports.

US President Donald Trump delayed his September 1 deadline for 10 percent tariffs on some Chinese imports, giving a boost to the risk appetite of investors.

Back home, sentiment got a fillip after data showed India’s retail inflation rate in July eased marginally to 3.15 percent, remaining comfortably within Reserve Bank of India’s (RBI) target level of 4 percent, fuelling hope of a further rate cut by the RBI in its next policy meet.

Wholesale price-based inflation also fell to a multi-year low of 1.08 percent in July, mainly on account of cheaper fuel and food items, government data showed.

Rupee’s rebound against the US dollar and softer crude oil prices were the other factors that offered relief to the market.

Ending at 37,311.53, Sensex leaped 353 points or 0.96 percent. Nifty closed the day at 11,029.40, up 104 points or 0.95 percent. Broader market underperformed Sensex as the BSE Midcap and Smallcap indices closed 0.85 percent and 0.41 percent up, respectively.

The breadth of the market also improved as 1,319 stocks logged gains against 1,156 that suffered losses. As many as 140 stocks remained unchanged.

Barring healthcare index on BSE, all the other sectoral indices ended in the green with metal, bank, capital goods and oil & gas indices rising up to 3 percent.

Despite today’s gains, market experts advise caution.

“We expect the market to remain volatile in the near-term and maintain our cautious stance. In the absence of any fresh domestic triggers and at the end of earnings season, investors will take cues from global developments. Positive progress on US-China trade talks will boost investors’ sentiments. Given the uncertainty, we advise investors and traders to maintain a stock-specific approach and avoid risky trades,” said Ajit Mishra VP- Research, Religare Broking.

Stocks in news

Metal stocks logged healthy gains, buoyed by positive development on the US-China trade war. BSE Metal pack closed 2.68 percent up with shares of Jindal Steel (up 9.55 percent), Vedanta (up 4.87 percent) and Tata Steel (4.61 percent) as the top gainers.

Shares of Dr Reddy’s Laboratories fell 8 percent intraday but recouped most losses to end 1.76 percent lower at Rs 2,513 after reports emerged that there could be a delay in the launch of the generic female contraceptive drug in the US.

Shares of NMDC rose 3.46 percent to Rs 104.65 on the back of strong numbers reported by the company in the quarter ended June 2019. The company’s Q1 net profit rose 20.9 percent to Rs 1,179.3 crore against Rs 975.3 crore.

Shares of Larsen & Toubro (L&T) rose 1.55 percent to close at Rs 1,334.05 as the company said it is planning to raise Rs 1,400 crore via non-convertible debentures (NCDs).

Shares of Sun Pharma fell 4.69 percent to Rs 417.05, a day after the company said its June quarter profit increased 31 percent year-on-year to Rs 1,387.5 crore from Rs 1,057.3 crore.

Global markets

European shares fell on August 14, as a shrinking German economy and weak industrial data from China stoked fears of a global slowdown, forcing investors to turn defensive and overshadowing a temporary US-China tariff truce, reported Reuters.

On the other hand, Asian markets ended higher after announcements of delay in the implementation of tariffs on some Chinese imports by the US.

Shanghai Composite index gained 0.42 perent to 2,808.91, Nikkei added 0.98 percent at 20,655.13 and Kospi rose 0.65 percent to 1,938.37.

Technical view:

The hourly chart of Nifty shows that the index is trading between two converging trendlines where the upper trendline i.e. the falling trendline has been acting as a stiff barrier for the last three sessions.

In terms of the bar patterns, the price action over the last few sessions has taken form of an Arrow pattern on the daily chart.

“The position of the pattern in the larger structure shows that the pattern is likely to breakout on the downside. Breakout level for the same is at 10,900 on the downside. As per the wave structure, the recent three-wave pullback looks complete at August 9 high of 11,181 and unless that gets taken out, the index is expected to drift lower. On the downside, the recent low of 10,782 will be the initial target whereas the larger target is at 10,455, which is 78.6 percent retracement of the October – June rally,” said Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.

132 stocks readying to rise

Momentum indicator MACD showed 132 stocks, including Indiabulls Housing Finance, ICICI Bank, Biocon, DLF, MMTC, Fortis Healthcare, Castrol India and Piramal Enterprises, with bullish crossovers, signalling these stocks may log gains in the coming sessions. On the other hand, YES Bank, Wipro, JSW Energy, GIC Housing Finance and Orient Paper were among the 52 stocks that showed bearish crossovers.

Stocks above & below 200-DMAs

NMDC, IDFC First Bank, BPCL, Magadh Sugar, Zodiac Clothing, Bharat Rasayan, Century Textiles, Cholamandalam Investment and Finance Company and Greenply Industries were among the stocks that witnessed positive breakouts and traded above their 200-DMAs. However, ABB India, City Union Bank and Pfizer were among those stocks that traded below their 200-DMAs.Subscribe to Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get PRO for 1 year at price of 3 months at 289. Use code FREEDOM.