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NSE Intra-day chart (19 February 2020)
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Market Commentary 20 February 2020
Benchmarks to open in red tracking Asian peers

 

Indian equity bourses resumed their gaining rally on Wednesday, with Sensex and Nifty ending higher by over a percent each. After a fabulous opening, markets remained positive for the whole day, as the Finance Minister Nirmala Sitharaman said that the government would announce measures to tackle the financial fallout from the coronavirus outbreak amid a fall in new cases in China. Traders took some support with the Reserve Bank of India (RBI) Governor Shaktikanta Das' statement that there is no reason to doubt that the government will be able to cut fiscal deficit to 3.5% of the GDP in the fiscal beginning April 1. In the second half of the trading session, key benchmarks extended their gains to settle near their day's high points, aided with the Minister of State for Finance Anurag Singh Thakur's statement that the government expects to resolve 90 per cent of the income tax disputes through 'Vivaad se Vishwas' scheme announced in the Budget for 2020-21. Market participants paid no heed towards a private report stating that the sharp reduction in lending rates is insufficient to prop up credit growth which is set to fall in July this year. Deterioration in factory output and real wage growth are the impeding factors limiting the growth in credit. Finally, the BSE Sensex gained 428.62 points or 1.05% to 41,323.00, while the CNX Nifty was up by 133.40 points or 1.11% to 12,125.90.

 

The US markets ended higher on Wednesday, with the S&P 500 and Nasdaq finishing at all-time highs, as investors were encouraged by comments from the Federal Reserve and measures China says it has taken to help coronavirus-stricken businesses. Minutes from the rate-setting Federal Open Market Committee's January meeting showed that Fed officials believe the US economy appeared stronger in late January than they had been expecting. However, Fed members at the meeting, where they kept rates at a 1.50%-1.75% range, expressed concerns about the threat of the coronavirus outbreak in China, and of tensions in the Middle East, which may suggest that the central bank may be more inclined to ease rates than to raise them in the near-term. Policy makers emphasized their intention to provide some stability for markets and the economy for a time after cutting rates three times in succession last year. On the economic data front, a report released by the Commerce Department showed a pullback in new residential construction in the US in the month of January. The Commerce Department said housing starts slumped by 3.6 percent to an annual rate of 1.567 million in January after soaring by 17.7 percent to a revised rate of 1.626 million in December. Meanwhile, producer prices in the US increased by much more than anticipated in the month of January, according to a report released by the Labor Department. The Labor Department said it producer price index for final demand climbed by 0.5 percent in January after rising by 0.2 percent in December. 

 

Crude oil futures settled higher with gains of over two percent on Wednesday as concerns about the outlook for energy demand eased after reports said the number of coronavirus cases fell down for a second straight day in China. According to the National Health Commission, mainland China had 1,749 new confirmed cases of coronavirus infections on February 18, down from 1,886 cases a day earlier and the lowest since January 29.  Besides, Expectations that the Organization of the Petroleum Exporting Countries (OPEC) and allied producers will deepen output cuts, and the US decision to cut more Venezuelan crude from the market contributed as well to the rise in crude oil prices. Crude oil futures for March surged $1.24 or 2.4 percent to settle at $53.29 a barrel on the New York Mercantile Exchange. April Brent crude rose $1.37 or 2.4 percent to settle at $59.12 a barrel on London's Intercontinental Exchange.

 

Indian Money market remained closed on Wednesday on account of Chhatrapati Shivaji Maharaj Jayanti.

 

The FIIs as per Tuesday's data were net buyers in equity segment, while they were net sellers in debt segment, In equity segment, the gross buying was of Rs 4177.32 crore against gross selling of Rs 4004.00 crore, while in the debt segment, the gross purchase was of Rs 1424.43 crore with gross sales of Rs 1542.84 crore. Besides, in the hybrid segment, the gross buying was of Rs 16.12 crore against gross selling of Rs 13.80 crore.

 

The US markets ended higher on Wednesday on signs of slowing coronavirus infections and expectations that China would take more measures to bolster its virus-hit economy. Asian markets are trading mostly in red in early deals on Thursday. Indian markets snapped four-day losing streak and ended higher on Wednesday after the Finance Minister Nirmala Sitharaman said that the government would announce measures to tackle the financial fallout from the coronavirus outbreak. Today, the start of session is likely to be weak amid lackluster trade in Asian peers and rise in crude oil prices overnight. There will be some cautiousness with the Reserve Bank of India (RBI) Governor Shaktikanta Das' statement that the coronavirus outbreak will have a limited impact on India but the global GDP and trade will definitely get affected due to the large size of the Chinese economy. He added that only a couple of sectors in India are likely to see some disruptions but alternatives are being explored to overcome those issues. Traders also will be concerned with Fitch Ratings' report that with deceleration in growth and tight liquidity conditions, the country's financial institution sector may continue to face challenging operating environment. It said the stress in non-banking financial companies, small and medium enterprises (SMEs) and the real estate sector will continue to put asset-quality pressures on financial institutions in the country. Though, some support may come later in the day as the government approved setting up of 10,000 new farmer produce organisations (FPOs) by 2024 with budgetary support of nearly Rs 4,500 crore as part of its efforts to cut production cost and boost income of farming community. Auto stocks will be in focus with ICRA's report that India's automobile industry is likely to be negatively impacted and supply chain disrupted if the Coronavirus (COVID-19) outbreak in China and South-East Asia persisted longer. There will be some reaction in dairy stocks as the government increased the interest subvention or subsidy on loans given to the dairy sector from 2 per cent to 2.5 percent. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,125.90

12,067.10

12,159.70

BSE Sensex

41,323.00

41,128.90

41,437.13

                                                 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,277.01

35.30

33.87

36.47

Tata Motors

789.14

158.05

152.53

164.08

SBI

398.47

320.35

317.07

323.82

Bharti Infratel

225.82

225.10

215.50

231.45

ONGC

218.06

101.70

99.60

103.00

 

  • Infosys has entered into a long-term strategic partnership with GE Appliance, a Haier company, to effectively streamline IT operations. 
  • Tata Motors' wholly owned subsidiary -- JLR has unveiled a new futuristic electric driverless car concept as part of a spin-off project developed at its new innovation centre at the University of Warwick in central England. 
  • Hero MotoCorp is aiming to create the next generation of mobility solutions over the next 5-7 years that are relevant to customers across the world. 
  • HDFC Bank, Mastercard and SAP Concur have joined hands for spending management services for the corporate sector.
News Analysis