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NSE Intra-day chart (02 July 2020)
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Market Commentary 03 July 2020
Markets to open in green amid positive global cues

 

Indian equity benchmarks ended Thursday's session in green terrain that marked a second straight day of gain for the markets, on widespread buying amid a broad up-move in global markets following encouraging Covid-19 vaccine trials. Sensex and Nifty closed above their crucial 35,800 and 10,550 levels, respectively. Key gauges traded on positive note since the beginning, as traders took encouragement with Finance minister Nirmala Sitharaman's statement that the government is committed to undertaking reforms to make the tax administration simple for businesses, particularly the micro, small and medium enterprises (MSMEs). Sentiments remained optimistic as the Confederation of All India Traders (CAIT) has suggested a host of measures such as technical audits and waiver of late fees, to broaden the Goods and Services Tax (GST) base and make the taxation system simple. Key indices gathered further ground in late afternoon trade, as the government approved a scheme under which the eligible non-bank lenders will be provided short-term liquidity through a special purpose vehicle (SPV) set up by the SBICAP securities, a subsidiary of the State Bank of India (SBI). Market participants also took a note of the Ministry of Finance's latest report that the gross Goods and Services Tax (GST) revenue collected in the month of June, 2020 is Rs 90,917 crore of which CGST is Rs 18,980 crore, SGST is Rs 23,970 crore, IGST is Rs 40,302 crore (including Rs 15,709 crore collected on import of goods) and Cess is Rs 7,665 crore (including Rs 607 crore collected on import of goods). However, markets pared some gains at the end of the session, as some anxiety remained among traders with Fitch Ratings' report stating that India's non-bank financial institutions (NBFIs) will continue to face elevated near-term risks even as economic activity picks up with the easing of the country's nationwide lockdown. Finally, the BSE Sensex gained 429.25 points or 1.21% to 35,843.70, while the CNX Nifty was up by 121.65 points or 1.17% to 10,551.70.

 

The US markets ended higher on Thursday, with Nasdaq ending at a record, following the release of a closely watched Labor Department report showing another record spike in employment in the month of June. The report said non-farm payroll employment skyrocketed by 4.8 million jobs in June after soaring by an upwardly revised 2.7 million jobs in May. Street had expected employment to surge up by about 3.0 million jobs compared to the spike of 2.5 million jobs originally reported for the previous month. The Labor Department also said the unemployment rate dropped to 11.1 percent in June from 13.3 percent in May. The unemployment rate had been expected to dip to 12.3 percent. A separate Labor Department report showing first-time claims for US unemployment benefits fell by much less than expected in the week ended June 27th may. The Labor Department said initial jobless claims dropped to 1.427 million, a decrease of 55,000 from the previous week's revised level of 1.482 million. Street had expected jobless claims to tumble to 1.355 million from the 1.480 million originally reported for the previous week. The report also showed an increase in continuing claims, a reading on the number of people receiving ongoing unemployment assistance, which climbed by 59,000 to 19.290 million in the week ended June 20. However, upside remain capped  as the US saw 52,000 new COVID-19 cases Wednesday, according to data compiled by Johns Hopkins University, a new one-day record in the US, implying that the battle against the spread of the virus is far from over, which will make a V-shaped, or rapid and sharp, economic recovery nearly impossible.

 

Crude oil futures ended higher for a second session on Thursday buoyed by better-than-expected US job growth in June. The US added 4.8 million jobs in June and the unemployment rate fell for the second straight month to 11.1%. Besides, recent data from the Energy Information Administration that showed a sharp decline in crude inventories in the US last week also continued to support oil prices. Energy markets have been keying in on increases in cases of COVID-19, however, with the US hitting a single-day record of infections of more than 52,000, injecting some concern into crude markets about the impact of protocols to limit the spread on the economy and oil uptake. Crude oil futures for August gained 83 cents or 2.1 percent to settle at $40.65 a barrel on the New York Mercantile Exchange. September Brent crude rose $1.11 or 2.6 percent to settle at $43.14 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended substantially stronger on Thursday on fresh selling of American currency by banks and exporters. Besides, healthy growth in the domestic equity markets and dollar weakness against other currencies overseas added to the rupee gains. Sentiments got boost with the signs of progress in developing a COVID-19 vaccine which bolstered hopes of a post-pandemic economic recovery. Meanwhile, Ministry of Finance in its latest report has said that the gross GST revenue collected in the month of June, 2020 is Rs 90,917 crore of which CGST is Rs 18,980 crore, SGST is Rs 23,970 crore, IGST is Rs 40,302 crore (including Rs 15,709 crore collected on import of goods) and Cess is Rs 7,665 crore (including Rs 607 crore collected on import of goods). On the global front, pound continued to be driven up by the weaker U.S. dollar on Thursday and stayed neutral versus the euro as investors assessed the probability of Britain signing a trade deal with the European Union by the end of this year. Finally, the rupee ended at 75.04, 56 paise stronger from its previous close of 75.60 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 3669.98 crore against gross selling of Rs 5355.14 crore, while in the debt segment, the gross purchase was of Rs 1705.52 crore with gross sales of Rs 1343.01 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.36 crore against gross selling of Rs 4.74 crore.

 

The US markets settled in green on Thursday following the release of a closely watched Labor Department report showing another record spike in employment in the month of June. Asian markets are trading higher on Friday tracking overnight gains on Wall Street. Indian market ended higher with gains of over a percent each on Thursday with information technology companies and automakers pacing the gainers. Today, the start of the session is likely to be in green following positive global cues and ahead of economic data. Market participants will be eyeing the Services PMI data to be released later in the day. Some support will come with the Reserve Bank of India's (RBI) report that bank credit and deposits grew 6.18 percent and 11 percent to Rs 102.45 lakh crore and Rs 138.67 lakh crore, respectively, in the fortnight ended June 19. Also, traders may take note of Union minister Nitin Gadkari's statement that India needs foreign direct investments worth Rs 50 to 60 lakh crore and the money can be tapped mainly through infrastructure projects as well as MSME sector to accelerate the wheels of coronavirus-hit economy. Besides, Prime Minister Narendra Modi and Russian President Vladimir Putin discussed the coronavirus crisis and resolved to strengthen the Indo-Russia ties for jointly addressing the challenges of the post-Covid world. However, there may be some cautiousness as with nearly 22,000 cases, India has registered its biggest single-day jump in the number of coronavirus cases. The tally now stands at 627,168 and 18,225 people have died from the disease. Traders may be concerned as Care Ratings revised India's GDP growth forecast for the current financial year to (-) 6.4 percent as economic activity continues to be under restriction, due to the COVID-19 induced lockdown. The rating agency, in May, had projected a decline in GDP growth of 1.5-1.6 percent in FY21. Auto stocks will be in focus with a private report that automobile sales are likely to see a sequential improvement over the next two months even as the year-on-year decline is expected to continue up to December quarter due to disruptions related to the coronavirus pandemic. There will be some reaction in micro, small and medium enterprises (MSMEs) stocks as the RBI asked banks, financial institutions and NBFCs to reclassify MSMEs on the basis of the new criteria.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,551.70

10,492.10

10,604.75

BSE Sensex

35,843.70

35,621.07

36,040.63

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

State Bank of India

521.28

185.45

183.63

187.63

ICICI Bank

509.65

362.85

359.17

368.72

Axis Bank

503.63

423.20

415.83

436.03

Tata Motors

480.86

101.55

100.32

102.87

ITC

393.22

205.85

203.35

207.55

 

  • Maruti Suzuki India has launched its Vehicle Lease Subscription Services for individual customers - Maruti Suzuki Subscribe. 
  • ICICI Bank has launched a facility that enables retail customers to get loan of up to Rs 1 crore instantaneously by pledging their holdings in both debt and equity schemes of mutual funds. 
  • Axis Bank has received an approval for a proposal relating to raising of funds up to Rs 15,000 crore to beef up capital buffers. 
  • ONGC has reported consolidated net loss attributable to owners of Rs 6189.44 crore for Q4FY20 as against net profit of Rs 4751.36 crore for Q4FY19.
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