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NSE Intra-day chart (04 November 2020)
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Market Commentary 05 November 2020
Benchmarks to make optimistic start on positive global cues

 

Extending northward journey for third straight session, Indian equity benchmarks ended the Wednesday's trade with a gain of around a percent, recapturing their crucial 40,600 (Sensex) and 11,900 (Nifty) levels ahead of the US Presidential election outcome. As per the report, Democratic candidate Joe Biden was leading marginally against Donald Trump. Markets started the session on an optimistic note as terming elevated food prices a temporary phenomenon, Economic Affairs Secretary Tarun Bajaj said it should be back to normal soon on the back of arrival of new crops and government measures for improving supply of essential commodities. Separately, he said Finance Minister Nirmala Sitharaman will soon announce the next set of stimulus package to boost the coronavirus-hit economy. Markets turned jittery and lost all of their initial gains in middle of the day's trade as US election verdict could still swing either way. The election has turned out to be much tighter than anticipated with new challenges emerging. Sentiments also weighed down with the government data showing that after recording positive growth in September, India's exports declined 5.4 percent to $24.82 billion in October on account of dip in shipments of petroleum products, gems and jewellery, leather, and engineering goods. Besides, trade deficit in October narrowed to $8.78 billion as against $11.76 billion, as imports also fell 11.56 percent to $33.6 billion during the month under review. But, buying in last leg of trade helped markets to end above their crucial levels as purchasing managers' index (PMI) for services rising to 54.1 from 49.8 in September. Adding optimism, Finance Secretary Tarun Bajaj stated that Indian economy is recovering fast and will soon be back on rails as all the parameters have started showing improvement. He said we are actually seeing an improvement in all parameters generally and we are expecting further improvement in the month of November and this should continue. Finally, the BSE Sensex rose 355.01 points or 0.88% to 40616.14, while the CNX Nifty was up by 95.00 points or 0.80% to 11908.50.

 

The US markets ended higher on Wednesday, extending their previous session's gains, as traders reacted to the results of the US elections, which have yet to reach a definitive conclusion. Democratic candidate Joe Biden is currently in the lead in the race for the presidency, with the latest projections giving the former vice president 248 electoral college votes. Biden is also leading in Nevada and Michigan, which would give him the 270 electoral college votes needed to unseat President Donald Trump. However, Trump has called for a recount in Wisconsin and has filed to halt counting of ballots in Michigan, suggesting the outcome of the race could be still be up for grabs. Democrats currently seem unlikely to take control of the Senate, potentially leading a divided government if Biden is in fact the next president. On the economic data front, Private sector employment in the US increased by much less than expected in the month of October, according to a report released by payroll processor ADP. ADP said private sector employment rose by 365,000 jobs in October after spiking by an upwardly revised 753,000 jobs in September. Street had expected private sector employment to surge by 650,000 jobs compared to the jump of 749,000 jobs originally reported for the previous month. Meanwhile, Growth in US service sector activity slowed by more than expected in the month of October, according to a report released by the Institute for Supply Management (ISM). The ISM said its services PMI dipped to 56.6 in October from 57.8 in September, although a reading above 50 still indicates growth in the service sector. Street had expected the index to edge down to 57.5.

 

Crude oil futures ended higher on Wednesday buoyed by data showing a drop in crude inventories in the week ended October 30. According to the data released by Energy Information Administration, crude oil inventories in the US fell 7.99 million barrels in the week ended October 30, against expectations for a build of 890,000 barrels. Gasoline inventories were up 1.5 million barrels last week, while distillate stockpiles fell by 1.585 million barrels in the week, after falling 4.491 million barrels a week earlier. A report from the American Petroleum Institute on Tuesday showed US crude inventories fell by 8 million barrels last week. Crude oil futures for December rose $1.49 or 4% percent to settle at $39.15 a barrel on the New York Mercantile Exchange. January Brent crude gained $0.90 or 2.3 percent to settle at $40.61 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended weaker against the US dollar on Wednesday tracking decline in other emerging market currencies, after the dollar pared losses as early results in the U.S. presidential election showed a very tight race. Democratic candidate Joe Biden has secured 238 electoral votes so far, while Donald Trump has won 213. A candidate needs to win 270 electoral votes to capture the presidency. Adding pessimism, Commerce Ministry in its latest data has showed that India's merchandise exports fell by 5.4 percent to $24.82 billion in October 2020 as compared to $26.23 billion in the same month a year ago, on account of dip in shipments of petroleum products, gems and jewellery, leather, and engineering goods. Exports during April- October 2020-21 were $150.07 billion, exhibiting a negative growth of 19.05 percent over the same period last year. On the global front, U.S. dollar jumped and riskier currencies wilted on Wednesday as early results in the presidential election showed a tight race, surprising currency investors who had been betting on a decisive victory for Democrat Joe Biden. Finally, the rupee ended at 74.76, 35 paise weaker from its previous close of 74.41 on Tuesday. 

 

The FIIs as per Wednesday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 8746.25 crore against gross selling of Rs 7203.27 crore, while in the debt segment, the gross purchase was of Rs 2213.27 crore with gross sales of Rs 637.01 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.54 crore against gross selling of Rs 17.55 crore.

 

The US markets rallied on Wednesday as election results continued to roll in. Asian markets are trading mostly higher in early deals on Thursday following positive close from US markets. Indian equity benchmarks ended with notable gains on Wednesday's trading session after Finance Secretary Tarun Bajaj said that Indian economy is recovering fast and will soon be back on rails as all the parameters have started showing improvement. Today, the markets are likely to get optimistic start following overnight gains on Wall Street and positive cues from Asian peers. Traders will be taking encouragement with the pandemic-hit economy coming back on rails at more speed than expected, Union minister Prakash Javadekar said citing factors like increased demand of power and higher GST collections. He said an increase in rail freight collection, higher goods and services tax mop-up, rise in power demand and improved FDI inflows indicate that the economy was doing better in the second quarter of the current financial year. Further, some support may come as the Directorate General of Foreign Trade (DGFT) has said while October data looked promising for exports, the situation will improve further in the coming months due to collaborative efforts of all the stakeholders. Director General of Foreign Trade Amit Yadav has said since April, when there was a huge downfall in exports, it has made good progress and is going to rise in the coming months. Meanwhile, the finance ministry has said the economy has been recovering at a fast pace and would likely to reach pre-Covid-19 levels by the end of the current fiscal year. It, however, cautioned that the second wave of the pandemic could derail the recovery and warned against the breach of social distancing. However, there will be some cautiousness later in the day as companies garnered over Rs 75,000 crore from capital markets in September, a decline of 31 per cent from the preceding month, with private placement of debt instruments continuing to be the most preferred route for financing business. The funds were mopped up mainly for business expansion plans, loan repayments and working capital requirements. There will be some buzz in auto stocks as ratings agency Icra said Commercial vehicles (CV) volumes are expected to shrink 25-28 per cent this fiscal amid multiple headwinds along with the pandemic impact, and the outlook for the sector remains negative on the back of continuing challenges. There will be lots of important earnings announcements too, to keep the markets in action.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,908.50

11,800.05

11,973.30

BSE Sensex

40,616.14

40,230.57

40,847.61

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

NTPC

1,175.78

207.00

200.36

211.31

State Bank of India

481.82

504.65

493.79

516.89

ICICI Bank

475.19

85.10

84.04

86.64

Tata Motors

446.76

135.90

134.26

137.26

Reliance Industries

434.27

437.05

427.56

444.26

 

  • Titan Company has launched its first international Tanishq store in Dubai as part of expanding regions outside India.
  •  Kotak Mahindra Bank has reduced its Home Loan interest rates by a further 15 basis points (bps) to 6.75% p.a. with effect from November 1, 2020.
  • Tata Motors' wholly owned subsidiary -- Jaguar Land Rover has commenced bookings for its all-electric SUV Jaguar I-PACE.
  • SBI has reported a rise of 48.22% in its consolidated net profit at Rs 5403.81 crore for Q2FY21 as compared to net profit of Rs 3645.83 crore for Q2FY20.
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