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NSE Intra-day chart (15 April 2020)
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Market Commentary 16 April 2020
Markets to get pessimistic start amid weak global cues

 

Indian equity benchmarks traded with a positive bias for most part of the day but selling activity which took place during late hour of trade mainly forced the markets to cut all of their gains and ended Wednesday's session in red terrain, as concerns over the rise in Covid19 cases across the nation and worldwide kept domestic investors cautious. Markets made gap-up opening and traded in fine fettle, as traders took encouragement with the government data showing that the consumer Price Index-based (CPI) inflation eased for the second month in a row in March, at 5.91%, on the back of further reduction in rate of food inflation.  Some optimism also came with report that the government may soon come up with details of a second stimulus package. However, key indices failed to maintain their momentum and turned bearish in the last leg of trade, as the International Monetary Fund (IMF) cut its projection for India's economic growth to 1.9% for the current financial year, the lowest since the 1991 balance of payments (BoP) crisis, against its 5.8% forecast earlier. Traders paid no heed towards data showing that India's wholesale price index (WPI) inflation cooled to 1% for the month of March 2020 as compared to 2.26% for the previous month and 3.10% during the corresponding month of the previous year, on account of sharp fall in food prices in the country. Market participants even overlooked the India Meteorological Department's (IMD) announcement that it expects monsoon rainfall to be normal this year. Southwest monsoon seasonal (June to September) rainfall over the country as a whole is likely to be normal (96-104%). Finally, the BSE Sensex lost 310.21 points or 1.01% to 30,379.81, while the CNX Nifty was down by 68.55 points or 0.76% to 8,925.30.

 

The US markets ended lower on Wednesday as the latest earnings and economic reports reminded investors of the devastating economic impact of the coronavirus pandemic. Financial giants Bank of America (BAC), Goldman Sachs (GS) and Citigroup (C) all reported sharply lower first quarter earnings. The steep drop in earnings comes as the major banks set aside billions of dollars to prepare for a flood of defaults on loans due to the coronavirus-induced economic shutdown. Adding to the negative sentiment, the Commerce Department released a report showing a sharp decline in US retail sales in the month of March. The Commerce Department said retail sales plummeted by 8.7 percent in March after falling by a revised 0.4 percent in February. Street had expected retail sales to plunge by 8.0 percent compared to the 0.5 percent drop originally reported for the previous month. A separate report from the New York Federal Reserve showed New York manufacturing activity contracted at the fastest rate on record in the month of April. The New York Fed said its general business conditions index plummeted to a negative 78.2 in April from a negative 21.5 in March, with a negative reading indicating a contraction in regional manufacturing activity. The index was expected to slump to a negative 35.0. With the much bigger than expected nosedive, the general business conditions index plunged to its lowest level in the history of the survey-by a wide margin. Meanwhile, the Federal Reserve released a report showing the biggest monthly drop in US industrial production in over seventy years in the month of March. The report said industrial production plunged by 5.4 percent in March after rising by a downwardly revised 0.5 percent in February.

 

Crude oil futures plummeted to over 18-year lows on Wednesday on the back of a grim forecast for a record decline in global oil demand this year and a 12th consecutive weekly rise in US crude stockpiles. The Energy Information Administration (EIA) reported a rise of 19.2 million barrels in domestic crude supplies for the week ended April 10 much larger by an expected increase of about 12 million barrels. The American Petroleum Institute on Tuesday reported a climb of 13.1 million barrels. The EIA also reported that gasoline supply rose 4.9 million barrels and distillate stockpiles added 6.3 million barrels. Crude oil futures for May dropped 24 cents or 1.2 percent to settle at $19.87 a barrel on the New York Mercantile Exchange. June Brent crude fell $1.91 or 6.6 percent to settle at $27.69 a barrel on London's Intercontinental Exchange.

 

Erasing all of the initial gains, Indian rupee ended weaker against dollar on Wednesday, on emergence of demand for the greenback from importers. Traders turned cautious as the International Monetary Fund (IMF) has cut its projection for India's economic growth to 1.9% for the current financial year, the lowest since the 1991 balance of payments (BoP) crisis, against its 5.8% forecast earlier. However, losses remain capped as some support came with the government data showing that the consumer Price Index-based (CPI) inflation eased for the second month in a row in March, at 5.91%, on the back of further reduction in rate of food inflation. On the global front, dollar nursed losses on Wednesday as investors cautiously stepped into riskier currencies after US President Donald Trump edged toward rolling back some restrictions put in place to contain the coronavirus outbreak. Finally, the rupee ended at 76.44, 17 paise weaker from its previous close of 76.27 on Monday.

 

The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4021.96 crore against gross selling of Rs 5084.66 crore, while in the debt segment, the gross purchase was of Rs 553.26 crore with gross sales of Rs 1031.94 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.33 crore against gross selling of Rs 1.37 crore.

 

The US markets ended lower on Wednesday as the latest earnings and economic reports reminded investors of the devastating economic impact of the coronavirus pandemic. Asian markets are trading mostly in red on Thursday as concerns over the scale of the economic fallout of the coronavirus pandemic continued to weigh on sentiment. Indian markets ended lower on Wednesday amid weak cues from Asia and Europe and expectations of a widely expected painful quarterly earnings season due to the Covid-19 pandemic. Today, the markets are likely to make negative start following weak global cues. Traders will be worried over rising coronavirus cases. The Union Health Ministry has identified 170 districts as Covid-19 hotspots and 207 districts as potential hotspots. According to Worldometer tally, India had over 12,000 cases and 400 deaths. There will be some cautiousness with government data showing that India's exports dipped by 34.57% to $21.41 billion in March, while Imports fell by 28.72% to $31.16 billion. Besides, trade deficit narrowed to $9.76 billion in March this year from $11 billion in the same month last year. Traders will be concerned with Fitch Ratings' report that the Indian government has less fiscal room to support the economy compared to many of its peers and the country's credit profile would weaken if a wider fiscal deficit increases the debt-GDP ratio. It added that India's debt-to-GDP ratio is likely to rise to 76% from 70% currently due to wider fiscal deficit and low economic growth. Though, some support may come later in the day with Niti Aayog Vice Chairman Rajiv Kumar's statement that India's GDP growth will see strong recovery from the second quarter of this fiscal as economic activities resume. Traders may take note of IMF's statement that there is more scope for more urgent policy actions in India as the economic toll from the coronavirus pandemic is likely to be large, and it noted that the fiscal stimulus package unveiled by the government to mitigate the impact of the COVID-19 is a step in the right direction. There will be some buzz in the MSME stocks with Union Minister Nitin Gadkari's statement that a Rs 10,000 crore will soon be approved by the government to buy up to 15% equity in MSMEs with high credit rating that want to list on stock exchanges and raise money from the capital markets. Investors will be looking ahead to the Tata Consultancy Services' (TCS) Q4 result to be out later in the day. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

8,925.30

8,779.20

9,166.30

BSE Sensex

30,379.81

29,878.47

31,224.76

                                                 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

811.26

72.90

70.33

77.08

State Bank of India

721.90

182.35

177.68

189.48

ICICI Bank

491.34

327.35

317.60

344.50

ITC

490.93

189.35

183.45

194.50

Axis Bank

483.15

417.30

402.62

441.82

 

  • Dr. Reddy's Laboratories has launched authorized generic version of NitroDur (nitroglycerin) Transdermal Infusion System. 
  • Hindalco Industries' wholly-owned subsidiary -- Novelis Inc. has completed the acquisition of Aleris Corporation. 
  • Larsen & Toubro's construction arm -- L&T construction has bagged two contracts to build RRTS Infrastructure from National Capital Region Transport Corporation in Uttar Pradesh. 
  • Reliance Industries is launching a Rs 9,000 crore NCD issue on April 16 and the proceeds from the debt sale will be used to repay existing rupee debt.
News Analysis