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NSE Intra-day chart (30 January 2020)
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Market Commentary 31 January 2020
Markets to get slightly positive start; economic survey eyed


Bears made a comeback over the Dalal Street on Thursday, with Sensex & Nifty ending lower by around 300 & 100 points, respectively. After a weak start, indices remained under pressure, as India Ratings and Research (Ind-Ra) said that state government finances may continue witnessing revenue pressure in financial year 2020-21 (FY21) on account of subdued economic growth. The agency has cut its outlook on state finances to stable-to-negative for FY21 from stable, citing higher revenue expenditure and outstanding GST compensation. Negative cues from the global markets also hampered domestic sentiments. Bourses lingered in red terrain throughout the day, after industry body FICCI's statement that its Economic Outlook Survey has projected the country's annual median GDP growth for 2019-20 at 5%. The survey has put the median growth forecast for agriculture and allied activities at 2.6% for 2019-20, the industry and services sector at 3.5% and 7.2%, respectively, during the current year. Market participants paid no heed towards a private report stating that Finance Minister Nirmala Sitharaman's efforts to revive the economy have started to appear on the ground, helping to regain the lost momentum of the GDP. Finally, the BSE Sensex slipped 284.84 points or 0.69% to 40,913.82, while the CNX Nifty was down by 93.70 points or 0.77% to 12,035.80.


The US markets ended higher on Thursday after the World Health Organization (WHO) declared the coronavirus outbreak a global health emergency. Earlier in the day, the US confirmed its first human-to human transmission of the virus, which has killed 171 people in China and has spread to as many as 18 other countries. The virus has reportedly infected more than 8,100 people so far, outnumbering the infections saw during the entire SARS outbreak of 2002 and 2003. WHO Director-General Tedros Adhanom Ghebryesus said  that the organization witnessed the emergence of a previously unknown pathogen that has resulted in an unprecedented outbreak and that it is time to act together to limit the spread. On the economic data front, US economic growth in the fourth quarter continued at the same pace as in the previous quarter, according to a report released by the Commerce Department. The Commerce Department said real gross domestic product climbed by 2.1 percent in the fourth quarter, unchanged from the third quarter and in line with street estimates. The fourth quarter GDP growth reflected positive contributions from consumer spending, government spending, residential fixed investment, and exports as well as a decrease in imports, which are a subtraction in the calculation of GDP. Besides, a report released by the Labor Department showed first-time claims for US unemployment benefits decreased from an upwardly revised level in the week ended January 25. The report said initial jobless claims fell to 216,000, a decrease of 7,000 from the previous week's revised level of 223,000.


Crude oil futures ended lower with cut of over two percent on Thursday as worries rise over the potential economic impact from the continued spread of the coronavirus. Chinese authorities said more than 7,700 people have been infected, with at least 170 dead. Meanwhile, World Health Organization (WHO) declared that coronavirus is a public health emergency of international concern. WHO officials expressed great concern over the virus's spread outside of China. Besides, a number of international flights to China have been canceled and if this trend continues in the coming days and weeks it will likely only deepen demand concerns. Crude oil futures for March dropped $1.19 or 2.2 percent to settle at $52.14 a barrel on the New York Mercantile Exchange. March Brent fell $1.52 or 2.5 percent to settle at $58.29 a barrel on London's Intercontinental Exchange.


Indian rupee depreciated against the American currency on Thursday, due to fresh dollar demand from banks and importers. Sentiments remained down-beat as India Ratings and Research (Ind-Ra) expects aggregate fiscal deficit of the states to come close to 3% of gross domestic product in FY21. In its note, it has revised the outlook on state finances to stable-to-negative for FY21 from stable. Market participants also remained cautious ahead of the Union Budget that will be released later this week. The weak trade in the local equity market along with dollar's strengthen against some other currencies also adversely impacted local forex trade. On the global front, dollar held near a two-month high against a basket of major currencies on Thursday as investors tried to shield themselves from assets that could be hit by China's virus epidemic. Finally, the last traded price of rupee was 71.49, 22 paise weaker from its previous close of 71.27 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 4985.68 crore against gross selling of Rs 6427.93 crore, while in the debt segment, the gross purchase was of Rs 75582.37 crore with gross sales of Rs 1694.99 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.54 crore against gross selling of Rs 10.52 crore.


The US markets ended higher on Thursday as investors decided to look past fears about the economic impact of the coronavirus epidemic and focus on a spate of positive earnings reports. Asian markets are trading mostly in green on Friday as investors clutched at hopes China could contain the coronavirus, even as headlines spoke of more cases and more deaths. Indian markets ended lower on Thursday with cut of over half a percent each tracking global markets, amid concerns over the impact of coronavirus on global economy. Today, the markets are likely to make slightly positive start ahead of Economic survey to be out later in the day and the Union Budget due tomorrow. Positive leads from global markets and more than 2 percent fall in oil prices on Thursday are likely to aid domestic sentiments. Investors will also keep an eye on the economic data like core sector data which will be out later in the day. Some support will come with report that the government is aiming at $80 billion of jewellery exports in the next five years from the present level of $40 billion. The Centre also expects the jewellery industry to generate additional employment of 2 million. Besides, the seventh tranche of CPSE ETF received bids worth Rs 9,200 crore on Thursday from institutional investors in its anchor book. The government has floated the fresh tranche of the CPSE ETF with the view of raising at least Rs 10,000 crore. Traders may take note of Niti Aayog vice-chairman Rajiv Kumar's statement that the government should focus on alternate measures to stimulate economy as it is not possible to give fiscal stimulus. Kumar also said growth-enhancing measures are the need of the hour to achieve India's potential growth rate of 7-8 per cent per annum. He attributed the current slowdown to low investment, muted consumption expenditure and lagging exports. Meanwhile, An Irdai panel has suggested the introduction of daily premium payment policies to deepen insurance penetration in low-income groups. Telecom stocks will be in focus as industry body COAI is pitching for a 10-15 year payment schedule for telecom companies to pay their past statutory dues, beginning with part-payment upfront and a two-year moratorium. There will be some reaction in aviation stocks with credit rating agency ICRA's statement that the domestic airline industry is expected to post a net loss of about Rs 7,800 crore in fiscal 2020 as against an estimated net loss of approximately Rs 10,000 crore in fiscal 2019. There will be lots of earnings announcements too, to keep the markets in action.


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