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NSE Intra-day chart (02 March 2020)
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Market Commentary 03 March 2020
Markets to open marginally in green amid positive global cues

 

Indian equity benchmarks ended lower on Monday for the seventh straight day, as detection of fresh coronavirus cases in the country spooked domestic investors. After a firm start, indices remained in green for the most part of the session, as the government collected Rs 1.05 lakh crore as Goods and Services Tax (GST) revenue in February, up 8% over the same month last year. Adding some relief among market participants, the growth of India's eight core sectors improved to 2.2% in January 2020 against 1.5% in the same month last year, helped by expansion in the production of coal, refinery products and electricity. But, indices slipped into red in the last hour of trade, as Fitch Solutions cut its forecast for India's economic growth to 4.9 per cent in the current fiscal that ends March 31, saying manufacturing could come under pressure from weak domestic demand and supply chain disruptions due to the coronavirus outbreak. The GDP growth is forecast to recover slightly to 5.4 per cent in 2020-21 (April 2020 to March 2021). Besides, the Controller General of Accounts data showed that India's fiscal deficit touched 128.5 percent of current financial year budget target at January-end. The deficit during the same period of FY19 was 121.5 percent. Finally, the BSE Sensex slipped 153.27 points or 0.40% to 38,144.02, while the CNX Nifty was down by 69.00 points or 0.62% to 11,132.75.

 

The US markets ended sharply higher on Monday with Dow Jones Industrial Average scoring its biggest one-day percentage gain in nearly 11 years, as stocks bounced back sharply from the previous week's selloff, with the rebound fueled by expectations that policy makers will move to cushion the impact of the COVID-19 outbreak on the global economy. Expectations the Federal Reserve and other central banks will move to ease policy were credited with helping to fuel a rebound in global equities. However, the Paris-based Organization for Economic Cooperation and Development forecast that the global economy would grow by 2.4% in its best case scenario, compared with 2.9% expansion projected before the viral outbreak. The global death toll from COVID-19 stands at more than 3,000, while health officials in Washington state on Monday said there have been four more deaths from the outbreak, bringing the total to six. On the economic data front, construction spending in the US jumped by much more than expected in the month of January, according to a report released by the Commerce Department. The Commerce Department said construction spending surged up by 1.8 percent to an annual rate of $1.369 trillion in January after inching up by 0.2 percent to a revised rate of $1.346 trillion in December. Street had expected construction spending to climb by 0.7 percent compared to the 0.2 percent dip originally reported for the previous month. The bigger than expected spike in construction spending reflected sharp increases in both private and public construction spending. Meanwhile, a report released by the Institute for Supply Management (ISM) showed US manufacturing activity saw a slight expansion in the month of February. Dow Jones Industrial Average surged 1,293.96 or 5.09 percent points 26,703.32 Nasdaq gained 384.8 points or 4.49 percent to 8,952.17and S&P 500 was up 136.01 points or 4.6 percent to 3,090.23. 

 

Crude oil futures ended sharply higher with gains of over four percent on Monday on optimism that Organization of the Petroleum Exporting Countries (OPEC) and its allies will soon announce additional production cuts. Oil prices also found support from expectations that global central banks are ready to support economies amid the coronavirus outbreak. Besides, the gains also came amid volatile trade in equities, with the Dow Jones Industrial Average gaining over 5 percent and other major indexes rallying Monday after suffering their worst week since the financial crisis in 2008. Crude oil futures for April surged $1.99 or about 4.5 percent to settle at $46.75 a barrel on the New York Mercantile Exchange. April Brent crude rose $2.23 or 4.5 percent to settle at $51.90 a barrel on London's Intercontinental Exchange.

 

Erasing all of its initial gains, Indian rupee depreciated considerably for second straight session against the US dollar on Monday, amid buying in the American currency by banks and importers. Investor sentiments remained fragile as the government data showing that Q3 GDP growth slowed a 7-year low of 4.7% on the back of a continued slump in manufacturing and escalating coronavirus fears. Some pessimism also came with a private survey showed India's factory activity growth slowed in February from the previous month's eight-year high due to a modest weakening in demand and output, although overall conditions remained firm. The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, fell to 54.5 last month from January's 55.3. The rupee's losses were also caused by late hour sell-off in domestic equity market. On the global front, Euro steadied on Monday after their worst weekly showing since the 2008 financial crisis, as traders swung their attention to the extra injections of support they now expect major central banks to provide following the virus outbreak. The last traded price of rupee was 72.73, 49 paise weaker from its previous close of 72.24 on Friday.

 

The FIIs as per Monday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 12531.64 crore against gross selling of Rs 15872.49 crore, while, in the debt segment the gross purchase was of Rs 452.36 crore with gross sales of Rs 2717.67 crore. Besides, in the hybrid segment the gross buying was of Rs 14.99 crore against gross selling of Rs 8.65 crore.

 

The US markets ended sharply higher on Monday as investors grew optimistic that the Federal Reserve and other central banks would soon intervene to limit the economic impact from the spread of the novel coronavirus. Asian markets are trading in green in early deals on Tuesday tracking overnight gains on Wall Street. Indian markets wiped out all of their early gains and ended lower with cut of around half a percent each on Monday after two people from Delhi and Telangana tested positive for the coronavirus. Today, the benchmarks are likely to make flat-to-positive start following gains in global markets. Some support will also come with Union Finance Minister Nirmala Sitharaman's statement that the direct tax dispute resolution scheme announced in Budget will be of great help to people as they will be able to save time and money spent in fighting cases. Though, sharp rise in crude oil prices may keep gains in check. Traders may be concerned as The Organisation for Economic Cooperation and Development (OECD) lowered India's GDP growth forecast to 5.1%, from its earlier projection of 6.2%, for 2020 on concerns over the impact of deadly coronavirus on the domestic as well as the global economy. There will be some cautiousness as the National Statistical Office's (NSO) data showed that as the economy grapples with a prolonged slowdown, close to Rs 10.52 lakh crore of the corporate debt is at the risk of default over the next three years. Besides, the finance ministry has said that the central GST authorities have detected evasion of Rs 70,206 crore between July 1, 2017 launch of GST and January, 2020. There will be some buzz in the banking stocks with report that Public Sector Banks (PSBs) may end the current fiscal year 2019-20 on a positive note after registering a profit in the three quarters so far. Gems and jewelry stocks will be in focus with Crisil Ratings' report that the country's diamond exports could shrink by a fifth to $19 billion by the end of 2020-21, as the novel coronavirus (n-CoV) outbreak amplifies sluggishness in global demand. There will be some reaction in sugar stocks with ICRA's report that higher-than-anticipated exports and lower production for the SY2020 (sugar year 2019-2020) season are likely to support domestic sugar prices. On expectations of a global deficit, sugar prices have risen from $313/MT in August 2019 to $388/MT in January 2020. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

11,132.75

10,968.33

11,365.08

BSE Sensex

38,144.02

37,592.28

38,889.46

                                                 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Yes Bank

1,277.51

31.55

29.05

34.80

Tata Motors

1,115.86

125.40

121.50

131.60

SBI

667.11

287.40

276.97

304.92

Vedanta

327.33

110.95

106.83

117.23

ICICI Bank

286.42

506.10

496.18

518.28

 

  • Coal India has reported rise in its production by 14.2% to 66.26 million tonnes in February 2020. 
  • Tata Motors has reported domestic sales of 38,002 units for February 2020, as compared to 57,221 units for February 2019, posting a decline of 34%. 
  • SBI is expecting that growth in corporate credit offtake during Q4 of 2019-20 of the bank to be in the region between five to seven per cent on year-on-year basis. 
  • Maruti Suzuki India has reported total sales of 147,110 units in February 2020, as compared 148,682 units in February 2019, registering fall of 1.1%.
News Analysis