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NSE Intra-day chart (17 September 2020)
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Market Commentary 18 September 2020
Markets to get cautious start amid mixed global cues


Snapping a two-day rising streak, Indian equity benchmarks ended with losses of more than half percent each on Thursday, as border tensions with China and a negative trend in global peers, following US Fed's caution on economic recovery, dented investor appetite. The benchmarks staged a gap down opening as the Organisation for Economic Co-operation and Development (OECD) in its Interim Economic Outlook report forecast a deeper contraction of 10.2% for India in the current fiscal, surpassing its June estimate of -7.3% in the event of a second wave of infections. Traders remain concerned with a report stated that total tax collection of the Centre, including advance tax collection for the second quarter, fell 22.5% to Rs 2,53,532.3 crore till September 15 of the current fiscal as compared to the year-ago period. Key gauges continued to show a sluggish trend in afternoon session, with private report stated that India's GDP is likely to contract by 8.6 percent in FY21 as against its earlier prediction of 5.8 percent, citing factors including the modest government response to the crisis for its estimate. Market participants overlooked Commerce and Industry Minister Piyush Goyal's statement that the government is in the process of bringing out a strategy paper on boosting industrial growth which will be a road map for all businesses in the country. He said the government is in the process of rationalising the existing central labour laws into four labour codes -- on wages; industrial relations; occupational safety, health and working conditions; and social security by simplifying, amalgamating and rationalising the relevant provisions of the existing central labour laws. Finally, the BSE Sensex fell 323.00 points or 0.82% to 38,979.85, while the CNX Nifty was down by 88.45 points or 0.76% to 11,516.10.


The US markets ended lower on Thursday amid worries about economic outlook. The weakness on markets came as stocks extended the sell-off seen on Wednesday after the Federal Reserve revealed plans to leave interest rates at near-zero levels for years to come. The Fed's dovish monetary policy announcement was expected to help calm the markets, although investors seem to be viewing the central bank's projections as a sign the economic recovery will not be as swift as many were hoping. Fed Chair Jerome Powell cautioned that the pace of the recovery is expected to slow and called for fiscal stimulus from Congress. Lawmakers have remained at an impasse over a new coronavirus stimulus bill for weeks, and the upcoming elections could make reaching a compromise more difficult. Negative sentiment was also generated in reaction to a report from the Labor Department showing first-time claims for US unemployment benefits fell less than expected in the week ended September 12th. The Labor Department said initial jobless claims slipped to 860,000, a decrease of 33,000 from the previous week's revised level of 893,000. Street had expected jobless claims to dip to 850,000 from the 884,000 originally reported for the previous week. The Commerce Department also released a report showing new residential construction pulled back by much more than expected in the month of August. The report said housing starts tumbled by 5.1 percent to an annual rate of 1.416 million in August after soaring by 17.9 percent to a revised rate of 1.492 million in July. Street had expected housing starts to pullback by 1.2 percent to a rate of 1.478 million from the 1.496 million originally reported for the previous month.


Magnifying their previous sessions' gains, crude oil futures ended higher on Thursday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies stressed the importance of full compliance with output cuts during their monthly meeting. The oil producers, collectively known as OPEC+, held a joint committee meeting on Thursday to discuss their existing program of output cuts. The group had previously pared record production cuts of 9.7 million barrels per day to 7.7 million barrels per day starting in August, but also said that countries that failed to previously meet their quota limits would be compensating for their overproduction. The Joint Ministerial Monitoring Committee said it will recommend that the OPEC Conference approve an extension of the compensation mechanism, which was set to end in September, until the end of December. Crude oil futures for October rose 81 cents or 2 percent to settle at $40.97 a barrel on the New York Mercantile Exchange. November Brent crude surged $1.08 or 2.6 percent to settle at $43.30 a barrel on London's Intercontinental Exchange.


Indian rupee depreciated significantly against dollar on Thursday, on account of sustained dollar demand from importers and banks. Traders were concerned as the US Federal Reserve highlighted the uncertainty surrounding economic recovery. US Federal Reserve hinted at the key policy interest rate staying close to zero at least through 2023 without unveiling any additional stimulus plans. Sentiments were also under pressure with private report stating that India's GDP is likely to contract by 8.6 percent in FY21 as against its earlier prediction of 5.8 percent, citing factors including the modest government response to the crisis for its estimate. On the global front; pound's recent recovery against a weaker dollar was interrupted on Thursday when the dollar strengthened following the U.S. Federal Reserve meeting, while investors' attention turned to the Bank of England's policy meeting. Finally, the rupee ended at 73.66, 14 paise weaker from its previous close of 73.52 on Wednesday.


The FIIs as per Thursday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 5042.82 crore against gross selling of Rs 4547.42 crore, while in the debt segment, the gross purchase was of Rs 1103.23 crore with gross sales of Rs 890.41 crore. Besides, in the hybrid segment, the gross buying was of Rs 129.51crore against gross selling of Rs 141.20 crore.


The US markets declined on Thursday after data showed high levels of weekly jobless claims, while technology-related stocks resumed their slide. Asian markets are trading mostly higher on Friday as investors look for the next catalyst to reignite the rally. Indian markets ended lower on Thursday, dragged down by banking stocks and index heavyweights TCS and RIL, as China tensions remained in focus. Today, the markets are likely to make cautious start following mixed global cues. There will be some cautiousness with report that advance tax collections fell 25.5 per cent to Rs 1,59,057 crore in the second quarter of the fiscal, However, there was improvement over the first quarter ended June, when advance tax revenue had plunged 76 per cent to a tepid Rs 11,714 crore as the whole economy was under a stringent lockdown. Rising coronavirus cases are likely to dampen sentiments in the markets. India has recorded 96,730 Covid-19 cases in just 24 hours, taking its tally past the 5.2-million mark. With this, India is rapidly nearing the US tally of 6.8 million. However, traders may get some encouragement with report that the Reserve Bank of India (RBI) will purchase government securities under open market operations (OMOs) for an aggregate amount of Rs 10,000 crore on September 24, 2020. Some support may also come as investment through participatory notes (P-notes) in the domestic capital market surged to over Rs 74,000 crore till August-end, making it the highest level in 10 months. Meanwhile, the commerce ministry's investigation arm DGTR (Directorate General of Trade Remedies) has initiated a probe into an alleged circumvention of the anti-dumping duty imposed on the imports of axle for trailers from China. Banking stocks will be in focus with domestic ratings agency -- ICRA's report that divesting majority stake in state-run lenders by the government will be credit negative for such public sector banks (PSBs). Many of the entities where the government is mulling selling off majority stake as per reports have a weak credit profile. There will be some reaction in defence stocks as the government permitted foreign direct investment (FDI) of up to 74 per cent under automatic route in the defence sector with a view to attracting overseas investors. There will be some reaction in insurance sector as regulator Irdai is mulling over a plan to allow the tenure extension of COVID-19 specific insurance products as the vaccine for the disease is seemingly away by some more time.


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  • Titan Company has entered into partnership with SBI to introduce a range of Titan Pay watches powered by YONO, the lender's mobile banking app. 
  • HCL Technologies has expanded strategic partnership with Google Cloud to bring HCL's Actian portfolio, starting with Actian Avalanche, to Google Cloud. 
  • L&T's construction arm has secured an order for its Metallurgical and Material Handling Business from Northern Coalfields in Uttar Pradesh. 
  • TCS has partnered with Phoenix Group to launch an enhanced client analytics tool for workplace pension clients of its Standard Life Assurance business.
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