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NSE Intra-day chart (05 March 2020)
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Market Commentary 06 March 2020
Benchmarks to make gap-down opening amid sell-off in global markets

 

Indian equity bourses off day's high on Thursday and settled the session marginally higher. After a firm start, indices traded in green, aided with Reserve Bank of India (RBI) governor's statement that he's ready to act to shield the economy from the coronavirus and reiterated there's room to cut interest rates if needed. He added that for India, options include a rate cut and supporting the market through liquidity measures. Gains extended in noon deals, after Finance Minister Nirmala Sitharaman said that the government is working intensively to ensure meaningful intervention, if needed, to deal with the impact of unfolding coronavirus crisis on the country. But, in the last leg of the trading session, key benchmarks pared most of their gains, as domestic sentiments got hit after, United Nations Conference on Trade and Development (UNCTAD) in its latest report said that the trade impact of the coronavirus epidemic for India is estimated to be about 348 million dollars and the country figures among the top 15 economies most affected as slowdown of manufacturing in China disrupts world trade. Adding more worries among traders, IMF chief Kristalina Georgieva said that the new coronavirus epidemic poses a serious threat and will slow growth in the world economy to below the 2.9 per cent posted last year. Finally, the BSE Sensex gained 61.13 points or 0.16% to 38,470.61, while the CNX Nifty was up by 18.00 points or 0.16% to 11269.00.

 

The US markets ended lower on Thursday, erasing most of the steep gains in the previous session, on worries over the global spread of COVID-19 and its effect on the economy and supply chains continued to hang over the market. Investors continue to monitor developments regarding the coronavirus outbreak that has now spread worldwide, as confirmed cases reach more than 95,000 globally. Coronavirus infections in South Korea have jumped to more than 6,000, with the Korea Centers for Disease and Control and Prevention revealing that three more people died from the virus, bringing the total to 35. Switzerland has also reported its first death from the virus, while the number of cases in Germany rose by 87 to 349. California declared a state of emergency after a coronavirus-related death in the state, where there are at least 53 confirmed cases. On the economic data front, the Labor Department released a report showing a modest decrease in first-time claims for US unemployment benefits in the week ended February 29. The report said initial jobless claims edged down to 216,000, a decrease of 3,000 from the previous week's unrevised level of 219,000. Meanwhile, a separate report from the Commerce Department showed new orders for US manufactured goods pulled back by much more than expected in the month of January. The Commerce Department said factory orders slid by 0.5 percent in January after surging up by 1.9 percent in December. 

 

Crude oil futures ended lower on Thursday, with the Brent crude posting its lowest finish since 2017, on reports the Organization of the Petroleum Exporting Countries (OPEC) has recommended an extension of current output cuts and reduce output by another 1.5 million barrels a day for the second quarter. The OPEC and its allies are scheduled to meet on Friday and the final decision on output reduction will be out after their meeting. Besides, worries about the outlook for energy demand due to the impact of the coronavirus outbreak on the global economy weighed on the commodity. The coronavirus has infected 95,000 people in more than 80 countries and caused over 3,200 deaths. Crude oil futures for April dropped 88 cents or about 1.9 percent to settle at $45.90 a barrel on the New York Mercantile Exchange. May Brent crude fell $1.14 or 2.2 percent to settle at $49.99 a barrel on London's Intercontinental Exchange.

 

Indian rupee erased all of its intraday losses and appreciated marginally against US dollar on Thursday, on account of the selling in American currency by banks and exporters. Market participants took some support with Reserve Bank of India (RBI) governor's statement that he's ready to act to shield the economy from the coronavirus and reiterated there's room to cut interest rates if needed. He added that for India, options include a rate cut and supporting the market through liquidity measures. Dollar losing sheen against some other currencies overseas also supported the forex sentiment. However, gains remain capped as some pessimism came with IMF chief Kristalina Georgieva stating that the new coronavirus epidemic poses a serious threat and will slow growth in the world economy to below the 2.9 per cent posted last year. On the global front, U.S. dollar fell on Thursday amid expectations of the Federal Reserve will cut interest rates further, after slashing them by 50 basis points this week in an emergency move to shield the economy from the effects of coronavirus. The last traded price of rupee was 73.32, 7 paise stronger from its previous close of 73.39 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 8167.25 crore against gross selling of Rs 8956.68 crore, while in the debt segment, the gross purchase was of Rs 2746.60 crore with gross sales of Rs 1292.05 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.25 crore against gross selling of Rs 4.86 crore.

 

The US markets ended sharply lower on Thursday as fears grew over the spread of the coronavirus in the US. Asian markets are trading deeply in red on Friday following another Wall Street rout as disruptions to global business from the coronavirus beyond China worsened, stoking fears of a prolonged world economic slowdown. Indian markets erased most of their gains and ended flat on Thursday as fears that coronavirus could disrupt global economic growth haunted investors. Today, the benchmarks are likely to make gap-down opening tracking sell-off in the global markets on growth concerns amid coronavirus outbreak. The flu-like virus has now spread to nearly 80 countries, infecting more than 95,000 people. In India, the number of confirmed cases stands at 30. There will be some cautiousness with S&P Global Ratings' report that a fast spreading coronavirus outbreak could knock $211 billion off the combined economies of the Asia-Pacific, with Japan, Hong Kong, Singapore and Australia among the most exposed. S&P did not cut growth forecasts for emerging markets of Indonesia, Malaysia, the Philippines and India, citing the fact that reported infections in those countries were still low. Though, some support may come with a private report that the 50bps of Reserve Bank of India (RBI) rate cuts in 2020 after the FOMC cut 50bps. Besides, Governor Das has said that we are ready for a response should the situation warrant. Traders may take note of another private report that despite rising geopolitical tensions, slow growth forecasts and uncertainty remaining the norm in 2019, 51% of the Ultra-wealthy Indians experienced an increase in their fortune. Meanwhile, the Securities and Exchange Board of India (SEBI) has proposed to overhaul the e-voting process, which shareholders use to approve resolutions floated by listed companies. Steel stocks will be in focus with ICRA's statement that after witnessing uptrend, domestic steel prices are expected to come under pressure in near-term due to the outbreak of deadly coronavirus. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,269.00

11,212.57

11,357.47

BSE Sensex

38,470.61

38,275.59

38,776.71

                                                 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

7,847.03

36.80

30.58

40.43

State Bank of India

1,492.46

288.50

272.87

301.27

Tata Motors

877.96

125.75

123.62

128.52

Vedanta

263.57

117.10

114.67

120.87

ITC

200.26

188.05

186.00

190.65

 

  • Reliance Industries' subsidiary -- Reliance Retail Ventures has acquired 7,86,191 equity shares representing 100% of the equity share capital of SKDS for a consideration of Rs 152.5 crore. 
  • TCS has successfully implemented the TCS HOBS Product Portfolio Management solution for Airtel, accelerating its digital transformation journey. 
  • IndusInd Bank is planning for the borrowing and raising of funds in Indian and / or Foreign Currency by issuance of debt securities in the nature of Additional Tier 1 Capital and / or Tier 2 Capital of the Bank. 
  • The government has asked Bharti Airtel, Vodafone Idea and other telecom companies to pay remaining AGR dues as per the Supreme Court order.
News Analysis