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NSE Intra-day chart (19 June 2020)
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Market Commentary 22 June 2020
Benchmarks to make flat-to-negative start amid mixed Asian cues

 

Extending northward journey for second straight session, Indian equity benchmarks ended Friday's session with gains of over one and half percent each, propelled by stellar gains in index-heavyweight Reliance Industries amid positive sentiment in global markets and fresh foreign fund inflows. Key indices made positive start and managed to keep heads above water, as traders took some support with Prime Minister Narendra Modi's statement that economic indicators show that India is ready for a swift bounce back as business activity and demand are back to the level seen before the Covid-19 pandemic. Buying further crept in as United Nations Conference on Trade and Development (UNCTAD) said that India's economy could prove the most resilient in South Asia and its large market will continue to attract market-seeking investments to the country even as it expects a dramatic fall in global foreign direct investment (FDI). Domestic indices extended their upside in late afternoon session, taking support from report that opening of the coal sector to private players will generate jobs, reduce dependence on fuel import, stimulate the economy and catalyse the country's path towards a $5-trillion economy. Adding to the optimism, State Bank of India's (SBI) chairman Rajnish Kumar said that there is enough liquidity available in the system and also interest rates have moderated to a large extent. He further states that both the RBI and the government have taken measures to bring back the economy, derailed by the pandemic, back on track. Traders ignored Asian Development Bank (ADB) in a supplement to its Asian Development Outlook (ADO) has forecasted that the Indian economy is expected to contract by 4% during the current financial year, hit hard by the COVID-19 pandemic. It added that countries in Developing Asia will barely grow in 2020. However, it also said China is expected to record a positive growth of 1.8% in 2020, sharply down from 6.1% in 2019. Finally, the BSE Sensex gained 523.68 points or 1.53% to 34,731.73, while the CNX Nifty was up by 152.75 points or 1.51% to 10,244.40.

 

The US markets gave up early gains and ended mostly lower on Friday. Markets made firm start on optimism about economic recovery in the wake of recent strong data on employment and retail sales. But, reports showing a surge in coronavirus infections in several states in America and the World Health Organization's warning that the pandemic is accelerating and the world is in a new and dangerous phase unsettled the markets. The Trump administration has declared there will not be another shutdown, but Apple Inc. (AAPL) announced that it is temporarily shuttering stores again in US states where the novel coronavirus cases have been spiking in recent weeks. Texas and Arizona reported record spikes in new cases on Friday. Florida, California, South Carolina and North Carolina were among the other states to report a jump in new cases of virus infections. The market also reacted to Boston Federal Reserve President Eric Rosengren's remarks that the US economy may not see a fast recovery and that it would need more support from the Fed and Congress. He made these comments in a webcast to the Providence Chamber of Commerce. Rosengren said Unemployment remains very high, and because of the continued community spread of the disease and the acceleration of new cases in many states, I expect the economic rebound in the second half of the year to be less than was hoped for at the outset of the pandemic. On the economic data front, the US current-account deficit, a measure of the nation's debt to other countries, slipped 0.1% in the first quarter. The current-account deficit fell to $104.2 billion from a revised $104.3 billion in the 2019 fourth quarter. The small decline reflected a lower trade deficit in goods.

 

Crude oil futures settled higher for second straight session on Friday as Organization of the Petroleum Exporting Countries (OPEC) members and allies tightened the reins on output cuts and some signs of improvement in the global economy brightened the outlook for energy demand. OPEC and non-OPEC oil-producing nations promised full conformity with oil output cuts from July through September to balance the global oil market. the 23-member group said Attainment of 100 percent conformity from all participating countries is not only fair and equitable, but vital for the ongoing and timely rebalancing efforts and helping deliver a sustainable oil market stability. Meanwhile, a report from Baker Hughes said oil rig count in the US dropped by 13 to 266 this week, falling for a seventh successive week and hitting a record low as well. Crude oil futures for July jumped 91 cents or 2.3 percent to settle at $39.75 a barrel on the New York Mercantile Exchange. August Brent crude rose 68 cent or 1.6 percent to settle at $42.19 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended weaker against dollar on Friday, on emergence of demand for the greenback from importers. Investors' sentiment remained fragile as the Asian Development Bank (ADB) in a supplement to its Asian Development Outlook (ADO) has forecasted that the Indian economy is expected to contract by 4% during the current financial year, hit hard by the COVID-19 pandemic. However, downside remained capped as gains in domestic equity markets provided some support to the rupee. On the global front, Sterling rose slightly on Friday after hitting almost three-week lows as retail sales rebounded in May more strongly than hoped with the country gradually relaxing its coronavirus lockdown. Finally, the rupee ended at 76.20, 6 paise weaker from its previous close of 76.14 on Thursday.

 

The FIIs as per Friday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5105.72 crore against gross selling of Rs 4549.11 crore, while in the debt segment, the gross purchase was of Rs 1082.39 crore with gross sales of Rs 1765.27 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.61 crore against gross selling of Rs 0.64 crore.

 

The US markets closed mostly lower on Friday, after the World Health Organization signaled that the coronavirus pandemic remains a deadly threat. Asian markets are trading mixed on Monday as rising coronavirus cases in the United States raised more doubts about a quick economic rebound from the massive downturn triggered by the pandemic. Indian markets settled higher on Friday with notable gains amid positive global cues and hopes of a V-shaped recovery in earnings growth in the second half of fiscal year 2020-21. Today, the markets are likely to make flat-to-negative start of new week amid mixed cues from Asian peers. There will be some cautiousness with Worldometer report that India went past the 4 lakh-mark on June 21 with the biggest single-day spike of 15,915 new infections, while the death toll rose to 13,294. However, some respite may come later in the day with Chief Economic Advisor Krishnamurthy V Subramanian's statement that demand in the economy will increase when the uncertainty regarding health in the wake of COVID-19 outbreak ends. Some support may also come with the Reserve Bank of India's (RBI) data showing that India's forex reserves rose substantially by $5.942 billion to touch a life-time high of $507.644 billion in the week to June 12, helped by a significant jump in the foreign currency assets (FCA). Traders may react to the report that foreign portfolio investors (FPI) have infused a net Rs 17,985 crore into the Indian capital markets in June so far amid increasing liquidity and higher risk appetite. Meanwhile, Prime Minister Narendra Modi met with the ministers and top officials from infrastructure and commerce ministries, to discuss ways to boost local manufacturing and exports amid continuing tensions with China. There will be some buzz in the banking stocks with the latest data from the RBI showing that bank credit and deposits grew 6.24 per cent and 11.28 per cent to Rs 102.54 lakh crore and Rs 139.55 lakh crore, respectively, in the fortnight ended June 5. Aviation stocks will be in focus as Civil Aviation Minister Hardeep Singh Puri expects the domestic market to return to full capacity by the end of the year, but sees little chance of international travel reopening anytime soon with border restrictions in place. There will be some reaction in power stocks with report that intense heat wave during the third week of June has helped further narrowing of power demand slump to 9.76% from 10.5% in the previous week, showing commercial and industrial activities are yet to reach optimum levels.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,244.40

10,120.57

10,320.32

BSE Sensex

34,731.73

34,295.96

35,007.94

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

1,354.64

102.50

97.43

105.73

State Bank of India

768.98

184.50

181.02

186.47

Axis Bank

520.86

417.05

408.93

423.73

ICICI Bank

513.68

363.80

353.52

369.77

Reliance Industries

488.29

1,759.40

1,684.67

1,811.47

 

  • HCL Technologies has released Unica V12.1. 
  • Coal India has identified 15 mining projects that would be operated through mining operators cum developers under its new strategy to expand production. 
  • ICICI Bank has divested 18,000,000 equity shares of face value of Rs 10 each of ICICI Lombard General Insurance Company. 
  • Dr. Reddy's Laboratories has launched Abiraterone Acetate Tablets USP, 250 mg, a therapeutic equivalent generic version of Zytiga.
News Analysis