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NSE Intra-day chart (31 August 2020)
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Market Commentary 01 September 2020
Benchmarks to make cautious start amid mixed global cues


Snapping their six-session winning run, Indian equity benchmarks ended Monday's session near day's low with massive losses of over two percent, amid reports of a fresh border flare-up between India and China. Indian markets opened trade on a strong note, as traders took support with report that the Ministry of Home Affairs (MHA) has issued new guidelines for opening up of more activities in areas outside the Containment Zones. In Unlock 4, which will come into effect from September 1, 2020, the process of phased re-opening of activities has been extended further. Under the new guidelines, states are not to impose any local lockdown (State/ District/ sub-division/City/ village level), outside the containment zones, without prior consultation with the central government. Some buoyancy also came with Public Enterprises Selection Board (PESB) chairman Rajiv Kumar's statement that central public sector enterprises, which have a combined net worth of close to Rs 12 lakh crore, can boost India's GDP by 2-3 percent by leveraging funds and stepping up capital expenditure. However, local indices wiped out all of their morning gains and slumped sharply in afternoon trade, as market participants remained on sidelines ahead of gross domestic production (GDP) data, scheduled to be released later in the day. Sentiments remain dampened with private report stating that India's fiscal deficit is expected to touch 7 percent of GDP in 2020-21 fiscal as against budget estimate of 3.5 per cent, with revenue collections being hit amid disruptions in economic activities due to lockdowns. Adding to the pessimism, apex exporters body FIEO has expressed concerns over freezing of bank accounts of some exporters by the Enforcement Directorate (ED) without giving any warning, hearing or reasons, and has sought Commerce Ministry's intervention in the matter. Finally, the BSE Sensex lost 839.02 points or 2.13% to 38,628.29, while the CNX Nifty was down by 260.10 points or 2.23% to 11,387.50.


The US markets ended mostly lower on Monday on worries about US-China tensions. Also, investors were quite reluctant to make significant moves due to a lack of positive triggers. Investors continued to weigh the likely impact of the coronavirus pandemic on the economy despite recent comments from Federal Reserve Chairman Jerome Powell that said interest rates will likely remain lower for a long time. Clarida said a low unemployment rate by itself, in the absence of evidence that price inflation is running or is likely to run persistently above mandate-consistent levels or pressing financial stability concerns, will not, under our new framework, be a sufficient trigger for policy action. Over the past five months, the Dow's advanced 29.7%, its biggest 5-month percent gain since July 2009, while the S&P 500 added 35.4%, its best 5-month run since October 1938. The Nasdaq outperformed, advancing 52.9%, booking its strongest 5 months since March 2000. The S&P 500 clinched its best August return since 1986 and the Dow its best return for that month since 1984, while the Nasdaq recorded its strongest August since 2000. Much of the strength has been attributed to hopes for vaccines and treatments for the COVID-19 pandemic that has debilitated economies across the globe. The S&P 500 and Nasdaq have continued to notch records as risk assets shrug off the economic damage wrought by the coronavirus.


Crude oil futures end lower on Monday amid a bit of uncertainty about outlook for energy demand due to continued rise in coronavirus cases. Further, still, the likelihood of a drop in crude imports by China due to the fairly huge stockpiles in the country prevented traders from creating any significant long positions in the contract. However, investors were also weighing the likely impact of OPEC-led production cuts on crude prices, and this presumably helped limit oil's downside. Data showing continued expansion in China's manufacturing activity, and a surge in Japanese industrial production helped as well. Crude oil futures for October declined 36 cents or 0.8 percent to settle at $42.61 a barrel on the New York Mercantile Exchange. November Brent crude dropped 53 cents or 1.2 percent to settle at $45.28 a barrel on London's Intercontinental Exchange.


Rupee ended substantially weaker against dollar on Monday on account of continued dollar demand from importers and banks. Sentiments remained fragile with private report stating that Chinese troops 'carried out provocative military movements in Eastern Ladakh to change the status quo' but they were blocked by Indian soldiers. Adding pessimism, anther private report stated that India's fiscal deficit is expected to touch 7 percent of GDP in 2020-21 fiscal as against budget estimate of 3.5 per cent, with revenue collections being hit amid disruptions in economic activities due to lockdowns. Heavy selling in domestic equities also aided the negative trend in the local unit. On the global front; dollar was set for a fourth straight month of losses on Monday after a U.S. Federal Reserve policy shift on inflation, while the euro was poised to post a fourth month of gains, taking both currencies to levels last seen in 2018. Finally, the rupee ended at 73.60, 21 paise weaker from its previous close of 73.39 on Friday.


The FIIs as per Monday's data were net buyers in equity, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 7146.93 crore against gross selling of Rs 6669.73 crore, while in the debt segment, the gross purchase was of Rs 402.05 crore with gross sales of Rs 2286.53 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.87 crore against gross selling of Rs 7.12 crore.


The US markets ended mostly in red on Monday as worries about US-China tensions and reports showing a surge in new coronavirus cases in several states across America weighed on sentiment. Asian markets are trading mixed on Tuesday amid new Federal Reserve comments that suggested rates will stay low for an extended period. Indian markets reversed gains and ended sharply lower on Monday after tensions between India and China border near Ladakh escalated. Today, the markets are likely to get a cautious start amid mixed global cues coupled with weak macro-economic data. Investors will be eyeing the Manufacturing PMI data to be out later in the day. The implementation of the new margin rules from today is also expected to impact the market trend. Traders will be concerned with report that India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. There will be some cautiousness with report that the output of eight core infrastructure industries tumbled by 9.6%, for the fifth consecutive month in July, due to the decline mostly in production of steel, refinery products and cement. Market participants may also react to the rising coronavirus cases in the country. India has recorded over 68,000 new cases of coronavirus in the past 24 hours, taking its total caseload to 3,687,939. Meanwhile, the Union Government's fiscal deficit overshot the budget target for the current financial year within four months (April-July), mainly on account of the impact of lockdown on revenue collections. Though, some support may come later in the day with report that the RBI will conduct a simultaneous purchase and sale of government securities under open market operation (OMO) for an aggregate amount of Rs 10,000 crore on September 03, 2020. The Reserve Bank of India (RBI) as part of its measures to foster orderly market conditions has also announced that it will conduct additional special open market operation, involving the simultaneous purchase and sale of government securities for an aggregate amount of Rs 20,000 crore in two tranches of Rs 10,000 crore each. There will be some buzz in the telecom stocks as Justice Arun Mishra-led Supreme Court bench will pronounce the much awaited Adjusted Gross Revenue dues' verdict relating to telecom companies later in the day. Metal stocks will be in focus after Miners' body FIMI urged the government to introduce a mechanism to monitor the price and sale of domestic steel, which has witnessed a steep rise in recent months. There will be some reaction in fertiliser industry related stocks as India Ratings and Research (Ind-Ra) in a report said India's fertiliser sales are likely to grow 10-15 percent in 2020-21, however, the momentum seen in first half of the fiscal is likely to moderate during the second half. The auto sector stocks will also be in action, reacting to their monthly sales numbers.


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



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Oil & Natural Gas Corporation






  • Reliance Industries' subsidiary -- RRVL is acquiring the Retail & Wholesale Business and the Logistics & Warehousing Business from the Future Group. 
  • Maruti Suzuki India's Arena sales network has completed three years. 
  • Coal India's board has approved creating an additional board level post in the PSU and its subsidiaries. 
  • GAIL (India) is eyeing expansion in petrochemicals, specialty chemicals and renewables to supplement growth in its core business of natural gas marketing and transportation.
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