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NSE Intra-day chart (01 February 2020)
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Market Commentary 03 February 2020
Benchmarks to make gap-down opening amid sell-off in Asian peers

 

The Union Budget disappointed Indian markets on Saturday, as Sensex and Nifty settled with losses of around 2.50% each. Indices made a cautious start of the day, as the Controller General of Accounts' data (CGA) showed that the government's fiscal deficit touched 132.4 per cent of the full-year target at December-end mainly due to slower pace of revenue collections. Weakness remained over the street during the whole trading day, amid the FICCI's Business Confidence Survey Report stating that India Inc is facing huge risks from delays in necessary structural reforms in the factor markets and lack of adequate credit availability to micro, small and medium enterprises (MSMEs). In the second half of the trading session, losses got intensified, after the government in its Union Budget announcements raised fiscal deficit target to 3.8 per cent of the GDP from 3.3 per cent pegged earlier for 2019-20 due to revenue shortage. Adding more worries, the Reserve Bank of India (RBI) said that non-food bank credit growth decelerated to 7.0 per cent in December 2019 from 12.8 per cent in December 2018. Market participants paid no heed towards Finance Minister Nirmala Sitharaman's announcements over cut in personal income tax, extended tax benefits for affordable housing and gave relief to companies on payment of dividend in the Union Budget for 2020-21. Finally, the BSE Sensex slipped 987.96 points or 2.43% to 39,735.53, while the CNX Nifty was down by 300.25 points or 2.51% to 11,661.85.

 

The US markets ended deeply in red on Friday amid lingering concerns about the coronavirus outbreak, as the death toll from the disease continues to rise. The latest figures from China's National Health Commission say that at least 213 people have died and about 9,700 have been sickened. The number of people sickened by the new coronavirus in China now exceeds the global total infected with severe acute respiratory syndrome, or SARS, which killed nearly 800 people after emerging from southern China in late 2002 and spreading into 2003, but so far the death toll from the current epidemic is lower. The UK and Russia have also confirmed their first cases of coronavirus infection, raising concerns about the rapid spread of the disease and the impact on the global economy. Besides, adding to the worries, Delta and American Airlines recently announced plans to suspend all flights to China as a result of the outbreak. On the economic data front, personal income in the US increased by slightly more than anticipated in the month of December, according to a report released by the Commerce Department. The report said personal income rose by 0.2 percent in December after climbing by a downwardly revised 0.4 percent in November. Street had expected income to inch up by 0.1 percent compared to the 0.5 percent increase originally reported for the previous month. Disposable personal income, or personal income less personal current taxes, also crept up by 0.2 percent in December after rising by 0.4 percent in November. Meanwhile, revised data released by the University of Michigan showed US consumer sentiment unexpectedly improved in the month of January compared to the previously reported deterioration. The consumer sentiment index for January was upwardly revised to 99.8 from the preliminary reading of 99.1. The index is now up from the final December reading of 99.3.

 

Crude oil futures ended lower on Friday, weighed down by growing concerns about outlook for energy demand due to the rapidly spreading coronavirus' potential impact on the global economy. China's National Health Commission in its latest data said that at least 213 people have died and about 9,700 have been sickened by the coronavirus. Meanwhile, the US State Department urged Americans not to travel to China. West Texas Intermediate (WTI), the US benchmark, logged a 4.9% weekly fall, which led to a 15.6% January decline. That was the largest monthly loss since a 16.3% May decline for the front-month contract. The March contract for Brent, the global benchmark, lost 4.2% for the week, for a nearly 12% January fall. Crude oil futures for March declined 58 cents or 1.1 percent to settle at $51.56 a barrel on the New York Mercantile Exchange. March Brent lost 13 cents or 0.2 percent to settle at $58.16 a barrel on London's Intercontinental Exchange.

 

Indian rupee strengthened considerably against dollar on Friday on increased selling of the American currency by exporters and banks. Sentiments remained positive after the Economic Survey projected a GDP growth rate of 6-6.5% for the next fiscal (FY21). The survey also noted that the government is committed to supporting the micro, small and medium enterprises (MSME) sector, terming it an important segment of the economy that fosters entrepreneurship and generates employment opportunities at lower capital cost. However, strengthening of the American currency vis-a-vis other currencies overseas along with losses in the domestic equity market restricted the further up move. On the global front, British Pound has on Friday extended its gains against the world's major currencies following the Bank of England's decision to keep interest rates unchanged and is now set to be the best-performing major currency of January.  Finally, the last traded price of rupee was 71.34, 24 paise stronger from its previous close of 71.58 on Thursday.

 

The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 6401.33 crore against gross selling of Rs 5775.41 crore, while in the debt segment, the gross purchase was of Rs 1697.99 crore with gross sales of Rs 1389.28 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.40 crore against gross selling of Rs 1.50 crore.

 

All the Asian markets are trading in red on Monday on fears about the hit to world growth from the rapidly spreading coronavirus. Indian markets ended sharply lower on Saturday as Budget 2020 announcements failed to live up to the expectations of the Street. Today, the markets are likely to make gap-down opening of new week following sell-off in Asian peers and concerns over economic growth of India. Investors will be looking ahead to IHS Markit India Manufacturing PMI for the month of January schedule to be released later in the day. Market participants will also be looking ahead to the Reserve Bank of India (RBI) bi-monthly monetary policy meeting which is scheduled during February 4-6, 2020. There will be some cautiousness as economists at domestic rating agency Crisil doubt the budget attaining its targets on growth, given the rural boost and thus consumption and revenue realisations, saying planned budgetary measures are not expected to provide a short-term boost. Noting that the economy is facing its worst slowdown in over a decade, a Crisil report has said this was because consumption and investment have stopped firing for too long. Also, traders will be concerned with the Consumer Electronics and Appliances Manufacturers Association's (CEAMA) statement that prices of consumer goods like refrigerators, ACs, coolers and washing machines may rise in the short-term after the government's proposal to increase basic customs duty on components like compressors and motors. Though, some support may also come with SBI Research stating that the revised 3.8 percent fiscal deficit for FY20 looks ambitious as it is based on projected 18 percent rise in tax collections against a paltry 5.1 percent higher realisaition so far, and around Rs 65,000 crore mop-up through disinvestment in the last two months of the current fiscal. Also, foreign investors have pumped in more than Rs 12,000 crore in stock markets in January, remaining net buyers of Indian equities for the fifth consecutive month. In the equities segment, FPIs invested Rs 7,547.8 crore in September, Rs 12,367.9 crore in October, Rs 25,230.6 crore in November and Rs 7,338.4 crore in December. There will be some buzz in the coal stocks with a private report stating that India's coal import increased by 7.6% to 185.88 million tonnes (MT) in the April-December period of the current fiscal. Coal imports in December rose by 13.3% to 20.52 MT compared to 18.10 MT in the year-ago month. There will be some reaction in insurance stocks as the Budget set aside Rs 6,950 crore for recapitalisation of the three public sector general insurance companies - National Insurance, Oriental Insurance and United India Insurance.

 

Support and Resistance: NSE (Nifty) and BSE (Sensex)

 

Index

Previous close

Support

Resistance

NSE Nifty

11,661.85

11,524.32

11,908.37

BSE Sensex

39,735.53

39,275.92

40,550.46

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,016.55

37.90

36.93

39.53

SBI

618.42

302.60

291.72

318.07

Tata Motors

425.15

165.60

159.93

175.03

ITC

422.68

219.00

209.92

233.67

ONGC

312.83

104.35

101.52

108.37

 

  • Tata Motors has launched an engaging crowdsourcing platform, TACNet IdeaNation, in an attempt to address complex mobility issues.
  • Tech Mahindra is going to acquire 70 per cent stake in Bengaluru-based Cerium Systems at an enterprise value of up to Rs 245 crore. 
  • M&M has reported auto sales performance for January 2020 which stood at 52,546 vehicles, compared to 55,722 vehicles during January 2019, registering a fall of 6%.
  • Maruti Suzuki India has reported total sales of 154,123 units in January 2020, as compared 151,721 units in January 2019, registering rise of 1.6%.
News Analysis