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NSE Intra-day chart (12 June 2020)
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Market Commentary 15 June 2020
Markets to get pessimistic start amid weakness in Asian peers

 

Buying activity which took place during late hour of trade mainly helped Indian equity indices to cut all of their losses and to end Friday's session on optimistic note with gains of over half percent. The indices staged a gap-down opening, tracking a global selloff as coronavirus cases continued to surge. Traders were concerned after S&P Global Ratings said India's external position should remain stable over the next 12 months but COVID-19 pandemic-related risks to growth trajectory could exert downward pressure of the sovereign ratings if there is a weak recovery. S&P had projected India's economy to shrink by 5 per cent in the current fiscal, and the growth recover to 8.5 per cent next fiscal. Selling further crept in with the credit rating agency ICRA's report that the pace of credit rating downgrades has accelerated with average monthly downgrades increasing by 22 percent in the past few months amid the rapid spread of the novel coronavirus (Covid-19) across the globe as well as in India. Traders also remained on sidelines ahead of industrial production data for April and CPI inflation for May which are due later in the day. However, in the last hour of trade, local barometer gauges recovered all of the day's losses to end higher, as sentiments turned optimistic with Niti Aayog vice-chairman Rajiv Kumar's statement that India's economy will recover after the containment of the COVID-19 pandemic and the country will maintain its sound net external position. He also said that India's strong democratic institutions promote policy stability and the ongoing economic reforms, if executed well, should keep the country's growth rate ahead of peers. Traders also found some solace with Commerce and Industry Minister Piyush Goyal's statement that the country's exports are drastically improving with the outbound shipments contracting 36 percent in May as compared to 60 percent in April. Finally, the BSE Sensex gained 242.52 points or 0.72% to 33,780.89, while the CNX Nifty was up by 70.90 points or 0.72% to 9,972.90.

 

The US markets ended higher on Friday as traders looked to pick up stocks at relatively reduced levels. The advance on the day came on the heels of the sell-off seen in the previous session. Adding to the positive sentiment, the University of Michigan released a report showing a continued rebound in US consumer sentiment in the month of June. The preliminary report showed the consumer sentiment index for June climbed to 78.6 from 72.3 in May and 71.8 in April. Street had expected the index to rise 75.0. Meanwhile, a separate report from the Labor Department showed a bigger than expected jump in US import prices in the month of May. The Labor Department said import prices surged up by 1.0 percent in May after plunging by 2.6 percent in April. Street had expected import prices to increase by 0.6 percent. The rebound in import prices came as fuel prices spiked by 20.5 percent in May following the 31.0 percent nosedive in the previous month. However, upside remained capped as fears of an emerging second wave of the epidemic in the U.S. persist, with half a dozen states, including Texas and Arizona, facing rising infections of COVID-19. Arizona, Utah and New Mexico all posted rises in new cases of 40% or higher, while Florida, Arkansas, South Carolina and North Carolina saw cases rise by more than 30% for the week ended June 7, on a rolling seven-day basis. Meanwhile, Richmond Federal Reserve Bank President Tom Barkin said that the pandemic could have effects that last beyond the next couple of months and cautioned that some of the millions of jobs that have been lost during the viral outbreak may never return, echoing similar remarks made by Fed Chairman Jerome Powell on Wednesday.

 

Crude oil futures ended marginally lower on Friday on worries about a resurgence of coronavirus cases in the US. Further, uncertainty about energy demand amid worries about the global growth outlook weighed on the commodity. The International Monetary Fund's Gita Gopinath said that the global economy is recovering more slowly than expected and faces significant scarring. Crude oil futures for July lost 8 cents or 0.2 percent to settle at $36.26 a barrel on the New York Mercantile Exchange. However, August Brent crude added 18 cents or 0.5 percent to settle at $38.73 a barrel on London's Intercontinental Exchange.

 

Indian rupee gave up most of its losses to close marginally down against dollar on Friday, due to fresh demand for the American currency from banks and importers. Traders remained wary with S&P Global Ratings' statement that India's external position should remain stable over the next 12 months but COVID-19 pandemic-related risks to growth trajectory could exert downward pressure of the sovereign ratings if there is a weak recovery. S&P had projected India's economy to shrink by 5 per cent in the current fiscal, and the growth recover to 8.5 per cent next fiscal. Traders also remained on sidelines ahead of industrial production data for April and CPI inflation for May which are due later in the day. However, most of losses got trimmed as some support came with Commerce and Industry Minister Piyush Goyal's statement that the country's exports are drastically improving with the outbound shipments contracting 36 percent in May as compared to 60 percent in April. On the global front, euro edged up slightly against the U.S. dollar on Friday, not far from the three-month high it rose to earlier in the week, as traders paused from cashing in the latest profits. Finally, the rupee ended at 75.84, 5 paise weaker from its previous close of 75.79 on Thursday.


The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 5398.25 crore against gross selling of Rs 4540.44 crore, while in the debt segment, the gross purchase was of Rs 782.72 crore with gross sales of Rs 663.95 crore. Besides, in the hybrid segment, the gross buying was of Rs 21.11 crore against gross selling of Rs 15.75 crore.


The US markets ended higher on Friday following massive losses in the prior session. Asian markets are trading mostly in red on Monday as fears of a second wave of coronavirus infections in China sent investors scurrying for safe-havens. Indian markets erased early losses and ended higher on Friday, tracking gains in European markets. Today, the start of new week is likely to be pessimistic following weakness in the Asian peers as fears resurface over the coronavirus pandemic. Investors will be looking ahead to the Wholesale price index inflation numbers for May which are scheduled for release later the day. Traders will be concerned with rising coronavirus cases in the country. As per the report, India is witnessing a rapid increase in the number of coronavirus cases. With 11,220 new COVID-19 cases and 325 deaths registered on June 14, the total number of infections and the death toll in India reached 3,32,777 and 9,521 respectively. There will be some cautiousness as the government has not released the headline IIP growth for April, Consumer Price Inflation (CPI) for May saying that it is not appropriate to compare these readings with the previous months. The March IIP reading has been revised further lower to -18.3 percent versus -16.7 percent said earlier. Besides, it said the May CPI combined food price index is at 9.28 percent and risen up 0.1 percent versus the April reading. Traders may react to the private report that with the protracted lockdown pushing the Indian economy into deep recession in the current fiscal, the escalating new COVID-19 cases after easing of restrictions poses further downside risks to the economic outlook. Though, some respite may come later in the day as the Goods and Services Tax (GST) Council, in its first meeting after the lockdown was imposed, eased the compliance burden for small businesses by slashing late fees and halving the interest rate on them. Also, the GST Council has decided to reduce the late fee on the filing of GSTR-3B returns for the period between July 2017 and January 2020. Meanwhile, the Reserve Bank came up with a modified oversight framework for financial market infrastructure and retail payment systems with a view to ensure safety and stability of payment structure. There will be some buzz in the banking stocks with report that privatisation of any public sector bank (PSB) during the current fiscal is very unlikely due to their low valuations and mounting stressed assets amid the COVID-19 crisis. There will be some reaction in power stocks with report that soaring mercury levels during the second week of June in many parts of the country has resulted in narrowing of power demand slump to 10.5 percent, compared with a fall of 19.7 percent during the previous week.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9,972.90

9,679.48

10,131.18

BSE Sensex

33,780.89

32,800.57

34,308.74

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

929.97

105.30

100.12

108.37

State Bank of India

927.62

179.15

172.63

182.83

Indusind Bank

574.32

528.45

496.27

547.67

Axis Bank

478.15

408.00

393.93

417.28

ICICI Bank

475.10

344.20

330.15

352.20

 

  • Wipro has entered into partnership with CloudKnox Security. 
  • Infosys has launched its enterprise-grade Return to Workplace solutions to help clients ensure safety and wellness of their employees as they adapt to new ways of working. 
  • Tech Mahindra has launched mPAC 3.0 (Managed Platform for Adaptive Cloud), next-generation cloud management platform for enterprises globally. 
  • Maruti Suzuki India has rolled out BS6 compliant S-CNG variant of Celerio.
News Analysis