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NSE Intra-day chart (12 May 2020)
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Market Commentary 13 May 2020
Markets to get gap-up start after govt's Rs 20 lakh crore fiscal package

 

Indian equity benchmarks came off their intraday lows but failed to erase all the losses and ended on pessimistic note on Tuesday, on concern that the nationwide lockdown may extend amid a rise in virus-infected cases. Markets ended lower for second straight day, with Sensex and Nifty settling below their crucial 31,400 and 9,200 levels, respectively. Markets made gap-down opening, following weak trend seen in other Asian markets. Traders also remained wary with a foreign brokerage in its report estimating that the fiscal deficit to come at 5.8% of the GDP in FY21 as against the budget target of 3.5%, after the government's move to raise its market borrowing programme for the current financial year by Rs 4.2 lakh crore. However, Key indices witnessed sharp recovery in the last hour of the session, taking support from Union minister Nitin Gadkari's statement that he expects the Centre to unveil a financial package in two-three days, observing that the situation was very bad despite the three-month moratorium on loan repayments announced by the RBI. Some support also came with the report that government released Rs 6,195.08 crore to 14 states as the second equated monthly installment of the Post Devolution Revenue Deficit Grant on May 11. But, markets breadth remained negative, as traders remained on the sidelines ahead of the industrial production data for March and consumer inflation for April, slated to be announced later in the day. Finally, the BSE Sensex lost 190.10 points or 0.60% to 31,371.12, while the CNX Nifty was down by 42.65 points or 0.46% to 9,196.55.

 

The US markets ended lower on Tuesday on renewed coronavirus concerns after Dr. Anthony Fauci warned of suffering and death if the country reopens prematurely. Fauci, the top US infectious disease expert, and other members of the White House coronavirus task force testified before the Senate Health, Education, Labor and Pensions Committee. Fauci said there is a real risk that you will trigger an outbreak that you may not be able to control and, in fact paradoxically, will set you back, not only leading to some suffering and death that could be avoided, but could even set you back on the road to try to get economic recovery. Fauci also said that the US is moving in the right direction but does not have by any means total control of this outbreak. On the economic data front, Consumer prices in the US decreased in line with street estimates in the month of April, according to a report released by the Labor Department. The Labor Department said its consumer price index slid by 0.8 percent in April after falling by 0.4 percent in March. The drop by the index, which matched street estimates, reflects the largest monthly decline since December of 2008. Gasoline prices led the way lower, plummeting by 20.6 percent in April after tumbling by 10.5 percent in the previous month. The nosedive in gasoline prices contributed to another steep drop in energy prices, which plunged by 10.1 percent in April after slumping by 5.8 percent in March. Energy prices saw their largest monthly decrease since November of 2008.

 

Crude oil futures ended higher on Tuesday on expectations that falling production levels and a gradual revival in demand from a COVID-19 pandemic-related drop, will ease a global glut of crude that has slammed prices in 2020. The US Energy Information Administration (EIA) in its latest report has lowered its forecast for US crude production for the year 2020. The EIA forecasted domestic output at an average 11.7 million barrels per day. That would be down 500,000 barrels a day from 2019. Besides, Major oil producers Saudi Arabia, Kuwait and UAE have stated that they would cut outputs beyond what they had committed as part of the OPEC+ agreement recently. Crude oil futures for June rose $1.64 or 6.8 percent to settle at $25.78 a barrel on the New York Mercantile Exchange. July Brent crude gained 35 cents or 1.2 percent to settle at $29.98 a barrel on London's Intercontinental Exchange.

 

Indian rupee recovered from its initial losses to end higher against dollar on Tuesday, amid selling in American currency by banks and exporters. Traders took support with Union minister Nitin Gadkari's statement that he expects the Centre to unveil a financial package in two-three days, observing that the situation was very bad despite the three-month moratorium on loan repayments announced by the RBI. He noted that on March 27, the RBI announced a slew of steps, including a three-month moratorium on loan repayments, as part of measures to alleviate hardships faced by people. However, there was some cautiousness too ahead of industrial production data for March and consumer inflation for April, slated to be announced later in the day. On the global front, U.S. dollar clung to gains on Tuesday on growing fears about a second wave of coronavirus infections and after the Federal Reserve played down the likelihood of negative interest rates, boosting the currency's yield attraction. Finally, the rupee ended at 75.51, 22 paise stronger from its previous close of 75.73 on Monday.

 

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 5440.95 crore against gross selling of Rs 4791.98 crore, while in the debt segment, the gross purchase was of Rs 587.51 crore with gross sales of Rs 3864.27 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.01 crore against gross selling of Rs 3.96 crore.

 

The US markets ended sharply lower on Tuesday amid renewed coronavirus concerns after Dr. Anthony Fauci warned of suffering and death if the country reopens prematurely. Asian markets are trading mixed on Wednesday as caution remains over a recent resurgence in coronavirus cases in certain countries regionally. Indian markets ended lower for second straight session on Tuesday with weak global cues and rising coronavirus cases in India keeping investors nervous. Today, the start of session is likely to be gap-up after Prime Minister Narendra Modi announced a stimulus package totalling Rs 20 lakh crore to rescue the economy reeling under the impact of coronavirus. This amounts to nearly 10% of India's GDP. This economic package will focus on areas like land, labour, liquidity and law. He added that the lockdown will continue post May 17 with new rules, which may cap the gains. Some support will also come as India Inc said Prime Minister Narendra Modi's announcement of a Rs 20 lakh crore stimulus package was the need of the hour as it will pave the way for post pandemic recovery and unleash the next wave of economic growth. Besides, Finance Minister Nirmala Sitharaman is expected to announce the crucial details of the stimulus package in the days to come. Though, there may be some cautiousness with Union health ministry data showing that India's tally of the coronavirus disease (Covid-19) crossed the bleak 70,000-mark on May 13 morning as more than 3,600 new infections were reported in the last 24 hours. Traders may be concerned with the government data showing that the country's industrial output declined by 16.7% in March, mainly on account of poor show by mining, manufacturing and electricity sector due to the nationwide lockdown. Besides, the government has released the consumer price index-based inflation (CPI) data only for certain sub-groups, but did not give the general CPI number, citing difficulties in collecting the data due to the Covid-19 pandemic. However, it revised the CPI inflation for March to 5.84% from 5.91%. There will be some reaction in auto component industry stocks with Ind-Ra's report that auto component industry is likely to witness a second consecutive year of a double-digit de-growth this fiscal mainly on account of disruption in operations due to coronavirus pandemic and the subsequent lockdown. There will be some important earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9,196.55

9,080.05

9,276.95

BSE Sensex

31,371.12

30,964.89

31,657.12

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Vedanta

1,127.70

89.05

81.90

93.35

Tata Motors

775.52

86.20

83.90

88.10

State Bank of India

707.53

166.90

162.33

169.98

ICICI Bank

690.72

321.20

311.33

327.73

Reliance Industries

460.29

1,479.25

1,440.05

1,543.40

 

  • IOC has raised operating levels at its refineries to about 60 percent after fuel demand showed a gradual pick up on easing of lockdown restrictions. 
  • Bharti Airtel has selected IT companies IBM and Red Hat to build its new network cloud to support 5G operations and applications around emerging technologies on its network. 
  • TCS' strategic unit-- TCS iON has launched Remote Internships, a unique digital internship product to connect students directly with corporate and industry mentors. 
  • Maruti Suzuki India has resumed operations at its Manesar plant in Haryana after around 40 days of closure due to the coronavirus-led lockdown.
News Analysis