A gloomy beginning of August month

The bulls finally halted its upward run as on July 31, 2020 post recording gains for six successive weeks. Last week, Nifty and Sensex descended by 120 points and 421 points, respectively. The fall of 4.51 per cent in the Bank Nifty acted as the biggest thorn in the flesh resulting into a market correction. This came after the Reserve Bank of India’s (RBI) warning of potential rise in Non-Performing Assets (NPA) in FY21.

However, looking at the monthly picture, Nifty gained close to 7.5 per cent in the month of July. And 36 stocks from Nifty 50 ended in green for the month of July. Having said that, Bank Nifty ended the month of July with infinitesimal gains of 1.26 per cent, underperforming Nifty 50.  

According to the available data, Indian markets are about to enter a seasonally dreary month of August. Data suggests that, in last 11 years the month of August has provided an average negative return of 1.04 per cent with two severe falls. This drastic fall was witnessed in the year 2011 and 2015 when markets plummeted 8.77 per cent and 6.58 per cent, respectively. This seasonality analogy seems perfectly aligned with the today’s movement in SGX Nifty. At 7:40 AM, SGX Nifty is trading down by 43.50 points at 11,061 indicating a dull beginning of the month of August. However, stock-specific actions would remain intact.  As auto companies announced their monthly sales data during the weekend, auto stocks are likely to be in limelight today.

Amid Wall Street witnessing a solid close on Friday, majority of the Asian indices are trading in green on Monday. Japan’s Nikkei 225 is leading from the front as it is trading with gains of over 2 per cent. This is followed by China’s Shanghai Composite which is trading higher by 0.90 per cent, whereas the Hong Kong’s Hang Seng is lingering around the neutral line.

Asian Markets

Index bellwether Reliance Industries and HDFC twins failed to inject fuel to the rally, resulting in Indian markets signing off the week on a negative note. At closing bell, Nifty and Sensex settled below 11,100 and 37,607 level, respectively. However, the broader indices outperformed the frontline gauges with Nifty Mid-cap and Nifty Small-cap adding 0.43 per cent and 0.83 per cent, respectively.  Despite the broader indices outperformed, the advance-decline ratio remained in skewed towards the decliners as 1,021 stocks declined against 821 advances. On the sectoral front, mixed trend was witnessed wherein Nifty Pharma took a whopping 3.56 per cent jump. This was followed by Nifty Realty and Nifty PSU Bank. On the flipside, Nifty Media and Nifty Financial Services registered themselves as top losers.  

On Friday, late-day rally aided the US stocks to end final trading session of the week on a high note. Tech stocks were the showstopper on the Wall Street.  The stock price of iPhone maker (Apple), hopped above USD 400 for the first time ever, adding over USD 95 million to its market cap.  On the economic front, it was a mixed day as US personal income reported a drop, while personal spending surged. Tech-heavy Nasdaq outperformed Dow and S&P 500. On other hand, European indices witnessed a sharp drop as economic data disappointed market participants. Eurozone Gross Domestic Product (GDP) is diminishing at the fastest pace. 

US Markets

Europe Markets

Commodity