Daily Newsletter
NSE Intra-day chart (06 May 2020)
Top Gainers
Company NameClose% Change
Top Losers
Company NameClose% Change
World Indices
IndicesLast Trade% Change
Indices
IndicesLast Trade% Change
FII Activity(Rs. Cr)
DateMarketGross PurchaseGross SalesNet Change
Equity
Debt
Equity
Debt
Equity
Debt
 
Market Commentary 07 May 2020
Benchmarks to make negative start amid weak global cues

 

In a volatile session, Indian equity benchmarks traded with a positive bias for most part of the day and ended with gains of over half percent, thereby snapping out of a two-day losing streak, aided by gains in Finance, Telecom and financial stocks. Markets started session on a pessimistic note, as the country remained in an extended lockdown, with few exceptions, to curb the spread of the coronavirus (COVID-19) pandemic. Traders also remain concerned as the Centre for Monitoring Indian Economy (CMIE) said the Covid-19 crisis has led to a spike in the country's unemployment rate to 27.11% for the week ended May 3, up from the under 7% level before the start of the pandemic in mid-March. Investors also took a note of Global ratings agency S&P's report that in order to fight the COVID-19 pandemic,  additional financial stimulus is necessary in India despite the country's weak fiscal position. It mentioned that the stimulus is necessary to support the vulnerable segments of the society and also to prevent additional structural damage to the economy amid the lockdown which has suddenly stopped the business activity. But, markets recovered soon from their initial losses and entered into green terrain, taking support from the Minister for MSME and Road Transport and Highways Nitin Gadkari's statement that the government is looking to introduce a policy on import substitution in order to replace foreign imports and boost domestic manufacturing in the wake of the current economic scenario due to COVID-19 pandemic. The market breadth remained optimistic with India's Sherpa for G20 and G7 groups Suresh Prabhu stating that the government is working on an aggressive strategy to attract FDI into India in the aftermath of COVID-19 pandemic. However, key indices pared most of their gains in dying hour of trade, as cautiousness remained among traders with data showing that India's service sector activity plummeted to a historic low in April, as strict restrictions on the movement of citizens and business shutdowns led the sector to a complete standstill. The IHS Markit India Services Business Activity Index stood at 5.4 in April, an extreme decline from 49.3 in March, and indicative of the most severe contraction in services output since records began in December 2005. Finally, the BSE Sensex gained 232.24 points or 0.74% to 31,685.75, while the CNX Nifty was up by 65.30 points or 0.71% to 9,270.90.

 

The US markets ended mostly lower on Wednesday as investors pored over data showing a collapse in private-sector employment in April. Private sector employment nosedived in the month of April, according to a report released by payroll processor ADP. The report said private sector employment plunged by 20.236 million jobs in April. Street had expected employment to tumble by 20.050 million jobs compared to the loss of 27,000 jobs originally reported for the previous month. ADP noted the report utilizes data through the 12th of the month, the same as the Labor Department's monthly jobs survey, and does not reflect the full impact of COVID-19 on the overall employment situation. The nosedive in private sector employment reflected job losses throughout the economy, with employment in the service-providing sector plummeting by more than 16 million jobs and employment in the goods-producing sector plunging more than 4 million jobs. Besides, investors parsed corporate quarterly updates from some of the nation's largest companies, with Walt Disney Company's profit diving more than 90% in the second quarter due to the hit from the pandemic on the entertainment giant. A decrease by the price of gold also contributed to considerable weakness among gold stocks, with the NYSE Arca Gold Bugs Index plummeting by 3.5 percent. Meanwhile, the coronavirus has infected 3.6 million people world-wide, and a third of that figure is in the US alone, according to data supplied by Johns Hopkins University. More than 250,000 lives have been lost globally.

 

Crude oil futures ended lower on Wednesday pressured by concerns over tightening oil-storage capacity even though weekly crude inventories rose less than expected and domestic production declined. According to the data released by the Energy Information Administration (EIA), crude inventories in the US increased by 4.6 million barrels in the week ended May 1, much less than an expected increase of 8.7 million barrels. The EIA report also said that crude oil output dropped to a 15-month low of 11.9 million barrels per day last week. Meanwhile, distillate stockpiles rose sharply by 9.5 million barrels, much higher than an expected increase. The American Petroleum Institute (API) report showed on Tuesday that US crude inventories rose by 8.4 million barrels last week, as the demand destruction continues and storage space nears its upper limits. Crude oil futures for June dropped 57 cents or 2.3 percent to settle at $23.99 a barrel on the New York Mercantile Exchange. July Brent crude fell $1.25 or 4 percent to settle at $29.72 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally lower against dollar on Wednesday, due to fresh demand for the American currency from banks and importers. Traders remain concerned with India's service sector activity plummeted to a historic low in April, as strict restrictions on the movement of citizens and business shutdowns led the sector to a complete standstill. The IHS Markit India Services Business Activity Index stood at 5.4 in April, an extreme decline from 49.3 in March, and indicative of the most severe contraction in services output since records began in December 2005. Cautiousness also crept in with the Centre for Monitoring Indian Economy (CMIE) stating that the Covid-19 crisis has led to a spike in the country's unemployment rate to 27.11% for the week ended May 3, up from the under 7% level before the start of the pandemic in mid-March. On the global front, yen scaled a three-year high against the euro and a seven-week peak on the dollar on Wednesday, after a court decision challenging German participation in Europe's stimulus program and worries about a bumpy global recovery spooked investors. Finally, the rupee ended at 75.72, 9 paise weaker from its previous close of 75.63 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4813.92 crore against gross selling of Rs 5137.78 crore, while in the debt segment, the gross purchase was of Rs 936.35 crore with gross sales of Rs 994.56 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.52 crore against gross selling of Rs 3.50 crore.

 

The US markets ended mostly lower on Wednesday amid report that private sector employment plunged by 20.236 million jobs in April after slumping by a revised 149,000 jobs in May. Asian markets are trading mostly in red on Thursday as investors await the release of a private survey of China's services activity in April. Indian markets snapped two-day losing streak and ended higher on Wednesday after the country eased some lockdown restrictions. Today, the markets are likely to make pessimistic start amid weak global cues. Rising coronavirus cases may also impact the market sentiments. The data from the Union Health Ministry said the death toll due to COVID-19 neared 1700 on May 06 with the number of infected cases nearing 50,000 in the country. As per the latest update, the number of active COVID-19 cases in India stands at 33,514 while 14,182 people have been cured and discharged, and one patient migrated. There will be some cautiousness with report that Chief economic adviser KV Subramanian said India's gross domestic product (GDP) will contract in the first quarter, but is likely to grow 2% for the full financial year. Though, some respite may come later in the day as Niti Aayog CEO Amitabh Kant said that the government is working on a package of structural reforms across sunrise sectors to convert India into a global manufacturing and exporting hub. Also, some support may come as markets regulator Sebi gave certain relaxations to companies from compliance with procedural norms pertaining to rights issues opening up to July 31 amid the coronavirus lockdown. Meanwhile, the government has extended the last date for filing annual GST return for financial year 2018-19 by three months till September 2020. Infrastructure stocks will be in focus with CRISIL Research's statement that the 57-day nationwide lockdown due to COVID-19 will result in a sharp 13 per cent fall in toll collections and remittances. There will be some reaction in oil marketing companies (OMCs) stocks with report that the decision by the government to raise duties on petrol and diesel and not allowing OMCs to increase retail prices might squeeze their marketing margins by about 64%. Also, sugar stocks will be in limelight with CRISIL Ratings' statement that the operating profitability of domestic sugar mills is expected to decline by 150-300 basis points (bps) to 7.5-9.5 percent due to reduction in industrial usage of sugar, lower demand for ethanol, and fall in exports following the ongoing crisis of COVID-19 pandemic. There will be lots of earnings reaction to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9,270.90

9,142.63

9,373.03

BSE Sensex

31,685.75

31,239.39

32,051.48

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

State Bank of India

731.57

171.10

167.33

174.08

Axis Bank

675.12

388.85

373.12

399.52

ITC

655.87

163.90

159.13

170.03

Tata Motors

537.39

83.20

81.05

84.65

ICICI Bank

499.53

341.40

329.25

349.55

 

  • Bharti Airtel has strengthened its partnership with Zee5. 
  • Dr. Reddy's Laboratories and its subsidiaries have launched Desmopressin Acetate Injection USP, 4 mcg/mL Single-dose Ampules. 
  • L&T has raised Rs 1450 crore through Rated Listed Unsecured Redeemable NCD's and allotted 14,500 7.25% NCDs of Rs 10 lakh each, which will mature on May 6, 2024. 
  • Coal India's coal supply to the power sector registered a decline of 8 per cent to 42.30 million tonne in March 2020 in the wake of slump in the fuel demand due to lockdown.
News Analysis