NSE Intra-day chart (22 May 2020)
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FII Activity(Rs. Cr)
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Market Commentary 26 May 2020
Benchmarks to make positive start amid firm Asian cues

 

Pausing three-day gaining streak, Indian equity benchmarks ended Friday's session on lower note with losses of more than half percent, following weak cues from other Asian markets. Markets started the session in negative territory, as India Ratings (Ind-Ra) expects most sectors to experience varying degrees of revenue contraction during FY21 due to demand and supply disruptions caused by the novel coronavirus, or COVID-19, pandemic. Selling further crept in amid the Reserve Bank of India (RBI) unexpectedly slashed benchmark interest rates to their lowest levels since 2000 and extended the moratorium on repayment of bank for three months to ramp up support for the economy which is likely to contract for the first time in over four decades. The central bank, which advanced the monetary policy committee (MPC) meeting for the second time since March, extended the three-month moratorium of loan repayments, from June 1 to August 31 and raised the limit on banks' group exposure to companies. Key bourses continued their weak run in final hour of trade, as Moody's Investors Service said India's economy is expected to contract for the first time in more than four decades saying economic damage owing to the coronavirus-induced lockdown will be significant with lower consumption and sluggish business activity. However, markets managed to pared some initial losses as traders found some support with Commerce and Industry Minister Piyush Goyal's statement that in order to make India a self-reliant country and a global supplier, the government has recognised 12 sectors, including auto components, textiles, industrial machinery and furniture, where attention would be given. Goyal said that a self-reliant India will ensure production of quality products on a large scale, fulfil India's requirements and encourage export of surplus production. Finally, the BSE Sensex lost 260.31 points or 0.84% to 30,672.59, while the CNX Nifty was down by 67.00 points or 0.74% to 9,039.25.

 

The US markets were closed on Monday for the Memorial Day.

 

Indian rupee ended lower against dollar on Friday, amid weakness seen in the domestic equity markets post Reserve Bank of India (RBI) cut the repo rate. In the wake of COVID-19, the RBI has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 40 basis points (bps) to 4.0 per cent from 4.40 per cent with immediate effect. Traders remained cautious as India Ratings (Ind-Ra) expects most sectors to experience varying degrees of revenue contraction during FY21 due to demand and supply disruptions caused by the novel coronavirus, or COVID-19, pandemic. Meanwhile, rising coronavirus cases in the country and US-China trade tensions weighed on the local unit. On the global front, dollar gained against major peers on Friday as worries about rising diplomatic tensions between the United States and China supported safe-haven demand for the greenback. Finally, the rupee ended at 75.95, 34 paise weaker from its previous close of 75.61 on Thursday.

 

The FIIs as per Friday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 5981.04 crore against gross selling of Rs 6187.25 crore, while in the debt segment, the gross purchase was of Rs 951.33 crore with gross sales of Rs 789.43 crore. Besides, in the hybrid segment, the gross buying was of Rs 12.85 crore against gross selling of Rs 10.89 crore.

 

The US markets were closed on Monday for the Memorial Day holiday. Asian markets are trading in green on Tuesday after American biotech firm Novavax said it started the first human study of its experimental coronavirus vaccine. Indian markets, before going for a long weekend holiday, ended lower on Friday as a slew of measures announced by the Reserve Bank of India (RBI) to revive the economy failed to meet market expectations. Indian equity markets remain closed on Monday for Eid-ul-Fitar. Today, the start of week is likely to be optimistic following firm cues from Asian peers. Traders will be getting encouragement with Niti Aayog Vice Chairman Rajiv Kumar's statement that there is a need to convert development into mass movement, and India should aspire to become second or third largest economy in the world by 2047.  Some support will come with report that investments through participatory notes (P-notes) in the domestic capital market increased to Rs 57,100 crore as of April 30 after falling to over 15-year low at the end of the preceding month. Also, a report stated that reversing their selling trend, foreign investors have infused over Rs 9,000 crore into the Indian equity markets in May so far amid attractive valuations of stocks and a mega block deal. Though, there may be some cautiousness with report that amid global speculation that Covid-19 may begin to tail off in the summer, India is witnessing its steepest jumps in cases over the past few days, even as mercury across the country is on the rise. India has witnessed an increase of over 5 per cent every day in the total number of cases for the past nine days. The country witnessed 6,977 new Covid-19 cases, taking the tally to 1,38,845. Traders may also be concerned as Icra projected the economy to grow by 1.9 per cent in the fourth quarter against 5.8 a year ago and 4.3 per cent in 2019-20 against 6.1 per cent in 2018-19. Meanwhile, the Central Board of Indirect Taxes (CBIC) said it has sanctioned GST refund claims worth Rs 11,052 crore in 47 days. Metal stocks will be in focus with the World Steel Association's report that India's crude steel output declined over 65 per cent to 3.13 million tonnes (MT) during April. There will be some reaction in power stocks with India Ratings' (Ind-Ra) statement that even as the global economic slowdown and COVID crisis have severely hit the steel industry, players engaged in supply of transmission and distribution (T&D) equipment are expected to be more resilient mainly on the back of government orders.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9,039.25

8,955.33

9,136.38

BSE Sensex

30,672.59

30,395.68

31,028.71

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

State Bank of India

870.70

150.85

148.33

154.48

ICICI Bank

803.59

291.05

281.83

303.98

Axis Bank

483.68

336.95

326.62

353.52

ITC

390.14

186.35

183.33

190.63

Zee Entertainment Enterprises

383.78

163.25

155.17

168.17

 

  • ONGC has entered into a Memorandum of Understanding with NTPC to set up a Joint Venture company for renewable energy business. 
  • Bharti Airtel has acquired a strategic stake in Voicezen as part of its strategy to deliver a highly differentiated service experience to its customers. 
  • Maruti Suzuki India has entered into a partnership with Cholamandalam Investment & Finance Company. 
  • Bajaj Auto has reported a fall of 3.87% in its consolidated net profit attributable to owners of the company at Rs 1353.99 crore for Q4FY20 as compared to Rs 1408.49 crore for Q4FY19.
News Analysis