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NSE Intra-day chart (16 June 2020)
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Market Commentary 17 June 2020
Markets to get negative start amid Indo-China conflict

 

Indian equity indices traded in green terrain for most part of the day and ended with gains of over a percent on Tuesday, amid a rebound in global equities after the Fed Reserve's fresh move to support financial markets. Key indices opened majorly bullish, as traders took encouragement with the UN Conference on Trade and Development (UNCTAD) in its latest The World Investment Report 2020 stated that India was the 9th largest recipient of foreign direct investments (FDI) in 2019, with 51 billion dollars of inflows during the year, an increase from the 42 billion dollars of FDI received in 2018 when India ranked 12 among the top 20 host economies in the world. It also said a lower but positive economic growth in India in the post-COVID19 pandemic period and India's large market will continue to attract market-seeking investments to the country. Traders also took note of an article published in the monthly bulletin of the Reserve Bank which suggested that the government will have to chart out a fresh glide path to bring down the fiscal deficit once the normalcy is restored. However, the indices gave up their gains and turned sharply volatile during the early afternoon deals, amid escalating tension with China after a violent face-off on the Ladakh border. Traders were also anxious with the data released by the Commerce and Industry Ministry showing that contracting for the third straight month, India's exports declined 36.47 percent in May to $19.05 billion, mainly on account of drop in shipments by key sectors such as petroleum, textiles, engineering, gems and jewellery. Imports too plunged 51 percent to $22.2 billion in May, leaving a trade deficit of $3.15 billion, compared to $15.36 billion in the same month previous year. But, the frontline indices recovered some steam in final hour of trade and ended over a percent, taking support from the Finance Ministry's statement that public sector banks have disbursed Rs 16,031.39 crore till June 12, under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, adversely affected due to COVID-19 crisis. Finally, the BSE Sensex gained 376.42 points or 1.13% to 33,605.22, while the CNX Nifty was up by 100.30 points or 1.02% to 9,914.00.

 

The US markets ended higher on Tuesday, extending their previous session's rally, following the release of a report from the Commerce Department showing retail sales rebounded by much more than anticipated in the month of May, as stores began to reopen following the coronavirus lockdown. The Commerce Department said retail sales skyrocketed by 17.7 percent in May after plunging by a revised 14.7 percent in April. Street had expected retail sales to spike by 8.0 percent compared to the 16.4 percent nosedive originally reported for the previous month. The record increase in retail sales was partly due to a substantial rebound in sales by motor vehicle and parts dealers, which soared by 44.1 percent in May after tumbling by 12.3 percent in April. Positive sentiment was also generated with private report indicating that the Trump administration is preparing a nearly $1 trillion infrastructure proposal as part of an effort to support the economy following the coronavirus pandemic. Traders largely shrugged off a report from the Federal Reserve showing US industrial production increased by much less than expected in the month of May. The Fed said industrial production jumped by 1.4 percent in May after plummeting by a downwardly revised 12.5 percent in April. Street had expected industrial production to surge up by 2.9 percent compared to the 11.2 percent plunge originally reported for the previous month. Meanwhile, Federal Reserve Chairman Jerome Powell suggested more fiscal stimulus may be needed as the American economy may only make a slow recovery from the COVID-19 pandemic.

 

Crude oil futures ended higher on Tuesday buoyed by an upward revision in the oil demand forecast for the year by International Energy Agency (IEA). The IEA's report said it expects energy demand to be at 91.7 million barrels per day this year, which is higher by about 50,000 barrels per day compared to its estimate a month ago. The EIA report said oil supplies dropped by almost 12 million barrels per day in May thanks to output cuts by OPEC and allies. Meanwhile, the Federal Reserve's decision to expand its asset buying program and reports that the Trump administration is planning to increase infrastructure spending by pumping in about $1 trillion helped raise hopes about energy demand. Crude oil futures for July gained $1.26 or 3.4 percent to settle at $38.38 a barrel on the New York Mercantile Exchange. August Brent crude rose $1.24 or 3.1 percent to settle at $40.96 a barrel on London's Intercontinental Exchange.

 

Indian rupee continued to slide against the American currency for the fourth day on Tuesday, on increased demand for the US currency from importers. Traders remain concerned with the data released by the Commerce and Industry Ministry showing that contracting for the third straight month, India's exports declined 36.47 percent in May to $19.05 billion, mainly on account of drop in shipments by key sectors such as petroleum, textiles, engineering, gems and jewellery. Imports too plunged 51 percent to $22.2 billion in May, leaving a trade deficit of $3.15 billion, compared to $15.36 billion in the same month previous year. However, dollar losing sheen against other currencies overseas along with gains in the domestic equity market capped the losses to some extent. On the global front, dollar slipped and riskier currencies rallied on Tuesday as the U.S. Federal Reserve prepared to start its corporate bond buying scheme, while a report flagging the possibility of more fiscal stimulus helped to underpin investor sentiment. Finally, the rupee ended at 76.20, 17 paise weaker from its previous close of 76.03 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 3219.18 crore against gross selling of Rs 5882.15 crore, while in the debt segment, the gross purchase was of Rs 497.26 crore with gross sales of Rs 662.71 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.20 crore against gross selling of Rs 1.91 crore.

 

The US markets ended higher on Tuesday following the release of a report from the Commerce Department showing retail sales rebounded by much more than anticipated in the month of May, as stores began to reopen following the coronavirus lockdown. Asian markets are trading mostly in red on Wednesday as the International Monetary Fund said the global economy is set to see a more significant contraction than it previously forecast. Indian markets ended in green on Tuesday following global markets after the US Federal Reserve outlined plans to buy individual corporate bonds to help prop up the economy amid the coronavirus pandemic. Today, the start of session is likely to be pessimistic mid escalation of border tensions between India and China coupled with weakness in Asian peers. Rising coronavoirus cases in India may also impact the sentiments in the markets. The total number of coronavirus cases in the country has reached 354,161, and nearly 11,921 have died from the disease. Traders will be concerned with report that gross tax collection fell 31% till June 15 of the current fiscal, with advance corporate tax mop-up declining 79%. During the first two months of the June quarter, a nationwide lockdown was in place aimed at controlling the spread of the coronavirus pandemic. This had resulted in shuttering of around 80 per cent of the country's economic activities. Though, some support may come later in the day with Prime Minister Narendra Modi's statement that the economy is showing green shoots as the country emerges from the coronavirus lockdown and asserted that the fight against the pandemic is a fine example of cooperative federalism where the Centre and the states are working together. Meanwhile, India may impose anti-dumping duty on Chinese antibacterial drug Ciprofloxacin Hydrochloride with a view to guard domestic industry from cheap imports from the neighbouring country. Aarti Drugs had filed the application for imposition of anti-dumping duty on imports of the medicine from China. Banking stocks will be in limelight as hearing in the interest waiver case is scheduled in the Supreme Court today. There will be some buzz in the MSME stocks as the Finance Ministry said that public sector banks have disbursed Rs 16,031.39 crore till June 12, under the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, adversely affected due to Covid-19 crisis. There will be some reaction in jewellery stocks with the Gem and Jewellery Export Promotion Council's (GJEPC) statement that the overall gems and jewellery exports during April-May declined 82.31% to Rs 4,328.54 crore following lockdown in various parts of the world to curb the spread of COVID-19.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9,914.00

9,746.28

10,063.93

BSE Sensex

33,605.22

33,031.68

34,100.39

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

2,154.78

94.75

90.00

101.50

Axis Bank

961.90

381.55

359.63

404.23

State Bank of India

639.30

172.90

168.55

178.10

ICICI Bank

575.11

342.95

330.03

351.88

Indusind Bank

503.89

481.80

453.73

512.43

  • ITC has partnered with Bayer CropScience to market Bayer's crop protection products to farmers through the ITC's eChoupal online platform. 
  • Tata Motors has reported consolidated net loss attributable to shareholders at Rs 9894.25 crore for Q4FY20 as compared to net profit of Rs 1117.48 crore for Q4FY19. 
  • Maruti Suzuki's Alto has been crowned India's best-selling car for 16 years in a row. 
  • M&M has launched BSVI-compliant ambulance Supro in two variants in the wake of coronavirus pandemic which has led to a rise in demand for such vehicles.
News Analysis