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NSE Intra-day chart (17 July 2020)
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Market Commentary 20 July 2020
Benchmarks to make cautious start amid weakness in Asian peers

 

Indian equity benchmarks ended higher for the third day in a row on Friday, on sustained buying, with Sensex and Nifty closing above their crucial 37,000 and 10,900 levels, respectively. Investors hoped for strong corporate earnings to continue after HCL Technologies became the third IT major to report upbeat profit. Key indices made positive start and stayed in green for whole day, as traders took encouragement with Nasscom President Debjani Ghosh's statement that India has the potential to become a magnet for digital innovation by focusing on areas like talent, policy framework and trust. Some support also came in with report that investments through participatory notes (P-notes) in the domestic capital market surged to Rs 62,138 crore till June-end, making it the third consecutive monthly rise. Sentiments remained positive with Indian Oilseeds and Produce Export Promotion Council (IOPEPC) Chairman Khushwant Jain's statement that the impact of the pandemic on the country's agriculture exports such as oil seeds and rice is much lower and the sector is recording healthy growth rate. Domestic indices witnessed a sudden rally in last hour of trade, taking support from White House top economic advisors' statement that the worldwide rage against Chinese products and the US tech giants such as Google and Facebook announcing to invest billions of dollars in India indicate that people's trust in China is fading away while India emerges as a bigger competitor. Adding some optimism, Union Minister Nitin Gadkari has asked players to join hands with the government to rescue COVID-19-hit economy by taking up projects on public private partnership (PPP) mode. At the same time, he suggested all stakeholders, including banks, financial institutions, infrastructure, MSMEs, agriculture and industries, to jointly create demand to address the need of liquidity in the economy. Markets participants paid no heed towards domestic rating agency ICRA's report in which it has revised its forecast for contraction in India's GDP in FY21 to 9.5 percent from 5 percent it expected earlier, as continued lockdowns in some states have affected the recovery seen in May and June. Finally, the BSE Sensex rose 548.46 points or 1.50% to 37,020.14, while the CNX Nifty was up by 161.75 points or 1.51% to 10,901.70.

 

The US markets ended choppy trading session mostly in green on Friday as traders generally remain optimistic about the economic outlook but rising coronavirus cases limited upside. The US reported a record 77,255 new coronavirus cases on Thursday, according to data compiled by Johns Hopkins University. Reflecting the widespread resurgence of the coronavirus, the University of Michigan released a report showing an unexpected deterioration in US consumer sentiment in the month of July. The preliminary report said the consumer sentiment index tumbled to 73.2 in July after jumping to 78.1 in June. The pullback surprised market participants, who had expected the index to inch up to 79.0. With the unexpected decrease, Surveys of Consumers chief economist Richard Curtin noted the index is insignificantly above the nearly nine-year low set in April. The continued rise in COVID-19 cases in the US has been partly offset by optimism over scope for additional fiscal stimulus. The White House and lawmakers face increasing pressure to come up with an additional fiscal stimulus plan ahead of the expiration of supplemental unemployment benefits at the end of July. Meanwhile, the Federal Reserve on Friday announced it had expanded its Main Street Lending Program to include nonprofit organizations. In other economic data, US housing starts came in at a 1.19 million seasonally adjusted annual rate in June, the Commerce Department said Friday, a 17% increase from May. Permits for newly-built homes rose 2.1% between May and June to a seasonally adjusted annual rate of 1.24 million.

 

Crude oil futures ended lower on Friday, amid uncertainty over the outlook for crude demand as the number of COVID-19 cases continued to rise in the US and around the world. However, losses remained capped with the recent data showing a significant drop in crude inventories in the US and Organization of the Petroleum Exporting Countries' (OPEC) decision to ease production curbs beginning in August limited oil's slide. A report released by Baker Hughes today showed the US drilling rig count fell 5 units, reaching 253 rigs working for the week ended July 17. The count is down 701 units from the 954 rigs working this time a year ago. The number of active US rigs drilling for oil dropped by 1 to 180 this week, falling for an 18th straight week. Crude oil futures for August lost 16 cents or 0.4 percent to settle at $40.59 a barrel on the New York Mercantile Exchange. September Brent crude fell 23 cents or 0.5 percent to settle at $43.14 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended significantly higher against dollar on Friday, on persistent selling of the American currency by exporters. Local currency got support as Union Minister Nitin Gadkari has asked players to join hands with the government to rescue Covid-19-hit economy by taking up projects on public private partnership (PPP) mode. At the same time, he suggested all stakeholders, including banks, financial institutions, infrastructure, MSMEs, agriculture and industries, to jointly create demand to address the need of liquidity in the economy. On the global front; euro was flat against the dollar on Friday before a European Union summit that will try to reach agreement on a 750 billion- euro recovery fund. Finally, the rupee ended at 75.02, 16 paise stronger from its previous close of 75.18 on Thursday.

 

The FIIs as per Friday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4287.52 crore against gross selling of Rs 5489.90 crore, while in the debt segment, the gross purchase was of Rs 1467.38 crore with gross sales of Rs 2080.66 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.74 crore against gross selling of Rs 4.84 crore.

 

The US markets closed mostly higher on Friday as investors digested Netflix's disappointing earnings report and dire consumer sentiment data. Asian markets are trading mostly in red on Monday as investors try to figure out the full effects of the record jump in COVID-19 cases globally. Indian markets ended sharply higher with gains of over one and half a percent each on Friday led by financials and energy stocks. Today, the markets are likely to get a cautious start of new week amid weakness in Asian peers coupled with rising coronavirus cases. With over 40,000 new cases, India has recorded its biggest single-day spike. The total number of coronavirus cases in the country has reached 1,118,107. There will be some cautiousness with India Ratings and Research's report that the government's fiscal deficit is estimated to touch 7.6 percent in FY21, more than double the Budget Estimate, as the nation spends extra to lessen the impact of the COVID-19 pandemic while facing a shortfall in incomes. Traders will be concerned as foreign portfolio investors (FPI) remained net sellers in Indian markets in July so far as they pulled out Rs 9,015 crore from equities and debt securities with the surging markets providing profit booking opportunity amid concerns over rising cases of Covid-19. Though, some respite may come later in the day with the Agriculture Ministry's statement that there has been no impact of COVID-19 pandemic on kharif (summer) sowing as the total area planted to rice and other crops has increased by 21.20 per cent to 691.86 lakh hectare so far in the current season. Some support may come with the latest data from the Reserve Bank of India (RBI) showing that forex reserves rose $3.1 billion to hit a record high of $516.36 billion for the week ended July 10. There will be some buzz in the aviation stocks with, the US Transportation Department's statement that the Narendra Modi government has agreed to allow US air carriers to resume passenger services in the US-India market starting July 23. Infrastructure stocks were in focus with report that as many as 401 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns of over Rs 4.02 lakh crore owing to delays and other reasons. There will be some reaction jewelry stocks with government data showing that gold imports plunged 94 per cent to $688 million (about Rs 5,160 crore) during the first quarter of 2020-21 due to a significant fall in demand in the wake of the COVID-19 pandemic. 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

10,901.70

10,789.75

10,973.55

BSE Sensex

37,020.14

36,646.71

37,259.77

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Bharat Petroleum Corporation

538.42

443.80

408.07

463.47

Indian Oil Corporation

511.52

86.90

84.40

88.55

State Bank of India

470.36

188.20

185.63

190.13

Tata Motors

420.80

106.40

104.15

107.80

Axis Bank

334.65

433.10

425.17

440.47

 

  • Zee Entertainment Enterprises has brought back its much-loved content brand Zindagi on ZEE5, a video on demand website run by company. 
  • Coal India has introduced a new category of spot e-auction for importers only and aimed at replacing 150 million tonne of the fuel sourced from abroad with domestic supply. 
  • Tata Motors' wholly owned subsidiary -- JLR has crossed 15-lakh production mark for its Ingenium engine range which powers its current models. 
  • Kotak Mahindra Bank has launched 811 DreamDifferent credit card -- especially tailored for Kotak 811 customers based on their banking preferences.
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