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NSE Intra-day chart (01 December 2020)
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Market Commentary 02 December 2020
Benchmarks likely to make cautious start amid mixed Asian cues

 

Tuesday turned out to be a fabulous day of trade for Indian equity benchmarks, where frontline gauges traded jubilantly throughout the day and garnered gains of over a percentage point each. Markets made a cautious start on report that output of eight core infrastructure sectors dropped 2.5 per cent in October, mainly due to decline in production of crude oil, natural gas, refinery products and steel. The production of eight core sectors had contracted 5.5 per cent in October 2019. But, soon after a cautious start, key gauges gained traction and started moving northward as signs of recovery in India's economic growth supported the market sentiments. India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on consumer demand bouncing back. Adding more optimism, data from the Department for Promotion of Industry and Internal Trade (DPIIT) showed that FDI inflow rose 15 per cent during the April-September period to $30 billion (Rs 2.2 trillion) as compared to inflows of $26 billion during the same period last fiscal, with India being an attractive destination for foreign funds despite the pandemic. Markets extended rally to end near intraday highs, as traders took encouragement with Fitch Solutions' statement that after a COVID-19 pandemic-led contraction in consumer spending in 2020, household spending will return to growth in 2021, expanding by as much as 6.6 percent. Meanwhile, India has reported a significant drop in the number of fresh Covid-19 cases, taking its tally to 9,463,254. The country's death toll stands at 137,659. Sentiments were positive, even after Indian manufacturing sector lost momentum in the month of November, amid slower increases in factory orders, exports, buying levels and output. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 56.3 in November as against 58.9 in October, although it well above the 50-level that separates growth from contraction. Traders paid no heed towards report that the Union government's fiscal deficit further widened to Rs 9.53 lakh crore, which is nearly 120 per cent of the annual budget estimate, at the end of October of the current financial year. The deficit widened mainly on account of poor revenue realisation. Finally, the BSE Sensex rose 505.72 points or 1.15% to 44,655.44, while the CNX Nifty was up by 140.10 points or 1.08% to 13,109.05.

 

The US markets ended higher on Tuesday with the Nasdaq and the S&P 500 reaching new record closing highs amid hopes Congress could make progress towards a new coronavirus aid package. Strength in the overseas markets carried over onto Wall Street following the release of upbeat Chinese manufacturing data. Further, continued optimism about a potential coronavirus vaccine also generated buying interest, with Pfizer and BioNTech applying to the European Medicines Agency for conditional marketing authorization of their vaccine. Meanwhile, traders largely shrugged off a report from the Institute for Supply Management showing a slowdown in the pace of growth in US manufacturing activity. The ISM said its manufacturing PMI dropped to 57.5 in November from 59.3 in October, with a reading above 50 indicating growth in the manufacturing sector. Street had expected the index to dip to 58.0. A report released by the Commerce Department showed construction spending in the US increased by more than expected in the month of October. The Commerce Department said construction spending jumped by 1.3 percent to an annual rate of $1.439 trillion in October after falling by 0.5 percent to a revised rate of $1.420 trillion in September. Street had expected construction spending to climb by 0.8 percent compared to the 0.3 percent uptick originally reported for the previous month.

 

Crude oil futures ended lower on Tuesday as the Organization of the Petroleum Exporting Countries and its allies delayed a decision on whether to extend existing output curbs until later this week. Meanwhile, the oil market fundamentals remain weak and point to a significant oversupply during the early point of the coming year, due to continued increase in coronavirus cases in several regions. Resumption of production in Libya from September is also contributing to fears of oversupply in the market. Crude oil futures for January dropped $0.79 or 1.7 percent to settle at $45.55 a barrel on the New York Mercantile Exchange. February Brent crude fell $0.48 or 1 percent to settle at $47.40 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended considerably stronger against dollar on Tuesday due to fresh selling of the American currency by banks and exporters. Signs of recovery in India's economic growth supported Rupee. India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on consumer demand bouncing back. Adding more optimism, data from the Department for Promotion of Industry and Internal Trade (DPIIT) showed that FDI inflow rose 15 per cent during the April-September period to $30 billion (Rs 2.2 trillion) as compared to inflows of $26 billion during the same period last fiscal, with India being an attractive destination for foreign funds despite the pandemic. Besides, firm domestic equity markets also supported the rupee. On the global front, euro was close to a three-month high as the US dollar on expectations of more monetary stimulus from the United States and a strengthening recovery elsewhere that pushed up riskier currencies. Finally, the rupee ended at 73.68, 37 paise stronger from its previous close of 74.05 on Friday.

 

The FIIs as per Tuesday's data were net buyer in equity segment and net seller in debt segment. In equity segment, the gross buying was of Rs 75716.82 crore against gross selling of Rs 66584.22 crore, while in the debt segment, the gross purchase was of Rs 644.63 crore with gross sales of Rs 1246.97 crore. Besides, in the hybrid segment, the gross buying was of Rs 61.08 crore against gross selling of Rs 65.43 crore.

 

The US markets ended higher on Tuesday as investors grow increasingly hopeful about a vaccine to combat rising Covid-19 cases. Asian markets are trading mixed on Wednesday after Wall Street indices closed at record highs as investors grow increasingly hopeful about a vaccine to combat the pandemic and an economic recovery. Indian markets ended a percent higher each on Tuesday led by gains in metal, IT and pharma sectors. Today, the markets are likely to make a cautious start tracking mixed cues from Asian peers. Traders may take note of a private report that the Reserve Bank of India monetary policy committee is expected to leave interest rates unchanged when it meets on Friday, after data showing the economy contracting less than expected and persistently high inflation. The RBI's monetary policy committee will today begin its bi-monthly meeting, the resolution of which would be announced on December 4. Though, traders may be taking encouragement with report that the Organization for Economic Co-operation and Development (OECD) has raised prospects of India's economy by pegging contraction at 9.9 per cent, against 10.2 per cent it projected in September. Some optimism may come as the gross Goods and Services Tax (GST) collection for November stood at Rs 1.04 lakh crore, 1.4 percent higher than the sum collected in the same month last year. Some support may come as the finance ministry said investors continue to trust the Indian growth story despite Covid-19, and rolled out statistics on foreign portfolio investment (FPI), foreign direct investment (FDI), and corporate bond markets to buttress its claims. Besides, on Tuesday, India reported a significant drop in the number of fresh Covid-19 cases. Its case tally now stands at 9,499,710. The country's death toll has mounted to 138,159. There will be some buzz in the insurance sector stocks as latest data by the General Insurance Council (GIC) showed that foreign direct investment (FDI) in the general insurance sector slipped marginally to Rs 509.07 crore in FY 2019-20 from the previous year. Meanwhile, Burger King India, the quick-service restaurant chain, is set to launch its initial public offer (IPO) for subscription on December 2. This would be the fourteenth IPO in the current year. The issue will close on December 4 and the shares are likely to list on December 14.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

13,109.05

13,005.10

13,170.70

BSE Sensex

44,655.44

44,272.09

44,884.78

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Gail (India)

856.84

110.70

105.20

114.10

Tata Motors

488.81

179.75

177.76

182.06

Oil & Natural Gas Corporation

429.23

81.55

78.40

83.35

State Bank of India

369.99

248.05

245.21

249.91

NTPC

353.31

93.75

92.74

95.49

 

  • TCS has launched a curated version of its popular Data and Analytics Target Operating Model consulting framework. 
  • Bharti Airtel's Africa arm has partnered with Nokia to modernise network in Nairobi with high-speed 4G, and deploy 5G-ready equipment. 
  • Divi's Laboratories is planning to commence construction of its unit-III facility at Kona Forest, Ontimamidi Village, Andhra Pradesh from the December 07, 2020. 
  • Maruti Suzuki India has posted total sales of 153,223 units in November 2020.
News Analysis