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NSE Intra-day chart (15 May 2020)
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Market Commentary 18 May 2020
Markets to open marginally in green tracking Asian peers

 

Indian equity benchmarks gave up most of their losses in last leg of trade to come off their intraday low points, but failed to erase all losses and ended with minor cut. Key indices made cautious start as total number of coronavirus cases in India has been rising constantly. Selling further crept in as SBI research report stated that with the government's Rs 20 lakh crore stimulus package, the country's fiscal deficit is likely to be more than double to 7.9% in the current financial year. Markets extended their losses in the afternoon session, after Asian Development Bank (ADB) said the global economy is expected to suffer $5.8-8.8 trillion in losses due to the coronavirus pandemic. Of this, the impact on south Asian gross domestic product (GDP) will be to the tune of $142-218 billion. However, key indices staged a sharp recovery from the intraday losses in late afternoon session, as traders found some solace with India Inc stating that the second tranche of the stimulus package will provide relief to the most vulnerable sections of the society reeling under the impact of COVID-19 and boost the housing sector, aiding economic growth. The government announced a Rs 3.16 lakh crore package of free foodgrains for migrant workers, concessional credit to farmers and working capital loan for street vendors as part of the second tranche of fiscal stimulus to heal an economy hit hard by the lockdown. Meanwhile, the government said 2.5 crore farmers, including fishermen and those involved in animal husbandry, would get Rs 2 lakh crore of concessional credit through Kisan Credit Cards under its economic stimulus package. Finally, the BSE Sensex fell 25.16 points or 0.08% to 31,097.73, while the CNX Nifty was down by 5.90 points or 0.06% to 9,136.85.

 

The US markets ended higher on Friday despite data showing US April retail sales plunged more than forecasts and news the Trump administration will block shipments of semiconductors to China's Huawei Technologies, stoking fears of renewed trade tensions. The Commerce Department said retail sales fell 16.4 percent in April after tumbling by a revised 8.3 percent in March. Street had expected retail sales to plummet by 12.0 percent compared to the 8.7 percent slump originally reported for the previous month. Excluding sales by motor vehicle and parts dealers, retail sales plunged by an even steeper 17.2 percent in April after falling by a revised 4.0 percent in March. Ex-auto sales were expected to tumble by 8.6 percent compared to the 4.5 percent nosedive originally reported for the previous month. A separate report from the Federal Reserve showed industrial production plummeted by 11.2 percent in April after tumbling by a revised 4.5 percent in March. Street had expected production to plunge by 11.5 percent compared to the 5.4 percent nosedive originally reported for the previous month. Concerns about the economy may have been offset by a report from the University of Michigan showing an unexpected improvement in consumer sentiment in the month of May. The report said the consumer sentiment index rose to 73.7 in May after plummeting to 71.8 in April. The rebound surprised market participants, who had expected the index to slip to 68.0.

 

Crude oil futures settled higher on Friday, extending recent gains, finding support from production cuts by major oil producers and early signs of a recovery in demand for crude with some business lockdowns globally being lifted. Meanwhile, according to Baker Hughes, the number of active US rigs drilling for oil dropped by 34 to 258 this week, falling for a ninth straight week. The total active US rig count also fell, dropping by 35 to 339. Crude oil futures for June surged $1.87 or 6.8 percent to settle at $29.43 a barrel on the New York Mercantile Exchange. July Brent crude rose $1.37 or 4.4 percent to settle at $32.50 a barrel on London's Intercontinental Exchange.

 

Indian rupee gave up all of its initial gains and ended marginally lower against U.S. dollar on Friday, due to fresh demand for the American currency from banks and importers. Traders remained cautious as SBI research report stated that with the government's Rs 20 lakh crore stimulus package, the country's fiscal deficit is likely to be more than double to 7.9% in the current financial year. The domestic currency was also weighed down by dollar's strengthen against some other currencies overseas. However, losses were limited as traders found some support with report that India called for an agreement among G20 nations to enable the use of flexibilities under a WTO pact on intellectual property rights to ensure access to essential medicines, treatments and vaccines at affordable prices. On the global front, U.S. dollar was set for a weekly gain on Friday as rising Sino-U.S. tensions and worries about a second wave of coronavirus infections rattled investors. Finally, the rupee ended at 75.58, 2 paise weaker from its previous close of 75.56 on Thursday.

 

The FIIs as per Friday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4624.49 crore against gross selling of Rs 6993.20 crore, while in the debt segment, the gross purchase was of Rs 1486.68 crore with gross sales of Rs 7118.69 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.18 crore against gross selling of Rs 10.95 crore.

 

The US markets ended in green on Friday as traders shrugged off the release of some dismal US economic data, including reports showing record decreases in retail sales and industrial production in the month of April. Asian markets are trading mostly higher on Monday as more countries re-opened their economies, stirring hopes the world was nearer to emerging from recession. Indian markets ended range-bound trade in red territory with marginal losses on Friday amid rising coronavirus cases. Today, the start of new week is likely to be flat-to-positive following Asian peers and slew of measures announced by Finance Minister Nirmala Sitharaman to boost the economy amid the coronavirus-led disruption. Finance Minister Nirmala Sitharaman announced the fifth and final tranche of measures under Prime Minister Narendra Modi's ambitious Atmanirbhar Bharat Abhiyan outlining India's massive Rs 20 lakh crore economic package on May 17. Also, the Reserve Bank of India's (RBI) data showed that the country's foreign exchange reserves surged by $4.235 billion to $485.313 billion in the week to May 8 on account of rise in the foreign currency assets. Traders may take note that Finance Minister Nirmala Sitharaman said the government will frame a policy where private entities are allowed to participate in all sectors. However, there may be some cautiousness as Union home ministry on May 17 extended the lockdown for another two weeks till May 31 to contain the spread of coronavirus. The number of new cases topped 5,000 in a single day for the first time on May 17 on the back of another explosion in Maharashtra, which reported a record 2347 fresh infections, while as many as 154 death from the virus reported on May 17. Traders may be concerned with the commerce and industry ministry's data showing that India's exports contracted by a record 60.28 per cent to $10.36 billion in April amid the coronavirus lockdown. Imports too tumbled by 58.65 per cent to $17.12 billion in April from $41.4 billion in the same month last year. Besides, the trade deficit narrowed to $6.76 billion. Trade deficit in April 2019 stood at $15.33 billion. Also, a private report stated that the economic package announced by the Narendra Modi government over the past few days to help economic recovery is unlikely to have an immediate impact on growth, and it estimates real GDP to fall by 5 percent in fiscal year 2021. Meanwhile, Finance Minister Nirmala Sitharaman said the Centre has increased borrowing limits for states to 5 percent from 3 percent for FY21. There will be some buzz in the power stocks with Power Minister R K Singh's statement that the revised tariff policy has been cleared by a group of ministers and it is likely to be implemented within a month. The policy provides for steps like penalty for unscheduled power cuts by distribution companies. Coal stocks will be in focus as the Union government opened up the mining sector in a big push for privatisation. There will be some reaction in aviation stocks with a private report that the aviation reforms Finance Minister Nirmala Sitharaman listed reiterate steps announced before and will not immediately help airlines bleeding in the nationwide lockdown to contain the coronavirus.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9,136.85

9,063.77

9,196.17

BSE Sensex

31,097.73

30,813.38

31,339.18

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Vedanta

754.97

92.95

88.92

96.27

Tata Motors

385.94

84.35

82.98

85.53

State Bank of India

354.98

166.40

164.65

168.20

ICICI Bank

318.30

322.70

317.48

329.23

Reliance Industries

286.83

1,459.40

1,427.43

1,479.03

 

  • Tata Motors is planning to raise Rs 1000 crore by issuance of g Rated, Listed, Secured, Redeemable, Non-Convertible Debentures. 
  • TVS Motor Company has received approval from Board of Directors to raise Rs 500 crore Unsecured, Redeemable, Rated, Listed, Non-Convertible Debentures. 
  • Bharti Airtel is offering double data on its popular Rs 98 data add-on pack with the company now enabling users to browse up to 12GB of high speed data. 
  • Reliance Industries' telecom arm -- Reliance Jio Infocomm, has come up with a new work from home plan for users with high data requirement.
News Analysis