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NSE Intra-day chart (28 October 2020)
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Market Commentary 29 October 2020
Benchmarks to get gap-down start on sell-off in global markets


Indian equity benchmarks ended by over a percent each lower on Wednesday, weighed down by the weakness in banking, finance, metal and realty stocks amid weak global cues. Markets made slightly negative start but soon managed to wipe out all the losses to trade in green, as some respite came with Niti Aayog Vice Chairman Rajiv Kumar exuding confidence that India's economic growth would be in positive territory in the second half of this fiscal, and will do even better than a large part of the world in 2021-22. However, buying proved short-lived as markets once again entered into negative terrain and stayed in red for rest of the day, as traders turned anxious with the central bank's statement that Indian states are racking up more debt to fund the prospect of wider budget deficits as they step up spending to fight the virus pandemic. Local gauges extended their losses in late afternoon session, as some anxiety remained among traders with Finance Minister Nirmala Sitharaman's statement that there were visible signs of revival in the economy but the GDP growth may be in the negative zone or near zero in the current fiscal (FY21). She also said the economy saw a contraction in the April-June quarter, but demand has picked up in the festival season. Sentiments remained down-beat after UNCTAD said that Global foreign direct investment (FDI) flows fell 49% in the first half of 2020 compared to 2019 due to the economic fallout from COVID-19. Separately, Union Minister Piyush Goyal said the Commerce and Industry Ministry is working with states and local bodies to make it easier for businesses to get licences, permissions and approvals. He also said that the government is looking at addressing problems of quality so that domestic products can be recognised for high quality. Finally, the BSE Sensex fell 599.64 points or 1.48% to 39,922.46, while the CNX Nifty was down by 159.80 points or 1.34% to 11,729.60.


The US markets ended lower on Wednesday amid continued concerns about a recent spike in coronavirus cases across the US. The US has averaged more than 70,000 new coronavirus cases a day over the past week, with 29 states setting new records this month for the most new daily cases since the pandemic began in February. More than 8.78 million cases have been reported nationwide and at least 226,000 people have died of COVID-19, according to data from John Hopkins University (JHU). According to JHU, the average number of daily new cases this past week is up 21 percent compared to the previous week. The jump in new infections has also been accompanied by an increase in hospitalizations and deaths, leading to worries about new lockdowns. Meanwhile, President Donald Trump has continued to downplay the pandemic in recent days, accusing the media of focusing too much on the disease ahead of next week's elections. Besides, lingering uncertainty about a new stimulus bill also weighed on markets, with some analysts suggesting a victory by Joe Biden could make Republicans less likely to approve a new relief package until next year.


Crude oil futures ended sharply lower on Wednesday, weighed down by data showing a notable increase in crude inventories. Data released by US Energy Information Administration showed crude inventories in the US rose by about 4.3 million barrels in the week ended October 23, rising for the first time in three weeks. The American Petroleum Institute reported Tuesday that US crude inventories rose by 4.6 million barrels to about 495.2 million barrels last week. Further, sentiments were weak on worries about energy demand due to rising coronavirus cases. Several countries, including the US, Germany, France and Spain are seeing sharp spikes in new infections. Crude oil futures for December fell $2.18 or 5.5 percent to settle at $37.39 a barrel on the New York Mercantile Exchange. December Brent crude dropped $2.10 or 5.1 percent to settle at $41.20 39.10 a barrel on London's Intercontinental Exchange.


Snapping previous day's gaining streak, Indian rupee ended weaker against dollar on Wednesday with fresh dollar demand by banks and importers. Besides, dollar gains against other currencies overseas too hit the rupee sentiment. Investors were worried with Finance Minister Nirmala Sitharaman's statement that there were visible signs of revival in the economy but the GDP growth may be in the negative zone or near zero in the current fiscal (FY21). She also said the economy saw a contraction in the April-June quarter, but demand has picked up in the festival season. Meanwhile, UNCTAD's latest Global Investment Trends Monitor stated that in the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects. Also, global foreign direct investment (FDI) flows fell 49% in the first half of 2020 compared to 2019 due to the economic fallout from COVID-19. On the global front, euro fell against the dollar on Wednesday following a media report that France's government was leaning toward reinstating a national lockdown to curb a resurgence in coronavirus cases. Finally, the rupee ended at 73.87, 16 paise weaker from its previous close of 73.71 on Tuesday.


The FIIs as per Wednesday's data were net buyer in equity segment, while net seller in debt segment.  In equity segment, the gross buying was of Rs 10966.42 crore against gross selling of Rs 7377.28 crore, while in the debt segment, the gross purchase was of Rs 540.52 crore with gross sales of Rs 1567.35 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.88 crore against gross selling of Rs 16.96 crore.


The US markets tumbled on Wednesday as a surge in coronavirus cases in the United States and Europe dashed hopes of a quick global economic recovery. Asian markets are trading in red on Thursday following an overnight plunge on Wall Street as coronavirus cases continue to surge in the West. Indian markets ended around 1.5 percent lower on Wednesday following in selloff in the global markets, dragged by losses in all key sectors but mainly banks and financials. Today, the markets are likely to get gap-down opening tracking sell-off in the global peers amid rising coronavirus cases. Investors may also need to wrestle with volatility due to October series derivative expiry. There will be some cautiousness with report that India has reported a daily jump of nearly 50,000 Covid-19 cases, even as the tally has soared past the 8-million mark. The country's death toll has mounted to 120,563. However, some support may come later in the day with report that in what could give a leg up to Prime Minister Narendra Modi's clarion call to make India self-reliant or Atma Nirbhar, the government is considering to come up with more calibrated fiscal and monetary policy measures to accelerate growth to help economy recover from the impact of the pandemic. Meanwhile, the Commerce and Industry Ministry has released the next edition of its consolidated foreign direct investment (FDI) policy document, incorporating all the changes made over the past year. Besides, edible oils trade body SEA has urged the government not to tamper with the import duties or encourage PSUs to import edible oils at concessional duties in a move to contain domestic prices. Airline industry stocks will be in focus with the Directorate General of Civil Aviation's statement that the suspension of scheduled international passenger flights has been extended till November 30 amid the coronavirus pandemic. There will be some reaction in real estate sector stocks with a private report stating that the Indian real estate sector seems to be getting back on feet after a long dry spell. Low home loan interest rates and discounted prices are piquing consumer interest while the re-opening of offices and an overall revival of business activity is aiding a revival in the office real estate market. There will be lots of important earnings announcements too, to keep the markets in action.


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