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NSE Intra-day chart (14 February 2020)
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Market Commentary 17 February 2020
Benchmarks to make a negative start of the new week

 

Indian equity bourses faltered for the 2nd straight day on Friday, with Sensex & Nifty losing around 0.50% each. The start of the day was on firm note, as rating agency Standard and Poor's affirmed India's sovereign rating at BBB- with stable outlook, saying the country's GDP growth is likely to gradually recover towards longer-term trend rates over the next two to three years. But soon, indices turned weak, with the International Monetary Fund's communications director Gerry Rice's statement that India's economy looks weaker than the IMF projected earlier in January and the government needs to focus on more ambitious structural and financial sector reform measures. Volatility remained over the Dalal Street till the end of the trading session, on the back of weak cues from the European markets along with rising inflation in the country. India's Wholesale price index (WPI) inflation spiked sharply to 3.1 percent in the month of January 2020 as against 2.59 percent for the previous month and 2.76 percent during the corresponding month of the previous year. Adding more anxiety among investors, a report by Moody's said that the Reserve Bank of India's recent asset recognition norms that allows banks not to treat real estate loans as restructured for one year is credit negative for Indian banks. Finally, the BSE Sensex lost 202.05 points or 0.49% to 41,257.74, while the CNX Nifty was down by 61.20 points or 0.50% to 12,113.45.

 

The US markets ended the choppy day of trade on muted note on account of mixed batch of U.S. economic data. While the Commerce Department released a report before the start of trading showing U.S. retail sales rose in line with estimates in January, closely watched core retail sales came in unchanged. The Commerce Department said retail sales rose by 0.3 percent in January after edging up by a downwardly revised 0.2 percent in December. Street had expected retail sales to climb by 0.3 percent, matching the increase originally reported for the previous month. However, the report said closely watched core retail sales, which exclude autos, gasoline, building materials and food services, were unchanged in January after rising by a downwardly revised 0.2 percent. Core retail sales were expected to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month. Further, the Federal Reserve released a report showing a continued decrease in U.S. industrial production in the month of January, as unseasonably warm weather led to another steep drop in utilities output. The Fed said industrial production fell by 0.3 percent in January following a revised decrease of 0.4 percent in December. Street had expected industrial production to dip by 0.2 percent. Manufacturing output edged down by 0.1 percent in January after inching up by 0.1 percent in December, as Boeing (BA) significantly slowed production of civilian aircraft amid the grounding of its troubled 737 Max. Meanwhile, the University of Michigan released a report showing an unexpected increase in U.S. consumer sentiment in the month of February. Preliminary data showed the consumer sentiment index rose to 100.9 percent in February from the final January reading of 99.8. The uptick surprised the street, who had expected the index to edge down to 99.5.

 

Crude oil futures ended higher for fourth straight session on Friday with traders creating fresh long positions amid hopes the coronavirus impact may not weigh on the global economy for long. Hopes that the Chinese central bank will step up stimulus to boost growth further aided sentiment and pushed up oil prices. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and allied producers are reportedly considering deepening production cuts. Russia, which seemed reluctant to agree on deepening output cuts, is now reported to be considering reducing output due to increasing inventory levels. According to a report released by Baker Hughes this afternoon, U.S. energy firms added two oil rigs this week. With this, the total rig count has risen to 678. Crude oil futures for March gained 63 cents or 1.2 percent to settle at $52.05 a barrel on the New York Mercantile Exchange. April Brent crude rose 98 cents or 1.7 percent to settle at $57.32 a barrel on London's Intercontinental Exchange.

 

Indian rupee slipped against the US dollar on Friday, due to increased demand of the greenback from the importers and the banks. Traders were cautious as India's Wholesale Price Index (WPI) inflation worsened to 3.1 percent in January from 2.59 percent in December, registering a 0.1 percent increase. This is the highest inflation figure in last eight months. A weak trend at Dalal Street coupled with US dollar's gain against other currencies overseas weighed on the local unit, while easing crude oil prices gave support and restricted the fall. Traders also found some solace as global ratings agency Standard and Poor's affirmed India's sovereign rating at BBB- with stable outlook, saying the country's GDP growth is likely to gradually recover towards longer-term trend rates over the next two to three years. On the global front, euro eased to another nearly three-year low on Friday as investors worried about slowing growth momentum in the eurozone ahead of an estimate of how its economy performed in the fourth quarter. The last traded price of rupee was 71.36, 10 paise weaker from its previous close of 71.26 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 5427.17 crore against gross selling of Rs 4764.27 crore, while in the debt segment, the gross purchase was of Rs 4361.50 crore with gross sales of Rs 1118.80 crore. Besides, in the hybrid segment, the gross buying was of Rs 13.45 crore against gross selling of Rs 8.82 crore.

 

Asian markets are trading mostly lower in early deals on Monday as investors weighed the near-term hit on global growth from a fast-spreading coronavirus outbreak in China, although expectations of further policy stimulus helped stem losses. The US markets ended mostly higher on Friday after the Commerce Department said retail sales rose by 0.3 percent in January after edging up by a downwardly revised 0.2 percent in December. Indian equity benchmarks ended Friday's trade on a negative note, as India's Wholesale Price Index (WPI) inflation worsened to 3.1 percent in January from 2.59 percent in December, registering a 0.1 percent increase. Today, the start of the session is likely to be on negative side on sluggish regional cues. Traders will remain concern on report that India's exports dropped 1.66 per cent to $25.97 billion in January, the sixth straight month of contraction, on account of a significant fall in shipments of petroleum, plastic, carpet, gems and jewellery, and leather products. Imports also fell for the eighth consecutive months, down 0.75 per cent to $41.14 billion in January, widening the trade deficit to a seven-month high of $15.17 billion. There will be some cautiousness too with former finance secretary Subhash Chandra Garg's statement that the Budget for 2020-21 does not effectively address the objective of kick-starting economic growth and building momentum. Infrastructure investments in roads, railways and metros have been the major planks of infrastructure investment by the government. Garg said that in the broadest sense, the expenditure proposals of Budget 2020-21 present more of consolidation in the face of deteriorating economic and fiscal situation. However, some respite may come later in the day on report that Finance Minister Nirmala Sitharaman has said the 2020-21 union budget was prepared keeping the FRBM (Fiscal Responsibility and Budget Management) in mind even as she maintained she would be remembered for presenting the longest prepared budget than for longest speech on it. She added so in a way all these (measures) and more has been done that the FRBM, as an Act, we have to keep in mind and also comply with it. So we have not really breached the FRBM. We have not gone outlandish on it. Tea stocks will keep buzzing on report that Tea Board chairman P K Bezbaruah said that the statutory body should disassociate itself from the functioning of the age-old auction system and usher in a liberalised regime where private parties can enter. There will be some buzz in the insurance stocks as Irdai data showed India's non-life insurance companies registered a 7.2 per cent rise in their combined new premium collection at Rs 17,225.75 crore in January this fiscal. The 35 insurers' gross premium collection stood at Rs 16,076.28 crore in the same month a year ago. Among these, the 25 general insurance providers had a collective premium of Rs 14,643.26 crore during the month, up 2.2 per cent from the same period of 2019. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,113.45

12054.20

12209.70

BSE Sensex

41,257.74

40540.56

41579.02

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,878.98

39.20

37.73

40.43

Tata Motors

566.76

169.65

166.57

174.47

SBI

482.06

319.90

315.00

328.35

Bharti Airtel

368.26

563.60

542.72

576.02

Gail

287.21

123.15

119.57

129.12

 

  • Bharti Airtel's Mauritius based wholly-owned subsidiary--Network i2i has raised $250 million through perpetual bonds offering a yield of 5.65 percent. 
  • Tata Motors has bagged an order from Uttar Gujarat Vij Company for supplying the electric version of its sub-compact sedan Tigor, which will be deployed in Gandhinagar and Ahmedabad. 
  • Maruti Suzuki India has launched the S-CNG variant of the BS6 compliant Big New WagonR. 
  • Reliance Industries' telecom arm -- Jio has continued its lead in average 4G download speed rankings with 20.9 mbps speed in January.
News Analysis