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Market Commentary 01 October 2020
Markets to get positive start amid firm global cues


Indian equity benchmarks settled marginally higher in a volatile session on Wednesday led by gains in index heavyweights Tech Mahindra, Titan and Nestle. Markets made a cautious start and fluctuated between green and red in first half of the session, as traders got anxious with Nobel Laureate Abhijit Banerjee's statement that India is among the worst performing economies in the world and the government's economic stimulus was inadequate to tackle the problem. But, he said that the country will see a revival in growth in the July-September quarter of the current fiscal. He said the country's economic growth was slowing down even before the Covid-19 pandemic hit. The sentiments remained in lackluster mood as private report stated that the steady rise in caseloads and the spillover effects of the strict lockdown measures will continue to undermine economic growth in the country. It said even if the growth takes the form of a V-shape, the level of Gross Domestic Product (GDP) will matter. However, in the second half of the session, key gauges managed to trade in green terrain, as traders found support as the Reserve Bank of India (RBI) has extended by six months the additional flexibility provided to states to raise funds through market borrowing and overdraft, with an aim to help state governments tide over the financial problems triggered by the COVID-19 pandemic. Though, weak global market cues and rising Covid cases kept the investor sentiment subdued and gains in check. Meanwhile, the Securities and Exchange Board of India (Sebi) has extended the special dispensations given to companies wanting to go public. The regulator has said the validity of Sebi observations for initial public offerings (IPOs) expiring between October 1, 2020 and March 31, 2021 will be extended till March 31, 2021. Finally, the BSE Sensex rose 94.71 points or 0.25% to 38,067.93, while the CNX Nifty was up by 25.15 points or 0.22% to 11,247.55.


The US markets ended higher on Wednesday, but off the session's best levels, as doubts grew about Washington's ability to provide the US economy with another round of fiscal stimulus ahead of the November elections. However, Senate Majority Leader Mitch McConnell said Republicans and Democrats remain far apart on a deal. The markets benefited from the release of some upbeat US economic data, including a report from payroll processor ADP showing private sector employment surged up by more than expected in the month of September. ADP said private sector employment spiked by 749,000 jobs in September after jumping by an upwardly revised 481,000 jobs in August. Street had expected employment to increase by 650,000 jobs compared to the addition of 428,000 jobs originally reported for the previous month. The National Association of Realtors (NAR) released a report showing pending home sales in the US jumped to a record high in the month of August. NAR said its pending home sales index spiked by 8.8 percent to 132.8 in August after surging up by 5.9 percent to 122.1 in July. Street had expected pending home sales to increase by 3.2 percent. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.


Crude oil futures ended higher on Wednesday after US government data showed a third consecutive weekly decline in domestic crude supplies. The Energy Information Administration reported that US crude inventories fell for a third straight week, down by 2 million barrels for the week ended September 25. That compared with an average climb of 1.9 million barrels expected by by S&P Global Platts, while the American Petroleum Institute on Tuesday had reported a fall of 831,000 barrels. Crude oil futures for November surged 93 cents or 2.4 percent to settle at $40.22 a barrel on the New York Mercantile Exchange. December Brent crude rose 74 cents or 1.8 percent to settle at $42.30 a barrel on London's Intercontinental Exchange.


Indian rupee ended stronger against dollar on Wednesday due to fresh selling of the American currency by banks and exporters. Sentiments were positive despite Nobel Laureate Abhijit Banerjee's statement that India is among the worst performing economies in the world and the government's economic stimulus was inadequate to tackle the problem. He said the stimulus measures did not increase consumption spending of lower income people as the government was not willing to put money in the hands of the low income population. On the global front, dollar ticked up in Europe on Wednesday, recovering some losses after a two-day fall, as traders assessed a debate between President Donald Trump and his challenger, Joe Biden. Finally, the rupee ended at 73.76, 10 paise stronger from its previous close of 73.86 on Tuesday.


The FIIs as per Wednesday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 4656.60 crore against gross selling of Rs 5722.53 crore, while in the debt segment, the gross purchase was of Rs 834.74 crore with gross sales of Rs 943.60 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.49 crore against gross selling of Rs 18.08 crore.


The US markets closed solidly higher on Wednesday as government leaders continued talks for a new pandemic relief package and positive economic data helped the major indexes end the third quarter in positive territory. Asian markets are tracking mostly in green on Thursday following gains on Wall Street overnight. Indian markets ended Wednesday's volatile session flat as gains in FMCG, pharma and IT stocks were countered by selling metals and PSU Banks amid mixed global cues. Today, the start of session is likely to be optimistic tracking firm cues from global peers. Some support will come with the Reserve Bank of India's (RBI) statement that India's current account balance (CAB) recorded a surplus of $19.8 billion -- 3.9 percent of GDP -- in the June quarter of FY21, up from the surplus of $0.6 billion in the preceding quarter (Q4FY20), on the back of lower trade deficit. Also, the RBI's report stated that India's external debt stood at $554.5 billion at end-June, recording a decrease of $3.9 billion over its level at the end of March 2020. Market participants may take note of Commerce and Industry Minister Piyush Goyal's statement that the government is opening up the economy for greater participation of the private sector and has been working in different ways to remove entry barriers for new investments. Though, traders may be concerned with report that the contraction in core sector output again worsened in August. Output declined by 8.5 per cent, following July's 8 per cent fall as an acute demand slump and the continuing liquidity crisis affected most industries. There may be some cautiousness as the Union Government's fiscal deficit remained above the annual target for second month in row at the end of August, mainly on account of the impact of lockdown on revenue collections. Meanwhile, the Centre has extended the deadline for furnishing annual returns under the goods and services tax (GST) for FY19 by a month till October 31, 2020. Cinema and leisure related stocks are expected to trade actively today after the central government allowed reopening of cinema halls, theatres, and multiplexes with effect from October 15 with a maximum of 50 per cent capacity. Oil & gas sector stocks will be in focus with report that natural gas price in India touched the lowest rate on record after the government slashed the price by 25 per cent to $1.79, denting revenues of producers like ONGC. There will be some reaction in aviation stocks as the Directorate General of Civil Aviation (DGCA) extended the suspension of international commercial flights till October 31, 2020, in view of rising COVID-19 cases across the world. Auto stocks will be in limelight as automobile companies will release their monthly sales data today. Meanwhile, Chemcon Speciality Chemicals will debut at the bourses today after finalising issue price at the higher end at Rs 340 per share. Computer Age Management Services will also list its shares today, with the issue price fixed at Rs 1,230 per share.


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  • Britannia Industries has raised Rs 200 crore through Commercial Papers on September 29, 2020 with a maturity date of February 26, 2021. 
  • Titan Company's perfume brand -- SKINN has launched Escapade a refreshing new range of perfumes for men. 
  • Tata Steel and the Council of Scientific & Industrial Research have joined hands to work in the field of Carbon Capture, Utilisation & Storage. 
  • Bharti Airtel has launched Airtel Secure - a comprehensive suite of advanced cyber security solutions for business customers.
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