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NSE Intra-day chart (07 July 2020)
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Market Commentary 08 July 2020
Markets likely to get flat-to-positive start on Wednesday

 

Indian equity indices remained extremely volatile throughout the session and somehow managed to end in green terrain on Tuesday, amid hopes of an economic recovery despite a rise in cases of coronavirus. With this, the equity indices registered their fifth successive session of gains. Both the indices made a slightly positive start, as traders took some solace with the Ministry of Finance asserting that green shoots have started to emerge in the domestic economy. In its monthly macroeconomic report, the ministry highlighted that total digital retail financial transactions via NPCI platforms rose sharply from Rs 6.71 lakh crore in April to Rs 9.65 lakh crore in May, a sign of revival in economic activity. Some support also came with a private report stating that India's Global Real Estate Transparency Index ranking has improved by one notch to 34 on the back of regulatory reforms, better market data and green initiatives. However, domestic bourses gave up all gains and fell sharply during the late morning deals, as traders got anxious with India Ratings and Research's report that the impact of Covid-19 and the associated policy response may result in an additional Rs 1.67 lakh crore of debt from the top 500 debt-heavy private sector borrowers turning delinquent between FY21 and FY22. But, the bulls were seen ruling Dalal Street once again in the dying hours of trade as the benchmark indices climbed out of the negative territory to inch up, as some optimism remained among traders with a Ficci-Dhruva Advisors industry survey report stated that the opening up of India's economy post lockdown and implementation of the economic package unveiled by the government have started showing results on the ground with initial signs of improvement in the performance of businesses now visible.   Finally, the BSE Sensex gained 187.24 points or 0.51% to 36,674.52, while the CNX Nifty was up by 36.00 points or 0.33% to 10,799.65.

 

The US markets ended lower on Tuesday on concerns about the coronavirus pandemic to resurface. The renewed coronavirus concerns came as World Health Organization officials warned that the death toll from the pandemic may start to climb again. Adding to the concerns, New York and New Jersey have added Delaware, Kansas and Oklahoma to the list of states from which travelers are required to self-quarantine for 14 days. Atlanta Federal Reserve President Raphael Bostic also warned that the spike in coronavirus cases in southern and western states could slow the US economic recovery. Bostic said there are a couple of things that we are seeing and some of them are troubling and might suggest that the trajectory of this recovery is going to be a bit bumpier than it might otherwise. Bostic noted that high-frequency data had shown a leveling off of economic activity both in terms of business openings and mobility. Market participants also attributed some of the day's malaise to dimming outlook for quarterly corporate earnings reports, even though they are widely expected to be poor, given the challenges posed by the pandemic.

 

Crude oil futures ended slightly lower on Tuesday as traders weighed the prospects for energy demand amid reports showing a surge in coronavirus infections in several parts across the world against current and near-term supply positions in the market. The United States is still knee deep in the first wave of the coronavirus outbreak, Anthony S. Fauci, the director of the National Institute of Allergy and Infectious Diseases, said as 16 US states reported record increases in the new Covid-19 cases in the first five days of July. Crude oil futures for August fell by a penny or 0.02 percent to settle at $40.62 a barrel on the New York Mercantile Exchange. September Brent crude declined 2 cents or 0.05 percent to settle at $43.08 a barrel on London's Intercontinental Exchange.

 

Tumbling for the second straight day, Indian rupee concluded substantially weaker against dollar on Tuesday, on account of sustained dollar demand from importers and banks. Besides, dollar firmness against some global currencies also weighed on the rupee sentiment. Sentiments remained down-beat with India Ratings and Research's report stating that that the impact of Covid-19 and the associated policy response may result in an additional Rs 1.67 lakh crore of debt from the top 500 debt-heavy private sector borrowers turning delinquent between FY21 and FY22. On the global front; dollar took a breather from recent gains on Tuesday with investors hitting pause on an equity market rally, as new coronavirus flare-ups and regional lockdowns in some countries curbed buying and lifted the dollar. Finally, the rupee ended at 74.93, 25 paise weaker from its previous close of 74.68 on Monday.

 

The FIIs as per Tuesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 4163.66 crore against gross selling of Rs 3687.67 crore, while in the debt segment, the gross purchase was of Rs 1790.15 crore with gross sales of Rs 1013.99 crore. Besides, in the hybrid segment, the gross buying was of Rs 21.61 crore against gross selling of Rs 23.20 crore.

 

The US markets ended lower on Tuesday as a lack of major US economic data allowed concerns about the coronavirus pandemic to resurface. Asian markets are trading mixed on Wednesday as concerns around the coronavirus pandemic continue to linger. Indian markets ended a volatile session modestly higher on Tuesday, with financials and IT companies pacing the gainers in the wake of positive global cues and comments from the finance ministry that green shoots have started to emerge in the domestic economy. Today, the markets are likely to make flat-to-positive start. Investors will be looking ahead to the Cabinet meeting in which a couple announcements under the Atma Nirbhar Bharat Abhiyan will reportedly be considered. Traders will be getting some encouragement with NITI Aayog CEO Amitabh Kant's statement that India will bounce back with a vengeance with green shoots in the economy already being visible, amidst the multiple challenges thrown up by the Covid-19 pandemic. Some support will come as the finance ministry said banks have sanctioned loans of about Rs 1,14,502 crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector reeling under the economic slowdown caused by the COVID-19 pandemic. Besides, the CBIC said the GST Implementation Committee is considering the demand for extending the due date for filing of annual return for 2019-20 by composition dealers. However, subdued global cues coupled with rising coronavirus cases may impact the markets. In India, there now are 743,481 coronavirus cases, while the death toll in the country is now above 20,600. More than half of all cases in the country are from just three states - Maharashtra, Tamil Nadu and Delhi. The World Health Organization (WHO) said it is looking into claims of airborne transmission coronavirus in poorly ventilated closed settings and will soon issue a scientific brief on the issue. Traders may react with a private report that the country's economy is likely to show a double-digit contraction in the April-June quarter due to the restriction on economic activities on account of the COVID-19 pandemic. there will be some reaction in Palm oil sector related stocks with report that palm oil demand in India is set to plunge this year as coronavirus lockdowns slash food service sector demand and households opt for alternatives at the supermarket. India's palm oil imports could plunge 20 percent from a year ago to 7.5 million tonnes in the 2019/20 marketing year ending on October 31.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,799.65

10,721.63

10,845.73

BSE Sensex

36,674.52

36,389.32

36,841.50

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

858.42

109.05

107.20

111.75

State Bank of India

551.25

188.60

185.37

190.52

ICICI Bank

460.31

376.05

366.10

382.00

IndusInd Bank

426.97

526.30

502.50

540.05

Axis Bank

379.92

447.35

432.70

455.50

 

  • Maruti Suzuki India has collaborated with Axis Bank to offer easy financing options for the potential car buyers. 
  • IndusInd Bank has reported rise in net advances to Rs 2,00,357 crore in Q1FY21, a marginal growth of 4% as compared to Rs 1,93,520 crore in Q1FY20. 
  • TCS has expanded its decade-long partnership with Tryg to help the latter adopt a future-ready technology stack and IT operating model. 
  • Tata Motors' wholly owned subsidiary -- JLR has started deliveries of BS-VI compliant petrol derivatives of new Range Rover Evoque and new Discovery Sport in India.
News Analysis