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NSE Intra-day chart (06 March 2020)
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Market Commentary 09 March 2020
Markets to get gap-down opening following global peers

 

Indian equity bourses witnessed huge losses on last trading day of the week, with Senses & Nifty ending lower by over 2%. After weak start, indices remained in red, impacted with S&P Global Ratings' report that a fast spreading coronavirus outbreak could knock $211 billion off the combined economies of the Asia-Pacific, with Japan, Hong Kong, Singapore and Australia among the most exposed. Adding worries over the street, the Reserve Bank of India superseded the board of Yes Bank and imposed a 30-day moratorium on it in the absence of a credible revival plan amid a serious deterioration in its financial health. Weakness persisted during the whole trading day, after domestic rating agency CRISIL said that the troubled non-bank lenders' segment is defying caution and growing the riskier unsecured loans portfolio at a pace of 25 per cent in the current fiscal. It also said that a rising propensity for personal loans and attractive risk-adjusted returns are the possible reasons driving the non-banking finance companies (NBFC) to grow on such loans. Traders overlooked Reserve Bank governor Shaktikanta Das' assurance that the central bank will take every measure needed to secure the economy against the challenges arising from the coronavirus epidemic. Finally, the BSE Sensex lost 893.99 points or 2.32% to 37,576.62, while the CNX Nifty was down by 279.55 points or 2.48% to 10,989.45.

 

Extending previous session's losses, the US markets ended lower on Friday, with cut of around a percent each, as traders continue to worry about the economic impact of the coronavirus outbreak. Recent data points to a slowdown in new coronavirus infections in China, but the disease seems to be spreading more rapidly around the rest of the world. So far, more than 100,000 infections have been confirmed worldwide and more than 3,300 people have been killed by the virus. The worries about the outbreak overshadowed the Labor Department's usually closely watched monthly employment report. The report showed much stronger than expected job growth in the month of February, although traders view the data as old news as the coronavirus fears have ramped up only recently. The Labor Department said employment surged up by 273,000 jobs in February, matching the upwardly revised spike in January. With the much stronger than expected job growth, the unemployment rate unexpectedly edged down to 3.5 percent in February from 3.6 percent in January. The rate had been expected to remain unchanged. A separate report released by the Commerce Department showed the US trade deficit narrowed more than expected in the month of January, as the value of imports fell by more than the value of exports. The Commerce Department said the trade deficit narrowed to $45.3 billion in January from a revised $48.6 billion in December. 

 

Crude oil futures settled to the lowest level in several years on Friday after the Organization of the Petroleum Exporting Countries' (OPEC) proposal for deeper output cuts was rejected by its allies. The meeting between OPEC and its allies concluded with the cartel and its allies failing to agree on the former's proposal of reducing production by another 1.5 million barrels per day from April to end of this year. The meeting concluded with the participants deciding to continue with the existing level of production cut till the end of this month. The OPEC+ has decided to meet in early June to review the situation. Also, mounting worries about the economic impact of the coronavirus outbreak and an imminent drop in energy demand weighed on oil prices. Meanwhile, Baker Hughes reported that the number of active US rigs drilling for oil rose by four to 682 this week, after seeing a decline of one rig in the previous week. Crude oil futures for April slipped $4.62 or about 10.1 percent to settle at $41.28 a barrel on the New York Mercantile Exchange. May Brent crude lost $4.72 or 9.4 percent to settle at $45.27 a barrel on London's Intercontinental Exchange.

 

Indian rupee fell sharply against US dollar on Friday, on increased demand for the US currency from importers. Traders remained cautious with S&P Global Ratings' report that a fast spreading coronavirus outbreak could knock $211 billion off the combined economies of the Asia-Pacific, with Japan, Hong Kong, Singapore and Australia among the most exposed. However, S&P did not cut growth forecasts for emerging markets of Indonesia, Malaysia, the Philippines and India, citing the fact that reported infections in those countries were still low. Across the global sell-off together with weakness in the Indian markets added to the woes of the Indian currency. However, rupee pared most of its losses on the back of easing crude oil prices and weakness in the dollar vis-a-vis other key global currencies. On the global front, Sterling extended gains against a broadly weaker dollar on Friday, and was also boosted by comments from the European Union's Brexit chief negotiator that a trade deal between Britain and the bloc was still possible this year. The last traded price of rupee was 73.79, 46 paise weaker from its previous close of 73.33 on Thursday.

 

The FIIs as per Friday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 6059.16 crore against gross selling of Rs 8296.84 crore, while in the debt segment, the gross purchase was of Rs 1855.90 crore with gross sales of Rs 1548.82 crore. Besides, in the hybrid segment, the gross buying was of Rs 26.25 crore against gross selling of Rs 12.58 crore.

 

The US markets ended in red on Friday as the coronavirus outbreak kept investors on edge. Asian markets are trading lower in early deals on Monday as panicked investors fled to bonds to hedge the economic shock of the coronavirus. Indian markets ended sharply lower on Friday amid selling across the board as a spreading coronavirus stoked fears of a prolonged economic slowdown. Today, the start of new week is likely to be gap-down following sell-off in the global markets amid coronavirus fears. Traders will be concerned with credit rating agency Moody's statement that the coronavirus has increased the risk of a global recession this year. It added that advanced economies including the United States, Japan, Germany, Italy, France, Britain and Korea could all fall into recession in an adverse scenario. Some cautiousness will come with report that snapping their six-month buying streak, FPIs pulled out a net Rs 13,157 crore from the Indian capital markets in the first five trading sessions of March as the coronavirus outbreak spooked investor sentiment. However, some respite may come later in the day as oil prices plunged nearly 21% in early trade on Monday after Saudi Arabia slashed its official selling price. Some encouragement may also come with the latest Reserve Bank of India's (RBI) data showing that the country's foreign exchange reserves swelled by $5.42 billion to a lifetime high of $481.54 billion in the week to February 14, on the back of rise in foreign currency assets. In the previous week, the foreign exchange reserves had increased by $29 million to $476.12 billion. Also, some support may come with report that investments through participatory notes (P-notes) in the domestic capital market rose marginally to Rs 67,281 crore at the end of January 2020. Investments increased after hitting a nearly 11-year low at the end of December 2019 when the total value of P-note investments in Indian markets -- equity, debt, and derivatives -- stood at Rs 64,537 crore. Traders may take note of NITI Aayog CEO Amitabh Kant's statement that technology in sunrise sectors will have to be the key for the country to achieve 9-10 per cent growth. There will be some buzz in the banking stocks as allaying concerns over banking sector health in the wake of Yes Bank fiasco, Chief Economic Adviser Krishnamurthy Subramanian said Indian banks are well capitalised and there is no reason to worry. He further said that it is a wrong method to assess a lender's health based on the ratio of deposit to m-cap (market capitalisation). There will be some reaction in IT stocks with former NASSCOM President R Chandrashekar's statement that India's information technology (IT) services sector is facing adverse impact on the operational front following the outbreak of coronovirus in several countries. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,989.45

10,866.20

11,073.90

BSE Sensex

37,576.62

37,142.78

37,878.76

                                                 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

State Bank of India

1,060.43

270.50

258.17

278.62

Tata Motors

839.71

114.20

112.23

116.73

ICICI Bank

310.24

486.35

476.83

496.33

ITC

267.65

181.75

179.38

184.48

Indian Oil Corporation

246.84

100.80

99.47

101.97

 

  • USFDA has completed audit at Dr. Reddy's Laboratories' API Manufacturing Plant-5 at Miryalaguda, Nalgonda District, Telangana. 
  • NTPC is planning to set up two new units of 600 MW each at Talcher Thermal Power Station in Odisha with an investment of Rs 7,400 crore. 
  • TCS has received an approval from the government to set up special economic zone for IT sector in Noida, Uttar Pradesh, on 19.9 hectares land.  
  • Maruti Suzuki India has reported 5.39 percent fall in its production in February 2020.
News Analysis