Snapping a two-day rising streak,
Indian equity benchmarks ended with losses of more than half percent each on
Thursday, as border tensions with China and a negative trend in global peers,
following US Fed's caution on economic recovery, dented investor appetite. The
benchmarks staged a gap down opening as the Organisation for Economic
Co-operation and Development (OECD) in its Interim Economic Outlook report
forecast a deeper contraction of 10.2% for India in the current fiscal,
surpassing its June estimate of -7.3% in the event of a second wave of
infections. Traders remain concerned with a report stated that total tax
collection of the Centre, including advance tax collection for the second quarter,
fell 22.5% to Rs 2,53,532.3 crore till September 15 of the current fiscal as
compared to the year-ago period. Key gauges continued to show a sluggish trend
in afternoon session, with private report stated that India's GDP is likely to
contract by 8.6 percent in FY21 as against its earlier prediction of 5.8
percent, citing factors including the modest government response to the crisis
for its estimate. Market participants overlooked Commerce and Industry Minister
Piyush Goyal's statement that the government is in the process of bringing out
a strategy paper on boosting industrial growth which will be a road map for all
businesses in the country. He said the government is in the process of
rationalising the existing central labour laws into four labour codes -- on
wages; industrial relations; occupational safety, health and working
conditions; and social security by simplifying, amalgamating and rationalising
the relevant provisions of the existing central labour laws. Finally, the BSE
Sensex fell 323.00 points or 0.82% to 38,979.85, while the CNX Nifty was down
by 88.45 points or 0.76% to 11,516.10.
The US markets ended lower on
Thursday amid worries about economic outlook. The weakness on markets came as
stocks extended the sell-off seen on Wednesday after the Federal Reserve
revealed plans to leave interest rates at near-zero levels for years to come.
The Fed's dovish monetary policy announcement was expected to help calm the
markets, although investors seem to be viewing the central bank's projections
as a sign the economic recovery will not be as swift as many were hoping. Fed
Chair Jerome Powell cautioned that the pace of the recovery is expected to slow
and called for fiscal stimulus from Congress. Lawmakers have remained at an
impasse over a new coronavirus stimulus bill for weeks, and the upcoming
elections could make reaching a compromise more difficult. Negative sentiment
was also generated in reaction to a report from the Labor Department showing
first-time claims for US unemployment benefits fell less than expected in the
week ended September 12th. The Labor Department said initial jobless claims
slipped to 860,000, a decrease of 33,000 from the previous week's revised level
of 893,000. Street had expected jobless claims to dip to 850,000 from the
884,000 originally reported for the previous week. The Commerce Department also
released a report showing new residential construction pulled back by much more
than expected in the month of August. The report said housing starts tumbled by
5.1 percent to an annual rate of 1.416 million in August after soaring by 17.9
percent to a revised rate of 1.492 million in July. Street had expected housing
starts to pullback by 1.2 percent to a rate of 1.478 million from the 1.496
million originally reported for the previous month.
Magnifying their previous
sessions' gains, crude oil futures ended higher on Thursday as the Organization
of the Petroleum Exporting Countries (OPEC) and its allies stressed the
importance of full compliance with output cuts during their monthly meeting.
The oil producers, collectively known as OPEC+, held a joint committee meeting
on Thursday to discuss their existing program of output cuts. The group had
previously pared record production cuts of 9.7 million barrels per day to 7.7
million barrels per day starting in August, but also said that countries that
failed to previously meet their quota limits would be compensating for their
overproduction. The Joint Ministerial Monitoring Committee said it will
recommend that the OPEC Conference approve an extension of the compensation
mechanism, which was set to end in September, until the end of December. Crude
oil futures for October rose 81 cents or 2 percent to settle at $40.97 a barrel
on the New York Mercantile Exchange. November Brent crude surged $1.08 or 2.6
percent to settle at $43.30 a barrel on London's Intercontinental Exchange.
Indian rupee depreciated
significantly against dollar on Thursday, on account of sustained dollar demand
from importers and banks. Traders were concerned as the US Federal Reserve
highlighted the uncertainty surrounding economic recovery. US Federal Reserve
hinted at the key policy interest rate staying close to zero at least through
2023 without unveiling any additional stimulus plans. Sentiments were also
under pressure with private report stating that India's GDP is likely to
contract by 8.6 percent in FY21 as against its earlier prediction of 5.8
percent, citing factors including the modest government response to the crisis
for its estimate. On the global front; pound's recent recovery against a weaker
dollar was interrupted on Thursday when the dollar strengthened following the
U.S. Federal Reserve meeting, while investors' attention turned to the Bank of
England's policy meeting. Finally, the rupee ended at 73.66, 14 paise weaker
from its previous close of 73.52 on Wednesday.
The FIIs as per Thursday's data
were net buyer in both equity and debt segment. In equity segment, the gross
buying was of Rs 5042.82 crore against gross selling of Rs 4547.42 crore, while
in the debt segment, the gross purchase was of Rs 1103.23 crore with gross
sales of Rs 890.41 crore. Besides, in the hybrid segment, the gross buying was
of Rs 129.51crore against gross selling of Rs 141.20 crore.
The US markets declined on
Thursday after data showed high levels of weekly jobless claims, while
technology-related stocks resumed their slide. Asian markets are trading mostly
higher on Friday as investors look for the next catalyst to reignite the rally.
Indian markets ended lower on Thursday, dragged down by banking stocks and
index heavyweights TCS and RIL, as China tensions remained in focus. Today, the
markets are likely to make cautious start following mixed global cues. There
will be some cautiousness with report that advance tax collections fell 25.5
per cent to Rs 1,59,057 crore in the second quarter of the fiscal, However,
there was improvement over the first quarter ended June, when advance tax
revenue had plunged 76 per cent to a tepid Rs 11,714 crore as the whole economy
was under a stringent lockdown. Rising coronavirus cases are likely to dampen
sentiments in the markets. India has recorded 96,730 Covid-19 cases in just 24
hours, taking its tally past the 5.2-million mark. With this, India is rapidly
nearing the US tally of 6.8 million. However, traders may get some
encouragement with report that the Reserve Bank of India (RBI) will purchase
government securities under open market operations (OMOs) for an aggregate
amount of Rs 10,000 crore on September 24, 2020. Some support may also come as
investment through participatory notes (P-notes) in the domestic capital market
surged to over Rs 74,000 crore till August-end, making it the highest level in
10 months. Meanwhile, the commerce ministry's investigation arm DGTR
(Directorate General of Trade Remedies) has initiated a probe into an alleged
circumvention of the anti-dumping duty imposed on the imports of axle for
trailers from China. Banking stocks will be in focus with domestic ratings
agency -- ICRA's report that divesting majority stake in state-run lenders by
the government will be credit negative for such public sector banks (PSBs).
Many of the entities where the government is mulling selling off majority stake
as per reports have a weak credit profile. There will be some reaction in
defence stocks as the government permitted foreign direct investment (FDI) of
up to 74 per cent under automatic route in the defence sector with a view to
attracting overseas investors. There will be some reaction in insurance sector
as regulator Irdai is mulling over a plan to allow the tenure extension of
COVID-19 specific insurance products as the vaccine for the disease is
seemingly away by some more time.
Support
and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,516.10
|
11,480.66
|
11,569.36
|
BSE Sensex
|
38,979.85
|
38,859.19
|
39,167.66
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata Motors
|
481.19
|
147.65
|
145.56
|
150.36
|
State Bank of India
|
412.26
|
195.45
|
194.30
|
197.30
|
Zee Entertainment
Enterprises
|
380.34
|
221.10
|
216.01
|
225.41
|
ITC
|
339.36
|
178.60
|
177.10
|
180.80
|
Wipro
|
268.12
|
311.70
|
307.04
|
316.54
|
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