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NSE Intra-day chart (16 October 2020)
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Market Commentary 19 October 2020
Benchmarks likely to make positive start amid firm cues from Asian peers


Last trading day of the week turned out to be fabulous day for Indian equity benchmarks where frontline gauges garnered gain of over half a percent each to settle above their crucial 39,900 (Sensex) and 11,750 (Nifty). Markets started the day on optimistic note as traders opted to buy beaten down but fundamentally strong stocks after yesterday's bloodbath. Sentiments remained positive with Moody's Investors Service in its latest report has said that while the government's second round of stimulus will spur consumer spending over the near term as coronavirus-related restrictions continue to be eased and India's festive season begins, the support to the country's Gross domestic product (GDP) growth will be minimal. Traders also remained optimistic on report that India's merchandise exports grew by 5.99 percent to $27.58 billion in September 2020 as compared to same period of last year, on account of growth in shipments of drugs and pharmaceuticals and readymade garments. Trade deficit, gap between imports and exports, narrowed to $2.72 billion in September 2020 as compared to a shortfall of $11.67 billion in the year ago-month. Despite some volatility, markets traded in green and ended with a gain of over half a percent as sentiments remained soothing with Union Health Minister -- Harsh Vardhan's statement that India is expected to have a COVID-19 vaccine in a few months and the country should be in the process of delivering it to people in the next six months. He said to fight against COVID-19 the social vaccine of maintaining a distance of six feet should be followed, along with regular washing of hands and wearing of masks and face covers, especially in public places. Some support also came with Finance Minister Nirmala Sitharaman's statement that V-shaped pattern of recovery is being seen in several high-frequency indicators, driven by various measures taken by the government to revive economic growth, hit hard by the outbreak of Covid-19 pandemic. She said several low-income and developing countries are confronted with the challenge to protect and ensure livelihood for millions slipping below the poverty line. Finally, the BSE Sensex surged 254.57 points or 0.64% to 39,982.98, while the CNX Nifty was up by 82.10 points or 0.70% to 11,762.45.


The US markets ended mostly higher on Friday, after moving sharply higher early in the session. Sharply pulled back in the final hour of trading, dragged the tech-heavy Nasdaq into negative territory. The rally seen in early trading as much better than expected retail sales data partly offset recent concerns the economic recovery may be stalling. A report from the Commerce Department said retail sales spiked by 1.9 percent in September after rising by 0.6 percent in August. Street had expected retail sales to climb by 0.7 percent. Excluding a jump in sales by motor vehicles and parts dealers, retail sales still surged up by 1.5 percent in September after climbing by a downwardly revised 0.5 percent in August. Ex-auto sales were expected to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month. Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, jumped by 1.4 percent in September after dipping by 0.3 percent in August. Adding to the positive sentiment, the University of Michigan released a report showing a bigger than expected improvement in consumer sentiment in the month of October. The preliminary report said the consumer sentiment index rose to 81.2 in October from the final September reading of 80.4. Street had expected the index to inch up to 80.5. Meanwhile, traders largely shrugged off a report from the Federal Reserve showing an unexpected decrease in industrial production in the month of September. A surge in new coronavirus infections in Europe, the Americas and parts of Asia, is also giving traders reason to turn cautious. The new caseloads prompted governments in France and Britain to impose new restrictions aimed on containing the outbreak contributed to some of the selling in the market earlier this week.


Crude oil futures ended lower on Friday as worries about the demand outlook amid the continued surge in coronavirus cases weighed on the commodity. Several countries across Europe have imposed fresh restrictions to curb the spread of virus infections. Several states in the US have also seen a surge in new cases and an increasing number of hospitalizations over the past few days. According to a report from Baker Hughes, the US oil-rig count rose for a fourth week in a row, with active-oils count surging up by 12 to 205. The report said active drilling-rig count rose by 13 to 282 this week. Despite lingering concerns over the demand recovery, the Organization of the Petroleum Exporting Countries (OPEC) and its allies plan to taper the ongoing oil production cuts as of January 2021, as initially agreed. Crude oil futures for November fell 8 cents or about 0.2 percent to settle at $40.88 a barrel on the New York Mercantile Exchange. December Brent crude declined 23 cents or 0.5 percent to settle at $43.16 42.93 a barrel on London's Intercontinental Exchange.


Indian rupee ended marginally higher against dollar on Friday, on persistent selling of the American currency by exporters. Traders remained positive as India's merchandise exports grew by 5.99 percent to $27.58 billion in September 2020 as compared to same period of last year, on account of growth in shipments of drugs and pharmaceuticals and readymade garments. The rupee also derived its strength from strong gains in the local equity markets as well as dollar's weakness against some currencies overseas. Meanwhile, Reserve Bank of India is going to conduct open market operations (OMOs) for Rs 10,000 crore on October 22. The OMO size may be enhanced in subsequent auctions, depending on the market response. On the global front, Sterling rose slightly on Friday but was still on track to end the week on a loss, as markets waited for Britain to say whether it would continue with Brexit negotiations after the European Union leaders' summit left the UK disappointed. Finally, the rupee ended at 73.35, 1 paise stronger from its previous close of 73.36 on Thursday.


The FIIs as per Friday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 6912.10 crore against gross selling of Rs 7205.18 crore, while in the debt segment, the gross purchase was of Rs 800.49 crore with gross sales of Rs 536.74 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.98 crore against gross selling of Rs 47.02 crore.


The US markets ended mostly in green on Friday after an advance reading of September retail sales showed stronger-than-expected growth. Asian markets are trading higher with notable gains on Monday buoyed by hopes of a US fiscal package before the US presidential elections next month. Indian markets ended higher on Friday mainly led by gains in the financials, metal and pharma sectors. Today, the start of new week is likely to be optimistic tacking firm trade in Asian peers. Traders will be taking some encouragement with Finance Minister Nirmala Sitharaman's statement that the government has taken a host of initiatives, including a stimulus package totalling 10 per cent of the country's GDP and major reforms in the labour sector, to combat the impact of the coronavirus pandemic. Some support will come with ICRA's report that Farm sentiments have remained buoyant mainly driven by healthy monsoon and further optimism of a good kharif crop. Market participants may take note of report that a government-appointed panel said that the COVID-19 pandemic has peaked in India and can be controlled by early next year with minimal active cases by February-end if protective measures are followed. However, there may be some cautiousness with the Reserve Bank of India's (RBI) report that high incidence of non-performing assets (NPAs) in banks acts as a major roadblock in transmission of monetary policy actions of the Reserve Bank. Also, traders may be worried with SEBI's report that the value of P-note investments in Indian markets - equity, debt, hybrid securities and derivatives - declined to Rs 69,821 crore at September-end after hitting a 10-month high of Rs 74,027 crore at the end of August. Meanwhile, India on Sunday registered a spike of 55,511 cases, taking the total count of coronavirus cases to 7,548,238, and the country's death toll reached 114,642. There will be some buzz in the power stocks with the government data showing that India's power consumption grew 11.45 per cent to 55.37 billion units (BU) in the first half of October this year, mainly driven by buoyancy in industrial and commercial activities. Real estate stocks will be in focus as in a bid to increase flow of credit to the real estate sector, the RBI rationalised the risk weightage to LTV (loan to value) ratio for all new housing loans sanctioned up to March 31, 2022. There will be some reaction in auto stocks with SIAM's report that passenger vehicle exports from India declined 57.52 per cent in April-September period of the current fiscal year as COVID-19 related disruptions hampered despatches to various global markets. Also, there will be lots of earnings reaction based on the performance of the companies.


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



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  • Hero MotoCorp has launched the new Pleasure plus Platinum, delivering its commitment of providing customers with an appealing and comprehensive range of products.
  • M&M's subsidiary company -- Mahindra Electric Mobility has launched its new electric three- wheeler Treo in Karnataka at Rs 2.7 lakh post FAME subsidies. 
  • Tech Mahindra has executed a JV Agreement with Sumitomo Corporation, Japan to set up a JV company to provide Engineering Services to the automotive sector. 
  • Reliance Industries' subsidiary company -- Reliance Retail Ventures has received the subscription amount from Mubadala & ADIA and allotted equity shares.
News Analysis