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NSE Intra-day chart (19 August 2020)
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Market Commentary 20 August 2020
Markets to get gap-down opening amid sell-off in global peers


In a highly volatile session, Indian equity benchmarks scaled down from the day's high during the closing hours of trade but still managed to end the day with minor gains on Wednesday, on the back of buying in select blue-chip counters. Key indices made optimistic start and stayed in green for whole day, as traders took some support with Nasscom's report that driving utilisation of data and artificial intelligence (AI) could play a crucial role in realising India's 2025 vision of inclusive development and deliver over $500 billion in value to the economy. According to the industry body, this segment could account for 10 per cent of the country's GDP by 2025. The sentiments remained on optimistic side with Union Minister Nitin Gadkari's statement that the government is considering according Micro, Small & Medium Enterprise (MSME) status to dealers as it will enable them to avail benefits offered to MSMEs. He said MSMEs comprising manufacturing and services units need to get registered to avail the benefits and subsidies offered under various government schemes. Firm trade continued over the Dalal Street in late afternoon session, taking support from India Ratings and Research's (Ind-Ra) latest report that the recently announced loan restructuring guidelines for COVID-19 related stress will provide banks with an opportunity to keep viable accounts as standard in their books. This is because a large proportion of assets that otherwise would have slipped to the gross non-performing assets (GNPA) pool will now be restructured by banks. Some support also came as GST Network said it has enabled a functionality to help GST payers know their input tax credit (ITC) eligibility in their Annual Return, making it more convenient to file GSTR-9. So far, the GST system used to compute eligible ITC based on suppliers' sales return GSTR-1, but the break-up at the invoice level was not provided. However, equity markets wiped out most of the gains in final minutes of trade with Moody's Investors Service's statement that US-India trade negotiations will continue to be challenging and are likely to get delayed due to the Covid-19 pandemic. Finally, the BSE Sensex gained 86.47 points or 0.22% to 38,614.79, while the CNX Nifty was up by 23.05 points or 0.20% to 11,408.40.


The US markets ended lower on Wednesday following the release of the minutes of the Federal Reserve's latest monetary policy meeting. The minutes of the Fed's July meeting noted that the coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The Fed noted economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year. The Fed said the ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. Meanwhile, Democratic House Speaker Nancy Pelosi said that she would be willing to reconvene negotiations and consider a compromise on another coronavirus relief package, after $600 a week in additional unemployment benefits expired at the end of last month leaving many workers in the lurch. On the economic data front, the World Trade Organization said global goods trade likely posted a record fall in the second quarter but a partial uptick in trade and output are expected in the third quarter. The Goods Trade Barometer, a real-time gauge of trends in global trade, fell 18.6 point from last year to 84.5 in the second quarter, the lowest on record since the series began in 2007. All of the barometer's component indices remained well below trend, with many registering historic lows. Indices for automotive products and air freight were by far the worst on record since 2007. A reading below 100 suggests below trend growth in global goods trade. The latest score and June statistics indicated that the volume of merchandise trade this year would contract by 13 percent compared to 2019.


Crude oil futures shook off early losses to end little higher on Wednesday, finding support after government data showing a fall in gasoline inventories soothed jitters over demand as a pandemic-lightened driving season moves into its final stretch. The Energy Information Administration said U.S. crude inventories last week fell by 1.6 million barrels, while gasoline inventories were down 3.3 million barrels. Meanwhile, traders were also keeping an eye on a meeting of an OPEC+ panel that was expected to recommend sticking with the current schedule of production curbs as major producers gauge the COVID-19 pandemic's affect on the demand outlook. Crude oil futures for September added 4 cents or 0.1 percent to settle at $42.93 a barrel on the New York Mercantile Exchange. However, October Brent crude fell 9 cents or 0.2 percent to settle at $45.37 a barrel on London's Intercontinental Exchange.


Erasing initial gains, Indian Rupee ended weaker against dollar on Wednesday, on account of sustained dollar demand from importers and banks. Traders took note of GST Network's statement that it has enabled a functionality to help GST payers know their input tax credit (ITC) eligibility in their Annual Return, making it more convenient to file GSTR-9. So far, the GST system used to compute eligible ITC based on suppliers' sales return GSTR-1, but the break-up at the invoice level was not provided. However, firm domestic equities and sustained foreign fund inflows capped the losses. On the global front; dollar struggled on Wednesday, holding a whisker above a 27-month low hit overnight, after a record run for stocks on Wall Street added to pressure on the currency from simmering trade tensions between Washington and Beijing. Finally, the rupee ended at 74.82, 6 paise weaker from its previous close of 74.76 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5396 crore against gross selling of Rs 4344.75 crore, while in the debt segment, the gross purchase was of Rs 658.83 crore with gross sales of Rs 827.22 crore. Besides, in the hybrid segment, the gross buying was of Rs 26.06 crore against gross selling of Rs 26.42 crore.


The US markets ended in red on Wednesday after the Federal Reserve in the minutes of its July meeting, raised concerns that the US economic recovery from the devastating effects of the pandemic faced a highly uncertain path. Asian markets are trading lower on Thursday tracking weakness on Wall Street overnight. Indian markets ended higher on third straight session on Wednesday led by PSU banks. Today, the markets are likely to make gap-down opening following sell-off in the global markets. Traders will be concerned as the World Bank said that it is likely to project a steeper contraction of India's economy than 3.2 per cent it has forecast for the current financial year due to the increasing number of Covid-19 cases and the resultant regional lockdowns. It cautioned India against using its tariff policy to attract the firms wanting to shift from China. Besides, Care Ratings said India's GDP is likely to contract by 20 per cent during the first quarter of the current fiscal on account of the COVID-19 pandemic-induced disruptions. Rising coronavirus cases may also dampened sentiments in the markets. India has recorded its worst single-day spike of over 69,000 coronavirus cases, taking its total to 2,835,822. With 980 fatalities reported on Wednesday, the country's death toll has surged to 53,994. There will be some cautiousness with Centre of Monitoring Indian Economy (CMIE) data showing that the unemployment rate in India recorded for August 18 was 8.20 percent (30-day moving average), against 7.64 percent at the start of the month on August 1. Meanwhile, the GST Council is likely to meet on August 27 to discuss the compensation payout to states and the opinion of the Attorney General on the legality of market borrowing to meet revenue shortfall. There will be some buzz in the sugar stocks after the Union Cabinet decided to increase the minimum price sugar mills pay to sugarcane growers, also known as Fair and Remunerative Price (FRP), by Rs 10 per quintal to Rs 285 for the next marketing year starting October 2020. Banking stocks will be in focus after India Ratings and Research said banks are likely to restructure up to Rs 8.4 lakh crore of loans, or 7.7 percent of the overall system's credit, under the newly announced recast package. There will be some reaction in auto component industry stocks as industry body ACMA said the auto component industry, which accounts for around 2.3 per cent of the country's GDP, is looking for government support in terms of tax rationalisation as it aims to tide over the challenging business environment.


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  • Reliance Industries' subsidiary -- RRVL has acquired equity shares of Vitalic and its subsidiaries for a cash consideration of around Rs 620 crore. 
  • BPCL is planning to commission its new state-of-the-art bottling plant at Madurai, in the state of Tamil Nadu, aimed to serve the southern districts. 
  • TCS has launched TCS Safe Workplace, a return-to-work solution that helps global enterprises quickly transition to a safe, secure and productive work environment. 
  • Dr. Reddy's Laboratories has launched Avigan (Favipiravir) 200 mg Tablets in India.
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