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NSE Intra-day chart (27 January 2020)
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Market Commentary 28 January 2020
Markets to get a pessimistic start amid global sell-off

 

Indian equity benchmarks witnessed a bloodbath on Monday's trading session by falling over a percent. After a weak start, markets remained under a grip of bears for the whole day, amid a private report indicating that the country's fiscal deficit for 2019-20 is expected to widen to 3.8% and the upcoming Budget may set a target of 3.5% for 2020-21. Some concerns also came with a report stating that India plans to increase import duties on more than 50 items including electronics, electrical goods, chemicals and handicrafts, targeting about $56 billion worth of imports from China and elsewhere. In the last leg of the trade, losses got extended on the streets, as Nobel laureate and economist Abhijit Banerjee said that the banking sector in the country is stressed and the government is in no position to bail it out. He said the demand slowdown in the automobile sector also shows that people are lacking confidence in the economy. Market participants paid no heed towards the Reserve bank of India (RBI) Governor Shaktikanta Das' statement that structural reforms and fiscal measures may have to be continued and further activated to provide a durable push to demand and boost growth. Finally, the BSE Sensex slipped 458.07 points or 1.10% to 41,155.12, while the CNX Nifty was down by 129.25 points or 1.06% to 12,119.00.

 

Extending the notable pullback seen over the course of the previous session, the US markets ended lower with cut of over one and half percent on Monday, amid growing worries about the economic implications of a rising death tolls and growing infections from a fast-moving virus in China. The coronavirus injected markets investors with fresh worries after China extended this week's Lunar New Year holiday and took more drastic measures to halt the spread of the illness. As of Monday, the death count rose to more than 80, and the number of those infected neared 3,000 confirmed cases. In the US, at least 110 people were identified as under investigation for the virus, according to the Centers for Disease Control and Prevention, while a handful of infections were reported in other countries, such as France and Japan. The continued spread of the coronavirus weighed on travel, tourism and hospitality stocks as well as companies with major exposure to China. On the economic data front, new home sales unexpectedly showed a modest decrease in the month of December, according to a report released by the Commerce Department. The report said new home sales fell by 0.4 percent to an annual rate of 694,000 in December from a downwardly revised 697,000 in November. Revised data also showed new home sales slumped by 1.1 percent in November compared to the previously reported 1.3 percent jump. The unexpected decrease was largely due to a steep drop in new home sales in the South, which plunged by 15.4 percent to a rate of 347,000. 

 

Magnifying losses to a fifth straight session, crude oil futures ended lower on Monday as the growing death toll and spread of China's deadly influenza over the weekend incited fresh fears that the illness could hurt global energy demand. The virus is fuelling fears of a cooling of oil demand, which would mean that the global oil market would be oversupplied to an even greater extent if no further measures are taken to reduce supply. As of Monday, the death count rose to 80 and the number of infected neared 3,000 confirmed cases. In the US, there are now five confirmed cases, with a handful of infections in other countries, such as France and Japan. Besides, oil prices fell despite Saudi Arabia saying it believes the crisis so far will have a very limited impact on consumption. Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman Al-Saud said the kingdom was closely monitoring developments in global oil markets resulting from gloomy expectations over the impact of the new coronavirus on the Chinese and global economy and oil market fundamentals. Crude oil futures for March fell $1.05 or 1.9 percent to settle at $53.14 a barrel on the New York Mercantile Exchange. March Brent dropped $1.37 or 2.3 percent to settle at $59.32 a barrel on London's Intercontinental Exchange.

 

Indian rupee continued to slip for the third consecutive session against the US dollar on Monday, following buying in the American currency by banks and importers. Traders remain worried with a private report indicating that the country's fiscal deficit for 2019-20 is expected to widen to 3.8% and the upcoming Budget may set a target of 3.5% for 2020-21. Traders also reacted negatively to private report that India's corporate and income tax collection for the current year is likely to fall for the first time in at least two decades, amid a sharp fall in economic growth and cut in corporate tax rates. The domestic currency was also weighed down by dollar's strengthen against some other currencies overseas along with sharp losses in the local equities. On the global front, euro fell on Monday as growing concerns over the potential economic damage from a fast-spreading coronavirus sapped demand for riskier assets. Finally, the rupee ended at 71.44, 10 paise weaker from its previous close of 71.33 on Friday.

 

The FIIs as per Monday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 4750.17 crore against gross selling of Rs 4154.75 crore, while in the debt segment, the gross purchase was of Rs 1458.44 crore with gross sales of Rs 651.15 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.99 crore against gross selling of Rs 4.84 crore.

 

The US markets ended sharply lower on Monday as investors grappled with fresh worries about the spread of a new virus in China that threatens global economic growth. Asian markets are trading mostly in red on Tuesday as China took more drastic steps to combat the coronavirus. Indian markets ended considerably lower on Monday, with cut of over a percent each, following Asian peers, amid decline in banking and metal stocks. Today, the start of session is likely to be negative following a global selloff as investors remain concerned over coronavirus spreading across the world. There will be some cautiousness as a SEBI-appointed panel proposed sweeping changes to strengthen the monitoring and enforcement of norms pertaining to related party transactions. However, some support may come later in the day as the government is planning to raise at least Rs 10,000 crore through the seventh tranche of CPSE ETF which will open for anchor investors on Thursday. Besides, Commerce and industry Minister Piyush Goyal has suggested the Brazilian side to reconstitute and activate India-Brazil Business Leaders Forum to boost economic ties between the two countries. Meanwhile, India pressed its largest LNG supplier Qatar to lower the price of gas under the existing long-term supply contracts, a request that Doha turned down saying sanctity of contracts is important for the credibility of both sides. Logistic stocks will be in focus with report that the government may consider announcement of national logistics policy to promote seamless movement of goods across the country in the forthcoming Budget. There will be some reaction in banking stocks with the Reserve Bank of India's (RBI) data showing that urban cooperative banks (UCBs) have reported nearly 1,000 cases of fraud worth more than Rs 220 crore in the last five fiscals. The central bank said a total of 181 fraud cases involving Rs 127.7 crore were noticed during 2018-19. There will be lots of earnings reaction, especially in banking sector, to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,119.00

12,078.47

12,188.07

BSE Sensex

41,155.12

41,012.98

41,406.77

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,342.42

42.40

41.68

43.28

ICICI Bank

381.49

537.25

530.83

544.33

Tata Motors

301.32

182.20

179.73

185.78

SBI

233.09

316.20

314.00

320.20

JSW Steel

171.52

262.80

258.77

266.37

 

  • Maruti Suzuki India has launched Ciaz S, sports variant of country's best-selling premium mid-size sedan Ciaz. 
  • Tata Motors is aiming to establish itself as the leader in the EV market in the country as it looks to roll out new products for both private and fleet segments. 
  • USFDA has concluded a cGMP inspection at Cipla's API manufacturing facility in Bommasandra, Bangalore from January 20 - 24, 2020. 
  • Vedanta is planning to offer Rated, Secured, Redeemable, Non-Cumulative, NCDs aggregating up to Rs 3,000 crore in one or more tranches.
News Analysis