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NSE Intra-day chart (09 March 2020)
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Market Commentary 11 March 2020
Benchmarks to make negative start amid rise in crude oil prices

 

Monday turned out to be a worst day for Indian equity bourses, with Sensex & Nifty losing around 5% each. Indices made a weak start, after Moody's said 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 concerns came with a 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 investors' sentiment. Bears hold their tight grip over Dalal Street for the whole day, with MSME Minister Nitin Gadkari's statement that it is not easy for entrepreneurs to avail bank loans, and there is a need to encourage those who have a good track record to boost entrepreneurship. Recently, Gadkari met bank chiefs along with Finance Minister Nirmala Sitharaman and discussed issues in extending finance to micro, small and medium enterprises (MSME) sector. Besides, Asian Development Bank said that the coronavirus outbreak has the potential to significantly harm the Asian economies, and the global economy may suffer losses of $77-347 billion. Finally, the BSE Sensex lost 1941.67 points or 5.17% to 35,634.95, while the CNX Nifty was down by 538.00 points or 4.90% to 10,451.45.

 

The US markets ended higher on Tuesday reclaiming a chunk of the ground lost the previous session in the markets' biggest one-day percentage drop since 2008. The strength on markets came after President Donald Trump's pledge to provide very substantial relief amid the economic fallout from the coronavirus outbreak. Trump said that he would be meeting with House and Senate Republicans today to discuss a possible payroll tax cut or other stimulus measures. The president said he would also talk with GOP lawmakers about getting help for hourly wage earners, hinting at providing paid leave to those affected by the coronavirus. Besides, a private report said that Trump proposed cutting the payroll tax rate to zero for the rest of 2020 may have contributed to the renewed buying interest. Besides, Monday's stock plunge was the result of fears that government attempts to contain the epidemic may shut down economic activity globally. At the same time, the biggest one day fall in crude oil prices since the 1991 Gulf War, after Saudi Arabia and Russia began a price war last Friday, also raised fears of a credit crisis in the energy industry. 

 

Crude oil futures ended higher on Tuesday, recouping a portion of their day-earlier losses, amid speculation of more central bank rate cuts and possible fiscal stimulus. Monday's percentage declines for both crude grades were the largest since January 1991 during the Gulf War. Tumbling oil prices came after Saudi Arabia over the weekend cut its export prices for crude in a move many saw directed at Russia's refusal to back Organization of the Petroleum Exporting Countries' (OPEC's) output cut plan. Both Brent and WTI futures plunged around 25 percent on Monday. Crude oil futures for April surged $3.23 or about 10.4 percent to settle at $34.36 a barrel on the New York Mercantile Exchange. May Brent crude gained $2.86 or 8.3 percent to settle at $37.22 a barrel on London's Intercontinental Exchange.

 

Continuing its downward journey for second straight session, Indian rupee depreciated considerably against the US dollar on Monday, amid buying in the American currency by banks and importers. Investor sentiments remained fragile with Asian Development Bank's (ADB) statement that the coronavirus outbreak has the potential to significantly harm the Asian economies, and the global economy may suffer losses of $77-347 billion. Sharp losses in the local equities and foreign fund outflows also dragged the local unit. Though, weakening of the American currency in the overseas market and easing crude oil prices supported the rupee some extent. On the global front, Sterling gained further against a sinking dollar on Monday, as coronavirus fears and a slump in oil prices roiled world markets. The last traded price of rupee was 74.07, 20 paise weaker from its previous close of 73.87 on Friday.

 

The FIIs as per Monday'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 6760.86 crore against gross selling of Rs 10241.71 crore, while in the debt segment, the gross purchase was of Rs 2137.78 crore with gross sales of Rs 2094.83 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.80 crore against gross selling of Rs 9.60 crore.

 

The US markets ended higher on Tuesday on bargain-hunting and hopes of government stimulus calmed investors' fears surrounding the coronavirus and growing signs of imminent recession. Asian markets are trading mixed in early deals on Wednesday as growing skepticism about Washington's stimulus package to fight the coronavirus outbreak knocked the steam out of an earlier rally. Indian markets ended sharply lower on Monday amid a global selloff as panic over the economic fallout of the coronavirus outbreak intensified. Markets were closed on Tuesday on account of Holi festival. Today, the markets are likely to get pessimistic start amid rise in crude oil prices overnight and mixed cues from Asian peers. Also, concerns over economic growth of India may weighted on the local indices as Moody's Investors Service cut its growth forecast for India to 5.3 per cent for 2020 from 5.4 per cent estimated earlier, as it expects the coronavirus outbreak to dampen domestic demand globally. Besides, as per a private report, the number of Coronavirus victims in India crossed 61 after Kerala, Maharashtra and Karnataka reported 14 new cases on Tuesday. There will be some cautiousness with domestic rating agency ICRA's report that investors have total bets of over Rs 93,000 crore on the additional tier-I bonds in Indian banks and a complete write-down proposed in the Yes Bank restructuring may lead to risk aversion. Meanwhile, Finance Minister Nirmala Sitharaman will hold meeting with chief executives of amalgamating banks on March 12 to review preparedness for the merger beginning April 1. Earlier this month, the Union Cabinet headed by Prime Minister Narendra Modi approved consolidation of 10 state-owned banks into four. There will be some buzz in the telecom stocks with a private report that a rescue package for stressed telecom companies may be cleared by the Union Cabinet later this week and could include a staggered payment schedule for the outstanding AGR (adjusted gross revenue) dues. Relief on the licence fee front may also come up for review as the government takes stock of measures aimed at nursing the telecom industry back to health. Coal sector stocks will be in focus with a private report that India's thermal coal imports rose 12.6 percent to nearly 200 million tonnes in 2019, reflecting the second straight year of growth in shipments of the fuel despite attempts by the government to cut imports. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,451.45

10,246.75

10,703.85

BSE Sensex

35,634.95

34,846.02

36,687.04

                                                 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

7,275.72

21.25

17.37

23.97

State Bank of India

1,012.95

253.45

248.82

260.42

Oil & Natural Gas Corporation

866.74

74.55

71.53

80.03

Tata Motors

815.50

105.70

103.35

108.95

NTPC

473.83

102.90

100.17

105.02

 

  • SBI's board has given the largest lender an in-principle approval to invest in the capital-starved Yes Bank. 
  • Tata Motors is expecting limited volume loss in its domestic business during the January-March 2020 period due to disruption of supply chain from China owing to the coronavirus outbreak. 
  • Tata Steel, which has been sourcing consumables from China, has started placing orders for materials in alternative markets like Brazil and Turkey even price is higher in these markets. 
  • Coal India has engaged Indian Port Rail Corporation to execute its rail infrastructure works, construction of additional sidings, and connectivity with the railway main lines.
News Analysis