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NSE Intra-day chart (07 August 2020)
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Market Commentary 10 August 2020
Markets to get flat-to-positive start on Monday


In a highly volatile session, Indian equity benchmarks reversed all of their initial losses to end flat with a positive bias on Friday, with frontline gauges managing to stay above their crucial 38,000 (Sensex) and 11,200 (Nifty) levels. Domestic share markets opened in negative territory and traded choppy for most part of the day, as muted cues from global markets and spiking COVID-19 cases in the country kept investors on the edge. The sentiments remained in lackluster mood with a private report stated that business optimism for the July-September quarter slumped to a record low due to sharp rise in COVID-19 cases, the extension of lockdown in containment zones and staggered easing of restrictions. Some cautiousness also came as the Reserve Bank of India sounded a note of caution saying that protracted spread of the COVID-19 pandemic poses downside risk to the domestic economy which is expected to remain in the negative zone in the current fiscal (FY21). However, markets managed to pared all of their losses in late hour of trade, as some optimism remained among traders in with Union Minister Jitendra Singh's statement that India will be an important pillar of the post-coronavirus global economic recovery and that the road map for winning the battle against the pandemic lies in countries restarting the economy and strengthening cooperative federalism. Traders also took some support with a private report that the Centre is looking to expand the scope of its Production-Linked Incentive (PLI) scheme to a few more sectors. The Finance Ministry, NITI Aayog and line ministries are reportedly discussing the PLI scheme for sectors such as chemicals, fertilisers, solar equipment including solar cells, power equipment sector, electric vehicle (EV) components (batteries, auto parts). Finally, the BSE Sensex gained 15.12 points or 0.04% to 38,040.57, while the CNX Nifty was up by 13.90 points or 0.12% to 11,214.05.


The US markets ended mostly higher on Friday after trading in the red for most part of the day's session. Markets managed to take out some gains despite Washington's failure to produce a last-minute coronavirus aid package before Congress takes a summer recess, leaving America's economic recovery hanging in the balance. Traders were reacting to reports saying spikes in virus cases in several parts across the world. Growing uncertainty about a new coronavirus relief plan following the failure of the policymakers to arrive at an agreement rendered the mood cautious on Wall Street. Tensions between the US and China have escalated following the Trump administration unveiling a ban on US transactions with ByteDance's TikTok and Tencent-owned WeChat. Investors remain hopeful that America's economy eventually will receive another shot in the arm in the form of government spending, they also worry that last month's job gains, reported by the Labor Department on Friday, might cause Congress to drag its feet. The Labor Department's report said employment jumped by 1.8 million jobs in July after surging up by 4.8 million jobs in the previous month. Street had expected employment to increase by 1.6 million jobs. The bigger than expected spike in employment came amid a sharp increase in employment in the retail sector, which added 258,300 jobs. The unemployment rate dropped to 10.2 percent in July from 11.1 percent in June. The unemployment rate was expected to dip to 10.5 percent.


Crude oil futures settled lower for second straight session on Friday with notable losses amid concerns about outlook for energy demand following reports showing spikes in coronavirus cases in several parts across the world. According to reports, there are signs of a second wave of coronavirus infections emerging in Europe after data showed an uptick in cases in some countries, including Spain, Belgium and Luxembourg.  Also, reports that talks between White House officials and Democratic leaders over a new coronavirus relief bill fell apart as the parties remained divided on key issues, including the quantum of money to be spent. Meanwhile, a report from Baker Hughes said the number of U.S. oil rigs fell by 4 this week to 176. Crude oil futures for September fell 73 cents or 1.7 percent to settle at $41.22 a barrel on the New York Mercantile Exchange. October Brent crude declined 69 cents or 1.5 percent to settle at $44.40 a barrel on London's Intercontinental Exchange.


Indian rupee ended marginally higher against dollar on Friday due to fresh selling of the American currency by banks and exporters. Rupee got some support with Minister of State for Personnel Jitendra Singh's statement that the India will be an important pillar of the post-coronavirus global economic recovery and that the road map for winning the battle against the pandemic lies in countries restarting the economy and strengthening cooperative federalism. However, traders remained cautious with private report that business optimism for the July-September quarter slumped to a record low due to sharp rise in COVID-19 cases, the extension of lockdown in containment zones and staggered easing of restrictions. On the global front; pound resumed its role as a risk-driven currency on Friday, falling against the dollar as global market sentiment turned sour after an escalation of US-China tensions. Finally, the rupee ended at 74.93, 1 paise stronger from its previous close of 74.94 on Thursday.


The FIIs as per Friday's data were net buyers in equity, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5451.52 crore against gross selling of Rs 4875.69 crore, while in the debt segment, the gross purchase was of Rs 786.98 crore with gross sales of Rs 1243.92 crore. Besides, in the hybrid segment, the gross buying was of Rs 14.87 crore against gross selling of Rs 12.06 crore.


The US markets closed mostly in green on Friday as the latest employment report showed the economy added more jobs than expected last month, though uncertainty surrounding fresh government stimulus threatened to crimp a recovery. Asian markets are trading mixed on Monday amid the heightened US-China tensions in recent weeks. Indian markets ended a choppy trading session flat on Friday tracking weak Asian and European markets coupled with Spiking coronavirus cases in the country. Today, the markets likely to get flat-to-positive start of new week amid mixed Asian cues. Traders will be getting encouragement as Prime Minister Narendra Modi launched a financing facility of Rs 1 lakh crore under the Agri-Infra Fund that will help create post-harvest infrastructure in villages and generate jobs. Some support will also come with Niti Aayog CEO Amitabh Kant's statement that India's FDI regime is the most liberal in the world, and even during the COVID-19 pandemic, the country has attracted over $22 billion worth of direct investments. However, rising coronavirus cases may dampen the sentiments in markets. The count of coronavirus cases in India jumped to 2,214,137, with the country reporting 62,117 new infections. The death toll from the pandemic reached 44,466, according to the Worldometer website. Traders may be concerned with a survey from the Reserve Bank of India (RBI) showing that consumer confidence fell to a record low last month as Indians grew more pessimistic about their jobs, incomes and spending. Telecom stocks will be in focus as the Supreme Court is expected to give its final verdict in the AGR case today. This will decide whether the telecom companies will be allowed a relaxed payment structure for clearing the dues they owe to the Union government. Defence-related stocks may also in limelight after the government announced a phased, year-wise embargo on the import of 101 items of defence equipment. There will be some reaction in coal stocks with a private report that India's coal import fell 43.2% to 11.13 MT in July this year on account of high stockpile of the dry fuel at pitheads, plants and ports. There will be lots of earnings reaction based on the performance of the companies.


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  • Coal India has logged a 21.5 per cent growth in coal allocation at 19.76 million tonnes under the four e-auction windows during the April-June quarter. 
  • Mahindra and Mahindra is looking for strategic partners for its electric vehicles business in order to further scale it up. 
  • ONGC has received approval from board of directors to raise to Rs 1,000 crore through NCDs on private placement basis.   
  • Hero MotoCorp has handed over two first responder vehicles to Civil Hospital, Gurugram.
News Analysis