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NSE Intra-day chart (14 July 2020)
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Market Commentary 15 July 2020
Markets likely to open higher amid positive global cues

 

Tuesday turned out to be disappointing session for the Indian equity indices which got pounded by around two percent, on the back of weak global cues, and concerns with regard to rising Covid-19. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 36,050 (Sensex) and 10,650 (Nifty). The sentiments weighed down by private report stated that a longer wait for a vaccine against the COVID-19 virus may lead to a contraction of up to 7.5 percent in the Indian GDP in FY21. It also revised down their base case estimates on the real GDP within a week, and now expect it to contract by 4 percent because of a drop in economic activity. The sentiments remained on pessimistic note reacting to Consumer Price Index (CPI) data, which increased to 6.09% in June 2020, mainly on account of higher prices of food items. The CPI was 3.18% in June 2019. Domestic markets extended their losses in late afternoon session, amid a private report stating that net inflows in equities plunged 94 per cent month-on-month in June. It said increase in redemptions by 74.9 per cent month-on-month to Rs 14,200 crore led to a decline in net inflows in equities from Rs 5,600 crore in the previous month to Rs 300 crore in June, the lowest in four years. Markets participants also took a note of reports that India's inflation based on wholesale price index (WPI) stood at -1.81% in the month of June as compared to 2.02% during the corresponding month of the previous year. Fuel & Power index, having weight of 13.15%, increased by (5.50%) to 88.3 (provisional) in June 2020 from 83.7 (provisional) for the month of May, 2020. Prices of mineral oils group increased compared to month of May, 2020, while prices of coal and electricity remain unchanged. Market participants largely overlooked Niti Aayog Vice Chairman Rajiv Kumar's statement that there is a need to translate the coronavirus-led pandemic situation into an opportunity to meet the sustainable development goals. Finally, the BSE Sensex fell 660.63 points or 1.80% to 36,033.06, while the CNX Nifty was down by 195.35 points or 1.81% to 10,607.35.

 

The US markets ended higher on Tuesday after Federal Reserve Gov. Lael Brainard called for sustained large-scale asset purchases by the US central bank to help the economy rebound amid a thick fog of uncertainty brought on by COVID-19. Brainard also said that the US economic recovery likely will face headwinds for some time, and require further accommodation.  Besides, steel, chemical, and biotechnology stocks saw considerable strength on the day, moving higher along with most of the other major sectors. Meanwhile, banking stocks were among the few groups to buck the uptrend, dragging the KBW Bank Index down by 1.6 percent. On the economic data front, partly reflecting a substantial rebound in gasoline prices, the Labor Department released a report showing US consumer prices increased by slightly more than expected in June following three straight monthly declines. The Labor Department said its consumer price index climbed by 0.6 percent in June after edging down by 0.1 percent in May. Street had expected consumer prices to rise by 0.5 percent. The bigger than expected increase in consumer prices reflected the strongest price growth since August of 2012. Over half of the monthly increase in consumer prices was due to the rebound in gasoline prices, which soared by 12.3 percent in June after plunging by 3.5 percent in May.

 

Crude oil futures ended higher on Tuesday getting a boost from some weakness in the US dollar. However, upside remained capped in the wake of mounting tensions between the US and China, as well as a continued rise in COVID-19 infections in the US and elsewhere - both of which can hurt energy demand. Meanwhile, the US announced its formal opposition to a number of Chinese claims in the South China Sea. China described the US rejection of its maritime claims as completely unjustified and as an attempt to stir discord between China and Southeast Asian countries. China also announced it will impose unspecified sanctions on defense contractor Lockheed Martin Corp. after the US approved a possible $620 million deal to supply missile parts to Taiwan. Crude oil futures for August gained 19 cents or 0.5 percent to settle at $40.29 a barrel on the New York Mercantile Exchange. September Brent crude added 18 cents or 0.4 percent to settle at $42.90 a barrel on London's Intercontinental Exchange.

 

Indian rupee tumbled against dollar on Tuesday, on account of sustained dollar demand from importers and banks amid heavy selling in domestic equities and strengthening American currency. Risk appetite also remained weak amid rising tensions between US and China. Besides, investors' sentiment weakened as Consumer Price Index (CPI), which increased to 6.09% in June 2020, mainly on account of higher prices of food items. The CPI was 3.18% in June 2019. Also, Wholesale Price Index (WPI) - based inflation stood at (-) 1.81% in June due to decline in prices of fuel and power, even as food articles remained expensive. The rate of deflation in May was 3.21%. On the global front, dollar edged up on Tuesday as diplomatic tensions between the United States and China and rising coronavirus cases knocked investor confidence, although moves in currency markets were small in a quiet session. Finally, the rupee ended at 75.42, 23 paise weaker from its previous close of 75.19 on Monday.

 

The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3630.51 crore against gross selling of Rs 3714.58 crore, while in the debt segment, the gross purchase was of Rs 1782.87 crore with gross sales of Rs 1289.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.11 crore against gross selling of Rs 1.69 crore.

 

The US markets ended higher on Tuesday as investors bought energy and materials stocks and looked beyond a recent surge in coronavirus cases. Asian markets are trading mostly in green on Wednesday as optimism about a coronavirus vaccine bolstered risk appetite. Indian markets ended lower on Tuesday on weak global cues as rising coronavirus cases weighed on investors' sentiment. Today, the markets are likely to open higher following overnight gains on Wall Street and positive cues from Asian peers. Traders will be taking encouragement with Former Reserve Bank Governor D Subbarao's statement that the government needs to build on some silver linings in the farm sector, driven by the prospect of a favourable monsoon, to speed up the economic recovery. Some support will come with Commerce and Industry Minister Piyush Goyal's statement that the government is working on creating a genuine single window clearance mechanism and mapping the entire land bank available for the industry and industrial development. Traders may take note of a private report stating that the RBI to slash up to 75 bps -- 25 bps on August 6 and another 50 bps in October, if the COVID-19 is brought under control by October. Besides, the government has extended the due date for filing annual return by composition dealers for 2019-20 till August 31. However, rising coronavirus cases may impact the markets. India has recorded nearly 29,000 Covid-19 cases in the past 24 hours, taking its total number of Covid-19 cases to 937,487. With over 550 deaths on Tuesday, the country's death toll has now reached 24,315. Meanwhile, SEBI has extended the deadline till August 15 for sending public comments on a report on social stock exchange which allows for direct listing of non-profit organisations. Auto stocks will be in focus with SIAM's statement that India's auto sales volume will take another 3-4 years to reach 2018 levels, as the coronavirus-induced lockdown hurt monthly revenue and increased pressure on a sector already reeling from poor demand. There will be some reaction in insurance stocks as IRDAI asked insurers to give 5% discount on Corona Kavach premium to doctors and health workers, and ensure that hospitals do not deny cashless treatment to insured persons in conformity with the terms of policy.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,607.35

10,528.28

10,721.03

BSE Sensex

36,033.06

35,760.95

36,421.63

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

State Bank of India

622.43

186.35

183.20

190.90

Tata Motors

469.26

105.20

103.68

107.13

ICICI Bank

340.33

346.05

340.28

352.13

Bharti Airtel

323.29

588.40

579.03

597.28

Reliance Industries

310.74

1,915.00

1,887.63

1,942.03

 

  • Cipla has received final approval for its ANDA for Icatibant Injectable 30mg/3mL from the USFDA. 
  • ITC's hospitality arm -- ITC Hotels has tied up with food delivery platform Zomato for contactless deliveries of all prepaid orders. 
  • HDFC is planning to raise funds through issuance of secured redeemable NCDs, in various tranches, aggregating Rs 45,000 crore on a private placement basis. 
  • Dr. Reddy's Laboratories has launched Over-the-Counter Nicotine Polacrilex Lozenges, 2 mg and 4 mg, the store brand version of Nicorette Lozenges in the US market.
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