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NSE Intra-day chart (28 February 2020)
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Market Commentary 02 March 2020
Benchmarks to make positive start following Asian peers

 

Looming coronavirus fears pushed Indian equity markets deeper into red on Friday. Indices made a weak start, impacted by the Association of Indian Forging Industry's statement that disruption in supplies due to the coronavirus outbreak in China has hit domestic forging industry along with automobile and auto component manufacturing sectors. Sentiments remained down, amid a private report that coronavirus outbreak could cause a dent to the recovery of the Indian economy amid supply chain disruptions and inflationary pressures. The report also said that manufacturing companies could face production disruptions if the length of the outbreak gets prolonged and their supply chain is not restored to normalcy. Markets continued to hit with huge losses during the whole trading day, as Industry body PHDCCI said that the coronavirus outbreak may negatively impact global growth by 30 basis points or $250 billion. It said disruptions in the global supply chains will not only hit China's exports but also the exports of the importing countries as they import a large chunk of raw materials and intermediate goods from China while exporting to other respective destinations. The street remained cautious, even after Union Finance Minister Nirmala Sitharaman asserted that the anti-CAA protests and the recent violence in Delhi have not dampened the spirit of investors. Finally, the BSE Sensex slipped 1448.37 points or 3.64% to 38,297.29, while the CNX Nifty was down by 431.55 points or 3.71% to 11,201.75.

 

The US markets ended mostly lower on Friday, though Nasdaq settled the day nearly unchanged, amid intensifying fears over the potential degree of damage the spread of COVID-19 will inflict on the global economy and supply chains. New Zealand and Nigeria are among the countries that have recently confirmed their first coronavirus cases, with the World Health Organization warning that the fast-spreading disease could soon reach most, if not all countries around the world. WHO director-general Tedros Adhanom Ghebreyesus recently said the organization has raised its assessment of the risk of spread and the risk of impact of the coronavirus to very high. In addition to the confirmed cases in new countries, the number of cases in countries like China, South Korea and Iran countries to rise. However, markets trimmed most of their losses after Federal Reserve Chairman Jerome Powell said the central bank will act as appropriate to support the economy amid the evolving risks posed by the coronavirus outbreak. On the economic data front, the government said consumer spending increased a mild 0.2% last month. Meanwhile, incomes shot up 0.6% - the biggest gain in 11 months - but the increase included annual cost-of-living increases in Social Security benefits as well as tax credits tied to the Affordable Care Act. Separately, a measure of business conditions in the Chicago region improved in February but remained in contraction territory. MNI Indicators said the Chicago PMI business barometer increased to 49.0 in February from 42.9 in January. Any reading below 50 indicates worsening conditions. 

 

Extending their recent losses, crude oil futures closed sharply lower on Friday as growing concerns about energy demand due to the impact of the fast-spreading coronavirus on the global economy weighed on the commodity once again. Besides, the Organization of the Petroleum Exporting Countries (OPEC) and allies are scheduled to meet next week, March 5-6, to consider deepening production cuts to support prices. Currently, the group is producing 1.7 million barrels less per day. According to the Production Supply Monthly report from the US Energy Information Administration, US oil output fell to 12.78 million barrels per day in December from 12.86 million barrels per day a month earlier. But then, weekly oil reports from EIA since January this year, have showed a jump in crude production in the US, with output rising to a record 13 million barrels per day. Crude oil futures for April slipped $2.33 or about 5 percent to settle at $44.76 a barrel on the New York Mercantile Exchange. April Brent crude dropped $1.66 or 3.2 percent to settle at $50.75 a barrel on London's Intercontinental Exchange.

 

Indian rupee fell sharply against US dollar on Friday, amid sustained foreign fund outflows. Markets' sentiment also took a hit as Industry body PHDCCI said that the coronavirus outbreak may negatively impact global growth by 30 basis points or $250 billion. Investors also remained on sidelines ahead of the release the Gross Domestic Product (GDP) figures for the October-December period to be released later in the day. Subdued equity market too put pressure on the domestic unit. Easing crude oil prices and weakening of the American currency in the overseas market failed to cast any impact on the rupee. On the global front, dollar nursed losses on Friday after its worst day against the euro in nearly two years, as the global spread of the coronavirus fired up expectations for a U.S. rate cut and pushed the hunt for yield elsewhere. The last traded price of rupee was 72.20, 59 paise weaker from its previous close of 71.61 on Thursday.

 

The FIIs as per Friday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 6276.36 crore against gross selling of Rs 9341.21 crore, while in the debt segment, the gross purchase was of Rs 1267.77 crore with gross sales of Rs 3207.61 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.90 crore against gross selling of Rs 6.19 crore.

 

The US markets ended mostly in red on Friday as fears escalated over the fast-spreading coronavirus. Asian markets are trading mostly higher in early deals on Monday as markets are recovering after the novel coronavirus outbreak sent stocks into a downward spiral last week. India markets crashed, for sixth straight session, on Friday, tracking global markets meltdown as economies worldwide struggle in battling the Coronavirus pandemic. Today, the start of new month is likely to be optimistic tracking positive cues from Asian peers and ahead of India Manufacturing PMI numbers for February slated to be released later in the day. Traders will be getting some encouragement as the government collected Rs 1.05 lakh crore as Goods and Services Tax (GST) revenue in February, up 8% over the same month last year. Some support also came in with report that the output of eight core sectors of the economy managed to rise for a second straight month in January, growing by 2.2% as key sectors like refinery products and electricity continued to see slow growth. Also, the Reserve Bank of India's (RBI) data showed that India's foreign exchange reserves inched up by $29 million to a fresh lifetime high of $476.122 billion in the week to February 21, aided by an increase in the value of gold holdings. Market participants may take note of industry body Assocham's statement that with the Chinese economy getting impacted due to the coronavirus outbreak, India can push its exports in the global markets to fill up the space vacated by the neighbouring country. Though, some cautiousness may crept in as Q3 GDP growth slowed a 7-year low of 4.7% on the back of a continued slump in manufacturing and escalating coronavirus fears. The GDP growth for the December quarter is the lowest since January-March of 2012-13 when it stood at 4.3%. Also, the Controller General of Accounts (CGA) said India's fiscal deficit touched 128.5% of the whole year budget target at January-end. Traders may also be concerned with report that overseas investors invested only Rs 6,554 crore in Indian markets on net basis in February, as they adopted a cautious stance amid coronavirus scare, subdued economic data and disappointing corporate earnings. There will be some buzz in the banking stocks with report that in a bid to address weaknesses in cooperative banking sector, the Parliament is likely to clear a Bill to amend Banking Regulation Act to bring multi-state cooperative banks under effective regulation of RBI during the Budget session. Steel stocks will be in focus as the World Steel Association (worldsteel) in its latest report stated that India's crude steel production registered a decline of 3.26 per cent to 9.288 million tonnes (MT) in January this year. The auto sector stocks will also be in action, reacting to their monthly sales numbers. Besides, SBI Cards and Payment Services' initial public offer (IPO) will hit the primary market with a Rs 10,350 crore initial public offering today. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,201.75

11,122.93

11,332.68

BSE Sensex

38,297.29

37,982.35

38,849.85

                                                 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Yes Bank

1,417.20

34.60

33.98

35.53

Tata Motors

944.70

128.95

124.13

136.68

SBI

597.05

303.00

297.85

311.40

Vedanta

573.63

114.00

108.73

122.63

ICICI Bank

327.38

497.25

490.68

505.33

 

  • HDFC Bank has joined hand with IndiGo to launch a co-branded credit card, which will effectively work like a loyalty programme for the carrier. 
  • Dr. Reddy's Laboratories has launched the first generic version of Vimovo tablets, used to treat rheumatoid arthritis, in the US market. 
  • NTPC is going to commence commercial operation of 250 MW unit of Barauni Thermal Power Station Stage-II from March 01, 2020. 
  • Indian Oil Corporation is in the process of developing LPG from bio mass in two to three years.
News Analysis