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Indian equity benchmarks gave up early gains to end lower on Tuesday, weighed down by pharma stocks after Dr Reddy’s Lab missed analysts’ expectations for quarterly profit.

Dear Trader…

Indian bourses extended their losses in today session as selling appeared in healthcare, power and energy stocks. Concerns over global growth due to the recent rise in delta variant coronavirus cases in different parts of the world which continue to persist weighed traders mood. Adding more pessimism, foreign institutional investors (FIIs) has sold shares worth Rs 2,376.79 crore, while domestic institutional investors (DIIs) net purchased shares worth Rs 1,551.27 crore in the Indian stock market. However, downfall remained capped amid Q1FY22 corporate earnings which have been strong so far and also commentary of most management has been encouraging.

Nifty futures opened at 15840.05 points against the previous close of 15820.45 and opened at a low of 15693.05 points. Nifty Future closed with an average movement of 176.90 points and a decline of around 86.55 points and 15733.90 points .. !!

On the NSE, the midcap 100 index will decline 0.43% and smallcap 100 index is closing decline 0.02%. Speaking of various sectoral indices, the NSE saw gains in only Metal, PSU Bank stocks, while all other sectoral indices closed lower.

At the start of intra-day trading, august gold opened at Rs.47446, fell from a high of Rs.47642 points to a low of Rs.47367, with a rise of 149 points, a trend of around Rs.47610 and September Silver opened at Rs.67357, fell from a high of Rs.67357 points to a low of Rs.66861, with a decline of 151 points, a trend of around Rs.66970..!!

Meanwhile, rating agency ICRA in its latest report has said that Indian auto component industry is expected to post 20-23 per cent revenue growth in the current fiscal (FY22) aided by strong exports and recovery in the domestic market. It said the growth would however be on the low base of the last two fiscals and will look optically strong because of the exceptionally weak first half of the financial year 2020-21. It also said headwinds such as sharp increase in commodity prices, supply chain disruptions partly arising from semiconductor shortage and premium freight expenses are expected to weigh in industry margins in FY2022, partially offsetting benefits arising from improved operating leverage,

According to the report, commodity prices were expected to remain at a multi-year high in the first half of the financial year 2021-22 before softening in the second half of the financial year. It noted that an increase in air freighting, resulting in higher freight costs for the industry, also remains a challenge. Despite the strong revenue growth and consequent benefits from operating leverage expected, these headwinds are expected to weigh in on margins.

Rating agency further noted that its interaction with large auto component suppliers indicated a cautiously optimistic approach towards CAPEX plans for the financial year 2021-22, with investments expected to be largely funded by internal accruals. It said the incremental investments will be primarily towards capability development i.e. new product additions and committed platforms, unlike the investments towards capacity expansion witnessed in the past.

Technically, the important key resistances are placed in Nifty future are at 15777 levels, which could offer for the market on the higher side. Sustainability above this zone would signal opens the door for a directional up move with immediate resistances seen at 15808 – 15818 levels. Immediate support is placed at 15676 – 15606 levels.

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