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NSE Intra-day chart (04 December 2020)
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Market Commentary 07 December 2020
Markets likely to get pessimistic start on Monday

 

Friday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges surpassing their crucial 45,000 (Sensex) and 13,250 (Nifty) levels as the Dalal Street cheered the RBI's MPC decision to keep policy rates unchanged. Markets started the day on optimistic note as traders took encouragement 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. Adding more optimism, Finance Minister Nirmala Sitharaman said 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. Markets extended rally in second half of the trade after the Monetary Policy Committee, led by Governor Shaktikanta Das, voted unanimously to hold the policy repo rate at 4.00 percent. The reverse repo rate was retained at 3.35 percent. The Marginal Standing Facility or MSF rate, and the Bank rate remained unchanged at 4.25 percent. Some support also came after the Finance Ministry in its latest Monthly Economic Review has said that the Indian economy is witnessing a V-shaped recovery as the GDP has recorded a quarter-on-quarter growth of 23 per cent in the July-September quarter of this fiscal. As per the report, this V-shaped recovery, evident at the half-way stage of 2020-21, reflects the resilience and robustness of the Indian economy. Finally, the BSE Sensex jumped 446.90 points or 1.00% to 45,079.55, while the CNX Nifty was up by 124.65 points or 0.95% to 13,258.55.

 

The US markets settled higher on Friday despite the release of a report from the Labor Department showing much weaker than expected job growth in the month of November. The Labor Department said non-farm payroll employment rose by 245,000 jobs in November after jumping by a downwardly revised 610,000 jobs in October. Street had expected employment to increase by 469,000 jobs compared to the addition of 638,000 jobs originally reported for the previous month. Despite the weaker than expected job growth, the unemployment rate dipped to 6.7 percent in November from 6.9 percent in October. The unemployment rate was expected to edge down to 6.8 percent. However, the bigger than expected drop in the unemployment rate came as a 400,000-person decline in the labor force far outpaced the 74,000-person drop in the household measure of employment. Continued optimism about coronavirus vaccines may be helping traders shrug off the disappointing jobs data, as the slowdown in job growth came amid the recent surge in new cases and subsequent restrictions. Besides, energy stocks continue turned some of the market's best performances on the day, benefiting from an increase by the price of crude oil.

 

Crude oil futures ended higher on Friday as OPEC and Russia cleared the hurdle of exiting the current oil output cuts in a coordinated way. OPEC and other oil producing countries agreed to increase output beginning next month at a much slower pace to overcome coronavirus-induced demand concerns. The oil producers have reached an agreement to pare current production cuts from January by 500,000 barrels per day and agreed to hold monthly meetings to assess market conditions and decide on further adjustments for the following month. Meanwhile, there are greater hopes for the oil demand recovery amid signs that U.S. may be closing in on new stimulus. Crude oil futures for January rose $0.62 or 1.4 percent to settle at $46.26 a barrel on the New York Mercantile Exchange. February Brent crude gained 53 cents to settle at $49.24 a barrel on London's Intercontinental Exchange.

 

Reversing previous session losses, Indian rupee ended significantly higher against dollar on Friday, owing to dollar sale by exporters and banks and positive domestic equities. Traders took encouragement 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. Adding optimism, Finance Ministry in its latest Monthly Economic Review has said that the Indian economy is witnessing a V-shaped recovery as the GDP has recorded a quarter-on-quarter growth of 23 per cent in the July-September quarter of this fiscal. Meanwhile, RBI has kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent. On the global front, euro was headed for its best week in a month on Friday and has blown past major resistance levels as investors piled into bets the US dollar has further to fall while the world begins to emerge from the COVID-19 pandemic. Finally, the rupee ended at 73.80, 13 paise stronger from its previous close of 73.93 on Thursday.

 

The FIIs as per Friday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 14379.51 crore against gross selling of Rs 10693.78 crore, while in the debt segment, the gross purchase was of Rs 3406.74 crore with gross sales of Rs 627.72 crore. Besides, in the hybrid segment, the gross buying was of Rs 19.77 crore against gross selling of Rs 16.57 crore.

 

The US markets ended higher on Friday on hopes of a much-needed US stimulus package before year-end just as coronavirus vaccines roll out, while oil prices hovered near their highest since March. Asian markets are trading mixed on Monday amid hopes of a much-needed US stimulus package before year-end just as coronavirus vaccines roll out. Indian markets ended higher on Friday after RBI upgraded its GDP target for the current fiscal year and kept interest rates steady in the face of stubbornly high inflation. Today, the start of new week is likely to be pessimistic tracking mixed Asian cues. Traders will be concerned with report that on Sunday, India reported 32,272 fresh Covid-19 cases. Its case tally now stands at 9,676,801. The country's death toll has mounted to 140,590. There will be some cautiousness with the Reserve Bank of India's (RBI) data showing that the country's foreign exchange reserves declined $469 million to $574.821 billion in the week ended November 27, after touching a lifetime high in previous week. Meanwhile, the government on Saturday proposed to hold another meeting on December 9 with representatives of protesting farmers, as their fifth round of talks ended in a deadlock with the farmers' group going on a maun vrat (vow of silence) seeking a clear 'yes or no' answer to their demand of repealing three farm laws. However, some respite may come later in the day with Niti Aayog vice chairman Rajiv Kumar's statement that India's economic growth is likely to reach pre-COVID-19 levels by the end of the 2021-22fiscal as the GDP contraction in this financial year is expected to be less than 8 per cent. Some support may also come with report that foreign direct investment (FDI) equity inflows into India crossed the $500 billion milestone during April 2000 to September 2020 period, firmly establishing the country's credentials as a safe and key investment destination in the world. Besides, overseas investors remained net buyers to the tune of Rs 17,818 crore in Indian markets in first four trading sessions of December amidst better than expected economic recovery around the world and positive sentiment on the back of various vaccine results. There will be some buzz in banking stocks with as bank credit grew at 5.82 percent to Rs 104.34 lakh crore, while deposits rose by 10.89 percent to Rs 143.71 lakh crore in the fortnight ended November 20. Power stocks will be in focus as power producers' total dues owed by distribution firms rose over 29 percent Y-o-Y to Rs 1,38,187 crore in October 2020, reflecting stress in the sector. There will be some reaction in coal industry stocks with a private report that India's coal import saw a drop of 18.6 percent to 116.81 million tonnes (MT) during April-October this fiscal as against the same period a year ago.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

13,258.55

13,180.91

13,308.11

BSE Sensex

45,079.55

44,780.88

45,263.25

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

State Bank of India

792.52

263.50

256.59

267.39

Tata Motors

479.96

184.15

181.30

187.90

Oil & Natural Gas Corporation

441.27

89.85

87.74

91.49

Hindalco Industries

419.79

252.70

245.15

258.10

ICICI Bank

395.47

502.05

488.70

509.70

  • Bajaj Finance has raised Rs 755 crore by issuing bonds on a private placement basis.
  • ICICI Bank has inaugurated its representative office at Thapathali, the prominent business district in Kathmandu, marking the foray of an Indian private sector bank in Nepal. 
  • Infosys together with HFS Research has unveiled a market study titled, Nowhere to Hide: Embracing the Most Seismic Technological and Business Change in our Lifetime. 
  • Kotak Mahindra Bank's division -- Kotak Wealth Management and Hurun India have launched second edition of Kotak Wealth Hurun - Leading Wealthy Women.
News Analysis