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NSE Intra-day chart (03 December 2020)
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Market Commentary 04 December 2020
Benchmarks likely to make positive start ahead of RBI's policy outcome

 

Indian equity benchmarks ended the Thursday's trade marginally in green, as traders remained on sidelines ahead of outcome of Reserve Bank of India's (RBI) December Policy Meet. Markets started the day on optimistic note as traders took encouragement with Niti Aayog Vice Chairman Rajiv Kumar's statement that the Indian economy is coming out of the pandemic-induced degrowth and GDP growth will enter the positive territory in the fourth quarter of this fiscal. Some support also came with ICRA Ratings' latest report where it said that the Indian corporate sector, which gradually returned to normalcy from the second quarter of the current fiscal, is likely to sustain improvement in the third quarter, aided by strong festive demand. Some support also came with Moody's Investors Service's statement that conditions will improve for Indian corporates next year as economic activity picks up steam post-lockdown and earnings grow on the back of widespread demand revival across sectors. It added that most companies' earnings will grow as demand starts to recover following a sharp slump, and financially strong companies will maintain good access to funding, but speculative-grade issuers will face challenges. Market participants started paring gains and continued booking profits till end of the day which led markets to end near neutral lines, as traders turned cautious after the growth of India's service sector slowed in the month of November, although it remained well above the 50-level that separates growth from contraction, with a further upturn in new work supporting business activity growth and the first rise in employment for nine months. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index fell to 53.7 in November from 54.1 in October. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - eased to 56.3 in November from 58.0 in October. Finally, the BSE Sensex slipped 14.61 points or 0.03% to 44,632.65, however the CNX Nifty was up by 20.15 points or 0.15% to 13,133.90.

 

The US Markets ended mostly higher on Thursday as report from the Labor Department showing a much bigger than expected decrease in first-time claims for US unemployment benefits in the week ended November 28th. The Labor Department said initial jobless claims dropped to 712,000, a decrease of 75,000 from the previous week's revised level of 787,000. Street had expected jobless claims to edge down to 775,000 from the 778,000 originally reported for the previous month. The report said the less volatile four-week moving average also slipped to 739,500, a decrease of 11,250 from the previous week's revised average of 750,750. Meanwhile, a slight pullback in the rate of growth in U.S. service sector activity continued in the month of November, according to a report released by the Institute for Supply Management (ISM). The ISM said its services PMI edged down to 55.9 in November after dipping to 56.6 in October, although a reading above 50 still indicates growth. Street had expected the index to slip to 56.0. However, upside remained capped as private report said that Pfizer expects to ship half of the coronavirus vaccines it originally planned for this year because of supply-chain problems. A company spokeswoman said that scaling up the raw material supply chain took longer than expected and noted the outcome of the clinical trial of the vaccine candidate was somewhat later than initially projected.

 

Crude oil futures ended higher on Thursday, extending their previous session's gains, after the Organization of the Petroleum Exporting Countries and their allies (OPEC+) announced their decision about output cuts. OPEC+ announced that they have reached an agreement to pare current production cuts of 7.7 million barrels per day to 7.2 million barrels per day beginning in January. Some support also came in as Britain approved Pfizer Inc.'s Covid-19 vaccine, clearing the way for mass inoculation. Meanwhile, the US FDA is holding its advisory committee next week to confirm a vaccine rollout plan, while the European Medicines Agency is likely to give emergency approval on December 29th. Crude oil futures for January rose $0.36 or 0.8 percent to settle at $45.64 a barrel on the New York Mercantile Exchange. February Brent crude gained $0.60 or 1.23 percent to settle at $48.85 a barrel on London's Intercontinental Exchange.

 

Continuing previous session's drubbing, Indian rupee ended significantly lower on account of sustained dollar demand from importers and banks. Sentiments remained fragile as the growth of India's service sector slowed in the month of November, although it remained well above the 50-level that separates growth from contraction, with a further upturn in new work supporting business activity growth and the first rise in employment for nine months. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index fell to 53.7 in November from 54.1 in October. Further, the Nikkei India Composite PMI Output Index - which measures both manufacturing and services - eased to 56.3 in November from 58.0 in October. On the global front, pound climbed to a one-year high near $1.35 on Thursday as a U.S. dollar selloff gathered momentum, but growing unease about a Brexit trade deal prompted investors to take protective action in the derivative markets. Finally, the rupee ended at 73.93, 12 paise weaker from its previous close of 73.81 on Wednesday.

 

The FIIs as per Thursday's data were net buyer in equity segment and net seller in debt segment. In equity segment, the gross buying was of Rs 9483.86 crore against gross selling of Rs 9320.13 crore, while in the debt segment, the gross purchase was of Rs 181.53 crore with gross sales of Rs 520.46 crore. Besides, in the hybrid segment, the gross buying was of Rs 211.66 crore against gross selling of Rs 10.53 crore.

 

The US markets ended mixed on Thursday after a report that Pfizer Inc had slashed the target for the rollout of its COVID-19 vaccine. Asian markets are trading mixed on Friday after a report said Pfizer expects to ship half the Covid-19 vaccine doses it originally planned for this year due to supply chain issues. Indian markets closed flat on Thursday led by a decline in IT stocks and heavyweight HDFC Bank after the RBI advised the lender to temporarily halt launches of Digital 2.0 programme. Today, the markets are likely to make positive start ahead of the Reserve Bank of India's bi-monthly monetary policy to be announced later in the day. The Monetary Policy Committee (MPC) of the Reserve Bank is expected to hold fire as persistent high inflation and a lower-than-expected contraction of the economy leave no headroom for a rate cut. Sentiments will get boost with the International Monetary Fund's statement that India's economy, severely affected by the coronavirus pandemic, is gradually recovering. It said 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 percent and held out hopes for further improvement on better consumer demand. Some support will come with Finance Minister Nirmala Sitharaman's statement that India's economy will return to growth in 2021-22 and higher spending in the budget due in February will lay the foundations for even stronger growth in the next four to five years. Meanwhile, the Finance Ministry has relaxed the expenditure caps for a number of ministries and departments, a move which should add power to the economy's wheels by way of extra government spending. Though, there may be some cautiousness as on Thursday, India reported 31,094 fresh Covid-19 cases. Its case tally now stands at 9,564,565. The country's death toll has mounted to 139,102. Aviation stocks will be in focus with Civil Aviation Minister Hardeep Singh Puri's statement that the cap on the number of domestic flights that Indian airlines are permitted to operate was increased from 70 per cent to 80 per cent of their pre-COVID levels. There will be some reaction in insurance industry stocks as the insurance regulator clarified that it has given permission to change health insurance premiums only by 5 percent. Telecom stocks will be in limelight after Trai announced the latest subscription figures. Bharti Airtel was the biggest gainer in terms of users in September with 3.8 million subscriber additions, Reliance Jio added 1.5 million users while Vodafone Idea continued losing subscribers.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

13,133.90

13,089.00

13,197.70

BSE Sensex

44,632.65

44,471.71

44,873.30

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

State Bank of India

792.66

256.30

249.86

260.86

Gail (India)

607.65

118.25

115.64

121.39

Oil & Natural Gas Corporation

536.19

88.70

86.14

90.14

NTPC

438.41

98.55

96.19

100.04

Indian Oil Corporation

393.18

89.90

88.30

90.80

 

  • Wipro has won multi-year contract from Verifone to drive agility across its cloud services offerings. 
  • Bharti Airtel's wholly owned subsidiary -- Nettle Infrastructure Investments has acquired an additional equity stake of around 4.94% in Bharti Infratel.    
  • L&T's real estate business has launched North Towers at its unique residential project - Seawoods Residences in Navi Mumbai. 
  • IOC has launched world-class premium grade Petrol (100 Octane) in the country.
News Analysis