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NSE Intra-day chart (20 August 2020)
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Market Commentary 21 August 2020
Benchmarks to open in green amid positive global cues


Snapping three straight days of gains, Indian equity indices ended volatile day of trade on lower note on Thursday, tracking a massive selloff in global markets after US Fed's gloomy economic outlook spooked investors across the world. Key indices opened on a negative note and remained lackluster throughout the session, as Care Ratings said India's GDP is likely to contract by 20% during Q1FY21 on account of the COVID-19 pandemic-induced disruptions. It said notwithstanding the fact that considerable uncertainty prevails regarding the quarterly economic performance, taking cognizance of the adverse impact of lockdown we are pegging the real GDP growth at (-) 20% Y-o-Y for Q1 FY21. Cautiousness also crept in after the World Bank said that it is likely to project a steeper contraction of India's economy than 3.2 per cent it has forecast for the current financial year due to the increasing number of Covid-19 cases and the resultant regional lockdowns. It cautioned India against using its tariff policy to attract the firms wanting to shift from China. Domestic markets remained under pressure in late afternoon deals with Centre of Monitoring Indian Economy (CMIE) data showing that the unemployment rate in India recorded for August 18 was 8.20 percent (30-day moving average), against 7.64 percent at the start of the month on August 1. Some cautiousness also remained amongst the market-men amid reports that the growing threat of stagflation for the Indian economy and persistence of retail inflation above 6 per cent may lead to rise in interest rates. The uncertain outlook on inflation in the short term has already led the Monetary Policy Committee (MPC) to hold the interest rates in August and has also diminished the likelihood of any further rate cut in the near term. Finally, the BSE Sensex fell 394.40 points or 1.02% to 38,220.39, while the CNX Nifty was down by 96.20 points or 0.84% to 11,312.20.


The US markets ended higher on Thursday with the Nasdaq settling at a record high, as investors rushed to large-capitalization technology and e-commerce shares for safety, after a pair of economic reports set off concerns about the broader US economy's tenuous recovery from the coronavirus epidemic. Support also came in on reports that China and the US have agreed to hold new trade talks in the coming days. A spokesman for the Chinese commerce ministry said the two sides will hold talks over the phone to review the progress of the phase one trade deal. On the economic data front, First-time claims for US unemployment benefits unexpectedly increased in the week ended August 15th, according to a report released by the Labor Department. The report said initial jobless claims climbed to 1.106 million, an increase of 135,000 from the previous week's revised level of 971,000. The increase surprised participants, who had expected jobless claims to drop to 925,000 from the 963,000 originally reported for the previous week. Besides, the Conference Board released a report showing its leading economic index for the US increased for the third straight month in July, although the pace growth by the index slowed from the two previous months. The report said the leading economic index jumped by 1.4 percent in July after surging up by 3.0 percent in June and by 3.1 percent in May.


Crude oil futures ended lower on Thursday after a rise in weekly jobless claims added to concerns about the outlook for demand already shaken by minutes of the Federal Reserve's last meeting. The number of first-time US weekly jobless claims rose back above 1 million last week. Minutes of the Fed's July 28-29 meeting released Wednesday said staff economists told policy makers they were lowering their estimate for economic growth over the second half of the year. Meanwhile, a meeting of the OPEC+ alliance's Joint Ministerial Monitoring Committee offered no surprises, with ministers maintaining output cuts of 7.7 million barrels a day, but emphasizing the need for countries that failed to cut enough in previous months to make compensatory reductions this month and next. Crude oil futures for September declined 35 cents or 0.8 percent to settle at $42.58 a barrel on the New York Mercantile Exchange. October Brent crude fell 47 cents or 1 percent to settle at $44.90 a barrel on London's Intercontinental Exchange.


Tumbling for second straight session, Rupee ended substantially weaker against dollar on Thursday on account of continued dollar demand from importers and banks. Sentiments remained fragile with the World Bank's report stating that it is likely to project a steeper contraction in India's economy than the 3.2 per cent it had forecast for the current financial year, given the rising number of Covid-19 cases and the resultant regional lockdowns. Traders were also worried as Care Ratings stated that India's GDP is likely to contract by 20 per cent during the first quarter of the current fiscal on account of the COVID-19 pandemic-induced disruptions. On the global front; dollar rose on Thursday, pulling away from a two-year trough after less dovish than expected minutes from last month's US Federal Reserve meeting prompted bears to buy into the heavily shorted currency in its biggest one-day surge since June. Finally, the rupee ended at 75.02, 20 paise weaker from its previous close of 74.82 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity segment and debt segment both. In equity segment, the gross buying was of Rs 5545.90 crore against gross selling of Rs 4447.14 crore, while in the debt segment, the gross purchase was of Rs 1363.09 crore with gross sales of Rs 643.44 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.68 crore against gross selling of Rs 22.36 crore.


The US markets ended higher on Thursday as gains in heavyweight tech stocks outweighed downbeat data that affirmed the Federal Reserve's view of a difficult road to economic recovery. Asian markets are trading in green on Friday following the release of mixed US economic data overnight. Indian markets ended lower on Thursday led by the slip in index heavyweights like ICICI Bank and Reliance Industries. Today, the start of session is likely to be optimistic tracking gains in global markets. Traders will be taking encouragement with a private report that Russia is looking for a partnership with India for producing the Covid-19 vaccine Sputnik V. Russian Direct Investment Fund (RDIF) is likely to do phase 3 clinical trials in Russia, UAE, Saudi Arabia, Brazil and Philippines. Some support will also come in with another private report that India's rural economy swung to growth in June after eight months of contraction. Though, there may be some cautiousness with rising coronavirus cases in the country. India has recorded over 68,500 coronavirus cases, taking its total past the 2.9-million mark to 2,904,329.  The country's death toll has surged to 53,994. Investors may react to the minutes of the Reserve Bank of India's August monetary policy meeting which showed that outlook for the domestic economy remains extremely uncertain. The MPC, however, said that the worst is almost surely behind us in terms of output losses. Meanwhile, NSE has announced its latest semi-annual review of indices according to which SBI Life Insurance and Divi's Laboratories will enter the benchmark index Nifty 50, replacing Bharti Infratel and Zee Entertainment Enterprises. Besides, Edible oil industry body SEA said it has urged the government to allow import of only crude palm oil and place all refined oils under the restricted category of trade. There will be some buzz in the sugar stocks as a Niti Aayog task force has recommended linking sugarcane prices to sugar rates to keep the industry in sound financial health. There will be some reaction housing finance companies stocks as rating firm ICRA said housing finance companies (HFCs) may see a muted portfolio growth and would require Rs 3.8-4.5 lakh crore to meet their refinancing obligations in FY21.


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



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Zee Entertainment Enterprises















Tata Motors





State Bank of India






  • L&T's wholly owned subsidiary -- LTHE has signed a Memorandum of Understanding with NTPC. 
  • Maruti Suzuki India has entered into partnership with Nadathur S. Raghavan Centre for Entrepreneurial Learning. 
  • Infosys has launched Infosys Cobalt - a set of services, solutions, and platforms that acts as a force multiplier for cloud-powered enterprise transformation. 
  • Hindalco Industries has signed a MoU with UltraTech Cement to deliver 1.2 million metric tonne of bauxite residue annually.
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