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NSE Intra-day chart (13 October 2020)
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Market Commentary 14 October 2020
Benchmarks to make negative start amid weak global cues


Indian equity benchmarks ended flat with positive bias on Tuesday. After making cautious start, key gauges gained some strength and managed to keep their head above water in first half of trading session, as Finance Minister Nirmala Sitharaman announced a Rs 73,000 crore package, including advance payment of a part of wages to central government employees and cash in lieu of LTC, to stimulate consumer demand and investment in the economy damaged by the coronavirus pandemic. Some support also came as the RBI raised banks' maximum aggregate retail exposure limit to entities with turnover up to Rs 50 crore to Rs 7.5 crore, up from Rs 5 crore, in a bid to increase credit flow to small businesses. Market participants also took a note of the Federation of Indian Chambers of Commerce and Industry (FICCI) -- President Sangita Reddy's statement that there is a need for convergence between self-reliance and globalisation, while sustainability and diversity would remain as cornerstones of future growth. She said the Indian industry would achieve faster growth and development under. However, key gauges wiped out gains and turned highly volatile in second half of trading session, as traders reacted to muted domestic macro-economic data. Amid continuing rise in food prices, the inflation based on the Consumer Price Index (CPI) jumped to an eight-month high of 7.34 per cent in September. The retail inflation had stood at 6.69 percent in August, while it was 3.99 per cent in September last year. Besides, with lower output of manufacturing, mining and power generation sectors, industrial production, measured on the basis of Index of Industrial Production (IIP), declined by 8 percent in August. The IIP had contracted by 1.4 percent in August 2019. Some concern also came as the stalemate over compensating states for the shortfall in Goods and Services Tax (GST) collections continued with a meeting of the GST Council ending without reaching any consensus. The panel, which is the highest decision-making body on indirect taxes, for the second time in a week failed to reach a consensus on the Centre's proposal of states borrowing against future GST collections to make up for the shortfall. Finally, the BSE Sensex rose 31.71 points or 0.08% to 40,625.51, while the CNX Nifty was up by 3.55 points or 0.03% to 11,934.50.


The US markets ended lower on Tuesday on profit booking after the major averages climbed to their best closing levels in over a month on Monday. Negative sentiment was also generated in reaction to report that Johnson & Johnson has paused a late-stage trial of its Covid-19 vaccine candidate due to an unexplained illness in a study participant. Further, uncertainty about a new stimulus bill also weighed on markets, as House Speaker Nancy Pelosi continued her attacks on the White House's latest offer in a letter to her Democratic colleagues, claiming the proposal falls significantly short of what this pandemic and deep recession demand. On the economic data front, Consumer prices in the US showed a modest increase in the month of September, according to a report released by the Labor Department, with the uptick in prices matching economist estimates. The Labor Department said its consumer price index rose by 0.2 percent in September after climbing by 0.4 percent in August. Prices for used cars and trucks spiked by 6.7 percent, accounting for most of the monthly increase by the headline index. The report said energy prices increased by 0.8 percent amid a jump in prices for natural gas, while food prices came in unchanged.


Crude oil futures ended higher on Tuesday, lifted by data showing a notable jump in Chinese crude oil imports in the month of September. According to data, China imported 11.8 million barrels of oil per day in September. That was about 5.5% more than its imports a month earlier. Year-on-year, imports were up as much as 17.5%. However, oil's upside was somewhat capped due to a surge in crude output in the Gulf of Mexico region as work in oil facilities resumed. Several facilities along the region had remained shuttered last week due to Hurricane Delta. Crude oil futures for November rose 77 cents or 2 percent to settle at $40.20 a barrel on the New York Mercantile Exchange. December Brent crude gained 73 or 1.8 percent to settle at $42.45 a barrel on London's Intercontinental Exchange.


Indian rupee ended weaker against the US dollar on Tuesday, on increased demand for the greenback from importers and banks. Traders remain concerned as industrial production, measured on the basis of Index of Industrial Production (IIP), declined by 8 percent in August. The IIP had contracted by 1.4 percent in August 2019. Adding pessimism, amid continuing rise in food prices, the inflation based on the Consumer Price Index (CPI) jumped to an eight-month high of 7.34 per cent in September. The retail inflation had stood at 6.69 percent in August, while it was 3.99 per cent in September last year. On the global front; dollar fell about 0.5% on Tuesday after reports that China has halted coal imports from the country as their relations deteriorate while the U.S. dollar recovered from a three-week low plumbed the day before. Finally, the rupee ended at 73.35, 7 paise weaker from its previous close of 73.28 on Monday.


The FIIs as per Tuesday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 7024.42 crore against gross selling of Rs 5258.10 crore, while in the debt segment, the gross purchase was of Rs 1165.34 crore with gross sales of Rs 594.20 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.70 crore against gross selling of Rs 6.60 crore.


The US markets ended in red on Tuesday with halted Covid-19 vaccine trials and an elusive US stimulus agreement. Asian markets are trading mostly lower on Wednesday as investors await a speech from Chinese President Xi Jinping. Indian markets pared gains and ended flat with positive bias on Tuesday as losses in banks, financials and pharma sectors were capped by gains in IT stocks and heavyweight Reliance Industries. Today, the markets are likely to make negative start amid weak global cues and ahead of the WPI inflation data for September to be announced later in the day. Market participants will be eyeing the Supreme Court hearing today on a batch of petitions seeking a waiver of interest on loans during the moratorium period and seeking an extension of the moratorium. There will be some cautiousness as the International Monetary Fund (IMF) projected the Indian economy to contract by 10.3% this year, owing to the coronavirus pandemic. However, the IMF also said that India is likely to bounce back with an impressive 8.8% growth in 2021. The 8.8% growth rate would make India as the fastest growing emerging economy in the world. Traders will also be concerned with report that a day after recording its lowest single-day addition to Covid tally since August 18, India on Tuesday registered a spike of 63,517 cases, taking the total count to 7,237,082, and the death toll reached 110,617. Though some respite may come later in the day with Agriculture and Food Processing Minister Narendra Singh Tomar's statement that the government is focusing on growth of the food processing sector as it has potential to boost farmers' income. Some support may come with report that a day after the goods and services tax (GST) Council meeting ended in a deadlock, the Centre has allowed 20 states to borrow an additional Rs 68,825 crore through the market to make up for the compensation shortfall amid inadequate cess collection. Banking stocks will be in focus as CARE Rating said Indian banks are likely to restructure around 4-5 percent of the overall bank credit outstanding while the Gross NPA (non-performing assets) ratio is likely to be 11-11.5 percent by end of FY21. There will be some reaction in PSU stocks with Finance Ministry's statement that the Union Cabinet will soon consider new public sector enterprises policy that will define strategic sectors, which will not have more than four PSUs. There will be some important result announcements to keep the markets in action.


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  • Infosys has completed the acquisition of Kaleidoscope Innovation. 
  • M&M has launched BS-VI compliant variants of its three-wheeler brand Alfa, priced up to Rs 2.67 lakh. 
  • Cipla's step-down US-based subsidiary -- Avenue Therapeutics, Inc has received a Complete Response Letter from the USFDA regarding its NDA for IV tramadol. 
  • Coal India's subsidiary -- Northern Coalfields is planning to expand three open-cast mining project in the ongoing financial year.
News Analysis