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NSE Intra-day chart (07 February 2020)
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Market Commentary 10 February 2020
Benchmarks to open in red amid weakness in global markets

 

Indian equity benchmarks paused the gaining rally on the last trading day of the week, with Sensex and Nifty ending lower by around 165 and 40 points respectively. After a negative opening of the trading session, indices remained lackluster for the whole day, as credit rating agency ICRA in its latest report stated that the performance of India Inc. continued to weaken under multiple headwinds during Q3 FY2020. The growth in revenue dipped to the lowest in more than sixteen quarters, due to continued weakness in consumer sentiments, benign commodity prices and general slowdown in the economy. Losses got intensified over the street in second half of the session, on the back of weak cues from the global markets. Traders remained worried, after RBI's Consumer Confidence Survey showed that the consumer confidence dropped further in January 2020 as against the last round. However, it said the future expectations index remained positive, implying an improvement in the last survey. Investors paid no heed towards RBI Governor Shaktikanta Das' statement that the Rs 1-lakh-crore of long-term repos are aimed at helping banks lower their lending rates, thus quickening the monetary policy transmission. Finally, the BSE Sensex lost 164.18 points or 0.40% to 41141.85, while the CNX Nifty was down by 39.60 points or 0.33% to 12098.35.

 

The US markets ended lower on Friday, after moving sharply higher over the course of the last several sessions, on lingering concerns about the coronavirus may re-emerge after traders shrugged off the worries about the outbreak. China's National Health Commission on Friday confirmed more than 31,000 cases of the deadly pneumonialike virus in the country, with more than 630 deaths. The disease also continues to spread outside the country. However, selling pressure was somewhat subdued following the release of a report from the Labor Department showing stronger than expected job growth in the month of January. The Labor Department said employment jumped by 225,000 jobs in January following a revised increase of 147,000 jobs in December. Street had expected employment to rise by 160,000 jobs compared to the addition of 145,000 jobs originally reported for the previous month. The stronger than expected job growth reflected Notable job in construction, healthcare, and transportation and warehousing. Despite the stronger than expected job growth, the unemployment rate inched up to 3.6 percent in January from 3.5 percent in December. Street had expected the employment rate to remain unchanged.

 

Crude oil futures ended lower on Friday as worries about the spread of coronavirus, and its impact on the global economy. China's National Health Commission confirmed more than 31,000 cases of the deadly pneumonialike virus in the country, with more than 630 deaths. The disease also continues to spread outside the country. Meanwhile, traders appeared to be waiting for the Organization of the Petroleum Exporting Countries' (OPEC's) decision on oil production cuts. OPEC's joint technical committee on Thursday had recommended a cut of 600,000 barrels a day, but Russia has stated that it would need more time to analyze the market and that it would clarify its position on deeper cuts next week.  Furthermore, West Texas Intermediate (WTI), Brent oil futures both posted a 5th straight weekly decline. Crude oil futures for March declined 63 cents or 1.2 percent to settle at $50.32 a barrel on the New York Mercantile Exchange. April Brent dropped 46 cents or 0.8 percent to settle at $ 54.47 a barrel on London's Intercontinental Exchange.

 

Indian rupee weakened considerably against dollar on Friday, due to fresh demand for American currency from banks and importers amid rising crude oil prices. The rupee sentiment was hit with report that the RBI projected the economy to expand by 6% during the next financial year, pegging it at the lower end of the GDP growth estimate of the Economic Survey. Traders took note of private report that the country needs to double credit growth to 15 percent to become a $5 trillion economy by 2024-25. The weak trade in the local equity market along with dollar's strengthen against some other currencies also dragged the local unit. On the global front, euro fell to its lowest since October on Friday after German industrial output for December recorded its biggest decline in a decade and strong employment numbers in the United States encouraged investors to buy the dollar. The last traded price of rupee was 71.40, 22 paise weaker from its previous close of 71.18 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 6676.66 crore against gross selling of Rs 6777.64 crore, while in the debt segment, the gross purchase was of Rs 7820.13 crore with gross sales of Rs 1997.31 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.18 crore against gross selling of Rs 0.68 crore.

 

The US markets ended in red on Friday amid lingering concerns about the coronavirus may re-emerge after traders shrugged off the worries about the outbreak to drive stocks higher. Asian markets are trading mostly lower on Monday as investors monitor the ongoing virus outbreak's impact on Chinese manufacturers. Indian markets snapped four-day gaining streak and ended lower on Friday in line with subdued Asian markets. Today, the start of new week is likely to be weak amid lackluster trade in global markets after death toll from coronavirus outbreak in China surpassed the SARS epidemic, raising alarm bells about its severity. Investors will be looking ahead to the macro-economic data like Index of Industrial Production (IIP), Consumer Price Index (CPI) and Wholesale Price Index (WPI) to be out later in the week. Traders will be concerned with rating agency Icra's statement that the GST compensation fund may see a shortfall of Rs 15,000-25,000 crore for 2019-20, and it pegged the unpaid GST compensation to the states at Rs 60,000-70,000 crore for the October 2019-January 2020 period. Some cautiousness may come with the Reserve Bank of India (RBI) data showing that foreign borrowings of Indian companies fell over 45% to $2.09 billion in December 2019 as compared to the year-ago period. However, traders may take some encouragement with Union Finance Minister Nirmala Sitharaman's statement that the Centre, in the Budget 2020, has laid the foundation of increasing consumption while ensuring that the government's investment is deployed to build infrastructure leading to a $5 trillion economy by 2024-25. Some support may came with report that foreign investors remained net buyers in Indian capital markets for a sixth straight month in February, putting in a net amount of Rs 5,177 crore mainly in the debt segment in the month so far. Meanwhile, the Centre has informally proposed to the goods and services tax council that rationalization of rates be done once in a year and not every three months. Besides, the RBI will begin the first tranche of its long-term repo operations on February 17 with three-year repo of Rs 25,000 crore, followed by another on February 24 for an equal amount. There will be some buzz in the banking stocks with Chief Economic Advisor Krishnamurthy Subramanian's statement that the PSU Banks may see enhanced profits with write-back of some of the provisions of the loan in their balance sheets on account of the IBC resolutions and they must now tap the market themselves instead of looking for recapitalization. Pharma stocks will be in focus with report that total foreign direct investment in the drugs and pharmaceutical sector in the country rose to Rs 2,065 crore during April to September period of fiscal year 2019-20. There will be some reaction in infra stocks with report that as many as 400 infrastructure projects, each worth Rs 150 crore or more, have been hit by total cost overruns of over Rs 4 lakh crore owing to delays and other reasons.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,098.35

12,063.30

12,144.05

BSE Sensex

41,141.85

41,012.00

41,333.05

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,271.63

38.70

37.92

39.72

Tata Motors

451.96

173.60

171.68

176.83

SBI

371.27

320.55

317.63

324.23

ZEEL

276.38

249.75

240.33

255.33

ONGC

214.16

109.25

107.28

110.48

 

  • DoT has approved the merger of Tata Teleservices' consumer mobile business with Bharti Airtel. 
  • TCS has entered into a strategic partnership with Coop Sweden to accelerate its business transformation program, with the introduction of new automation technologies and agile ways of working. 
  • Maruti Suzuki India has rolled out the BS6 compliant Ertiga S-CNG, offering a mileage of 26.08 km/kg to add unmatched portfolio of green vehicles. 
  • JSW Steel has bagged fourth iron ore mine in the ongoing auctions in Odisha with the latest win of Jajang block that holds estimated reserves of 39 million tonnes.
News Analysis