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NSE Intra-day chart (27 April 2020)
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Market Commentary 28 April 2020
Markets to get positive start amid sharp fall in crude oil prices

 

Indian stock markets traded firmly in green on Monday and ended with gains of over a percent, amid gains in Asian peers as investors hoped for additional measures to fight the coronavirus pandemic. Domestic equity indices witnessed a gap-up start and traded with healthy gains, as traders took support with the MSME Minister Nitin Gadkari's statement that the government may soon set up a Rs 1 trillion revolving fund for micro, small and medium enterprises (MSMEs) to bring in much-needed liquidity for small businesses if the Prime Minister's Office accepts the proposal. Some support also came with a private report that India is considering a goods and services tax (GST) relief package to counter the impact of Covid-19 and help prop up the economy. The market breadth remained optimistic, as Reserve Bank of India (RBI) has decided to open a special liquidity facility for mutual funds (SLF-MF) of Rs 50,000 crore, with an aim to ease liquidity pressures on mutual funds (MFs). The central bank also stated that it remains vigilant and will take whatever steps are necessary to mitigate the economic impact of COVID-19 and preserve financial stability. However, key indices pared most of their morning gains in dying hour of trade, as India Ratings and Research (Ind-Ra) revised its FY21 economic growth forecast for the country further down to 1.9 percent, lowest in the last 29 years, citing the COVID-19 pandemic and the subsequent lockdown. According to Ind-Ra, Indian economy had registered a GDP growth of 1.1 percent in financial year 1991-92. Finally, the BSE Sensex gained 415.86 points or 1.33% to 31,743.08, while the CNX Nifty was up by 127.90 points or 1.40% to 9,282.30.

 

The US markets ended higher on Monday, extending the upward move seen in the previous session, after New York Governor Andrew Cuomo announced plans for a phased reopening of his state's economy. Cuomo suggested the first phase, which involves low risk businesses in the manufacturing and construction sectors, could begin shortly after New York's stay-at-home order expires on May 15. The decision to announce the reopening plans comes as New York has seen as steady decline in coronavirus hospitalization rates, with Cuomo expressing optimism the worst is over. The announcement by Cuomo comes as other states, including several led by Republican governors, have already started reopening their economies. Buying interest was also generated amid optimism about additional stimulus ahead of Federal Reserve and European Central Bank meetings later this week. Financial stocks turned in some of the market's best performances on the day, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index spiking by 5.6 percent and 4.8 percent, respectively. Significant strength was also visible among housing stocks, as reflected by the 4.7 percent jump by the Philadelphia Housing Sector Index.

 

Crude oil futures ended with cut of over 24% on Monday amid mounting fears that storage at Cushing, Oklahoma, could reach full capacity soon and that production cuts might not be enough to counter the huge fall in demand amid the coronavirus pandemic. Earlier this month, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a group known as OPEC+, pledged to cut output by an unprecedented 9.7 million barrels per day in May and June. Russia is very likely to reduce its western seaborne exports by half in May. Crude oil futures for June dropped $4.16 or 24.6 percent to settle at $12.78 a barrel on the New York Mercantile Exchange. June Brent crude declined $1.45 or 6.8 percent to settle at $19.99 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended higher against dollar on Monday, tracking positive trend in domestic equities and weakening American currency in the overseas market. Traders took a note of Union minister Nitin Gadkari's statement that India should look at converting the world's hatred for China amid the coronavirus pandemic into an economic opportunity for itself by attracting large scale foreign investments. Market participants overlooked India Ratings and Research (Ind-Ra) revised its FY21 economic growth forecast for the country further down to 1.9 percent, lowest in the last 29 years, citing the COVID-19 pandemic and the subsequent lockdown. According to Ind-Ra, Indian economy had registered a GDP growth of 1.1 percent in financial year 1991-92. On the global front, yen edged higher against dollar on Monday after the Bank of Japan expanded stimulus to help companies hit by the coronavirus crisis while the pound rose against the dollar and euro on optimism Britain may soon ease a month-long lockdown. Finally, the rupee ended at 76.25, 21 paise stronger from its previous close of 76.46 on Friday.

 

The FIIs as per Monday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 5722.90 crore against gross selling of Rs 5848.50 crore, while in the debt segment, the gross purchase was of Rs 791.22 crore with gross sales of Rs 1625.14 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.01 crore against gross selling of Rs 2.93 crore.

 

The US markets ended higher on Monday after New York Governor Andrew Cuomo announced plans for a phased reopening of his state's economy. Asian markets are trading mixed on Tuesday as oil prices continued to slip following an overnight plunge on fears that global storage capacity will soon be filled as a result of weak demand caused by the coronavirus pandemic. Indian markets ended higher with significant gains on Monday after the Reserve Bank of India (RBI) rolled out a special liquidity facility worth Rs 50,000 crore for mutual funds to ease the pressure due to the coronavirus pandemic. Today, the markets are likely to get positive start amid sharp fall in crude oil prices overnight. Traders will be getting some encouragement with report that Prime Minister Narendra Modi has underlined that the lockdown has yielded positive results as the country has managed to save thousands of lives in the past one and a half months. Some support will also come as the Reserve Bank of India (RBI) received Rs 64,746 crore worth of bids or more than six times the amount it proposed to buy government bonds through the special open market operation (OMO). Traders may take note of a private report that the central government is considering a proposal to guarantee as much as Rs 3 trillion ($39 billion) of loans to small businesses as part of a plan to restart economy, which is reeling under the impact of a 40-day lockdown. Though, there may be some concern with report that India on April 27 recorded its highest single-day spike in toll due to COVID-19 as 60 deaths and 1,463 new infections were reported in the last twenty-four hours, taking the countrywide total to 28,380 and the number of deaths to 886. There may be some cautiousness with domestic rating agency Crisil's statement that nearly halved its GDP forecast for India to 1.8% for 2020-21 while projecting total losses of Rs 10 lakh crore or Rs 7,000 per person due to disastrous lockdowns to control COVID-19 pandemic. Meanwhile, continuing its efforts to help market participants tide over challenges due to COVID-19 pandemic, market regulator Sebi has decided to reduce broker turnover fees and filing charges on offer documents for public offering, rights issue and buyback of shares. There will be some buzz in the insurance stocks with Irdai's data showing that India's life insurance companies clocked 11.36% growth in their collective premium income at Rs 48.26 lakh crore during the fiscal ended March 2020. There will be some reaction in sugar stocks with ICRA's report that the demand for sugar has witnessed a significant decline following the nationwide lockdown and the overall adverse impact on sugar consumption would be at least one million tonne in the domestic market. There will be lots of earnings reaction based on the performance of the companies. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9,282.30

9,229.40

9,356.15

BSE Sensex

31,743.08

31,561.87

32,013.99

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

State Bank of India

430.03

180.90

179.77

182.77

ICICI Bank

389.81

347.90

179.77

354.53

Axis Bank

359.87

427.30

414.43

434.83

Tata Motors

278.35

75.25

74.63

76.03

Indusind Bank

268.20

407.40

392.65

416.50

 

  • Coal India has signed two agreements with heavy engineering major BEML for purchasing dumpers at Rs 400 crore. 
  • Dr Reddy's Laboratories has launched Fenofibrate Tablets USP, a therapeutic equivalent generic version of Tricor (fenofibrate) Tablets, approved by the USFDA. 
  • NTPC has invited expression of interest for procuring 10 hydrogen fuel cell based electric buses and an equal number of such cars. 
  • IndusInd Bank has reported a 16% decline in its standalone net profit at Rs 301.74 crore for the quarter ended March 2020, on higher provisioning.
News Analysis