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NSE Intra-day chart (19 May 2020)
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Market Commentary 20 May 2020
Markets to open in green on Wednesday

 

Indian equity benchmarks gave up most of their gains in last leg of trade to come off their intraday high points but still managed to end with decent gains, tracking positive global cues amid optimism about a potential vaccine for the coronavirus. Key indices began the session with a gap-up open, as traders took encouragement with Minister for MSMEs and road transport and highways Nitin Gadkari's statement that the recent steps announced by the government to boost liquidity and credit flows would also bolster the purchasing power of the people via employment creation and help accelerate the wheels of the economy. Traders took note of Expenditure secretary TV Somanathan's statement that this is a challenging year for the central government due to the serious revenue impact of the coronavirus crisis, but added that the Centre had no plan of carrying out poorly calibrated expenditure cuts. Both indices gave up more than of intraday gains in late trade, as traders got wary with a private report stating that American brokerage Goldman Sachs expects the Indian economy to contract by 5 per cent in FY21, making it the worst performance by the country ever. The brokerage said the GDP will contract by a mind-boggling 45 per cent in the June quarter as compared to the January-March period on an annualised basis, because of the continuing lockdown which is chilling economic activity, before recovering later. Some concern also came as the rating agency Moody's Investors Service in its latest report stated that the measures announced for financial institutions as part of Rs 20 lakh crore-economic package will help ease their asset risk, but will not fully offset the negative impact from the COVID-19 outbreak. Finally, the BSE Sensex gained 167.19 points or 0.56% to 30,196.17, while the CNX Nifty was up by 55.85 points or 0.63% to 8,879.10.

 

The US markets ended lower on Tuesday as traders cashed in on the rally seen on Monday. Weakness also prevailed after a report cast doubt on Moderna's coronavirus vaccine candidate and Wall Street braced for a potentially protracted economic recovery. Markets ignored comments from Federal Reserve Chair Jerome Powell, who reaffirmed the central bank will provide more support to the economy.  Testifying before the Senate Banking Committee, Powell said the central bank needs to be prepared to act further and I would say we are, if the need is there. Powell said as a society, we should do everything we can to provide relief to those who are suffering for the public good. On the economic data front, the Commerce Department released a report showing another steep drop in new residential construction in the US in the month of April. The report said housing starts plummeted by 30.2 percent to an annual rate of 891,000 in April after tumbling by 18.6 percent to a revised 1.276 million in March. Street had expected housing stocks to plunge by 23.8 percent to a rate of 927,000 from the 1.216 million originally reported for the previous month. The Commerce Department said building permits also slumped by 20.8 percent to an annual rate of 1.074 million in April after falling by 5.7 percent to a revised 1.356 million in March. Building permits, an indicator of future housing demand, had been expected to nosedive by 26.1 percent to a rate of 1 million from the 1.353 million originally reported for the previous month.

 

Crude oil futures ended higher on Tuesday, extending recent gains, supported by increased demand and output cuts. With several countries across the globe relaxing lockdown restrictions and reopening their economies, energy demand has picked up a bit. Meanwhile, US oil production has fallen and there are signs of further declines ahead. Crude-oil production from seven major US shale plays is forecast to decline by 197,000 barrels a day in June to 7.822 million barrels a day. Crude oil futures for June rose 68 cents or 2.1 percent to settle at $32.50 a barrel on the New York Mercantile Exchange. July Brent crude gained 16 cents or 0.5 percent to settle at $34.65 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended higher against dollar on Tuesday amid selling in American currency by banks and exporters. Traders took support with Minister for MSMEs and road transport and highways Nitin Gadkari's statement that the recent steps announced by the government to boost liquidity and credit flows would also bolster the purchasing power of the people via employment creation and help accelerate the wheels of the economy. Positive trend in domestic equities and weakening American currency also supported the local unit. Traders overlooked a private report stating that American brokerage Goldman Sachs expects the Indian economy to contract by 5 per cent in FY21, making it the worst performance by the country ever. On the global front, dollar nursed losses against major currencies on Tuesday, after encouraging data from the trial of a vaccine for COVID-19 reduced safe-haven demand for the greenback. Finally, the rupee ended at 75.66, 25 paise stronger from its previous close of 75.91 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 4680.85 crore against gross selling of Rs 7203.38 crore, while in the debt segment, the gross purchase was of Rs 1696.99 crore with gross sales of Rs 3228.29 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.52 crore against gross selling of Rs 3.74 crore.

 

The US markets ended lower on Tuesday as investors focused on a report questioning Moderna's recent coronavirus vaccine early-stage trial results. Asian markets are trading mostly in green on Wednesday as investors await the release of China's benchmark lending rate. Indian markets ended higher with gains of over half a percent each on Tuesday amid positive global cues on hopes of a vaccine for Covid-19. Today, markets to make optimistic start following positive cues from Asian peers. Some support will come with report that the government has decided to further revise the criteria for medium units by enhancing the investment and turnover limits to up to Rs 50 crore and Rs 200 crore respectively. Though, rising coronavirus cases may impact markets. India has witnessed its biggest daily spike in the total number of coronavirus cases, with over 6,000 being reported in 24 hours, according to data compiled by Worldometer. There are 106,468 cases of Covid-19 in the country at present, and as many as 3,301 people have died from the disease. Traders may be concerned as rating agency CRISIL joined analysts sceptical about the near-term benefits of the Rs 20 lakh crore stimulus package on growth and also flagged the absence of any dedicated steps for the most troubled sectors. There may be some cautiousness with the Centre for Monitoring of Indian Economy's (CMIE) report that unemployment rate in India continued to be high at 24% for the week ended May 17, same as week before. Traders may react to the Federation of Indian Export Organisations' (FIEO) statement that the export from the country is expected to fall by 20 per cent in the current fiscal in the wake of the coronavirus pandemic. Meanwhile, Markets regulator Sebi has allowed mutual funds to make additional investment in government securities and treasury bills while deciding on investment avenues for their corporate bond, banking, PSU and credit risk funds. Metal stocks will be in focus as ratings agency ICRA revised its outlook for the sector to negative from stable, expecting a record fall of 20 percent in domestic steel demand during the ongoing financial year. There will be some reaction in cement stocks with CRISIL Research's report that even as the Centre announced an economic stimulus package to aid businesses struggling amid the nationwide lockdown, cement dealers in the country expect demand to fall by up to 30 percent in FY21.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

8,879.10

8,812.82

8,987.87

BSE Sensex

30,196.17

29,962.01

30,585.15

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Bharti Airtel

719.10

598.80

569.37

615.87

State Bank of India

715.23

152.80

150.85

156.30

Tata Motors

653.79

81.80

80.32

84.47

ICICI Bank

618.29

300.30

294.43

308.83

Axis Bank

428.90

354.50

345.57

367.97

 

  • Kotak Mahindra Bank has launched a video-based KYC that will make it easier to open an account remotely, especially during the COVID-19 pandemic. 
  • Tata Motors has rolled out Keys to Safety - a holistic package of offers to accelerate its endeavor of providing safer cars for all.
  • Vedanta has received approval for the proposal of de-listing of the company from the BSE and the NSE. 
  • Maruti Suzuki India has delivered over 5,000 cars in the past few days.
News Analysis