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NSE Intra-day chart (04 February 2020)
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Market Commentary 05 February 2020
Benchmarks to open marginally in green following global markets

 

Bulls retained full charge over Dalal Street on Tuesday, with Sensex & Nifty ending higher by around 2.30% each. After a fabulous start, indices remained firm for the whole day, aided with Minister of State for Finance Anurag Thakur's statement that the economy is not in recession and India recorded the highest average growth among the G-20 nations during 2014-19. The minister also mentioned about continuous measures being taken by the government to improve the overall investment climate and boost the economic growth. Adding some comfort, Finance Minister Nirmala Sitharaman said that the money raised through disinvestment will be used to develop infrastructure, which will have multiplier effect on the economy and not bridging revenue deficit. Key benchmarks extended their northward journey in the second half of the trading session to settle near their intraday high points, after Niti Aayog CEO Amitabh Kant termed the Union Budget pragmatic and said the government is determined to bring Indian economy back to a high trajectory growth path. He further said if the government will be able to achieve disinvestment target of 2020-21 then the Budget will be very successful. Besides, Reserve Bank of India Governor Shaktikanta Das headed six-member rate setting panel started its three-day brainstorming meeting in the backdrop of Union Budget projecting a widening of fiscal deficit amid slowing economy and hardening inflation. Finally, the BSE Sensex gained 917.07 points or 2.30% to 40,789.38, while the CNX Nifty was up by 271.75 points or 2.32% to 11,979.65.

 

The US markets ended sharply higher on Tuesday on the heels of strength in overseas markets, with Chinese stocks rebounding following the nosedive seen as trading resumed on Monday. Traders seem to expect China to announce additional stimulus to boost the economy amid the fallout from the coronavirus outbreak. Private reports said that China's central bank could cut its key lending rate as well as banks' reserve requirement ratios (RRRs) in the coming weeks to support economic growth. The report came a day after the People's Bank of China (PBOC) unveiled liquidity injection measures to the tune of more than 1 trillion yuan. The PBOC also injected another 400 billion yuan in liquidity. The coronavirus has now claimed 425 lives and infected more than 20,000 people in mainland China. On the economic front, partly reflecting a significant rebound in durable goods orders, the Commerce Department released a report showing new orders for US manufactured goods spiked by more than anticipated in the month of December. The Commerce Department said factory orders surged up by 1.8 percent in December after tumbling by a revised 1.2 percent in November. Street had expected factory orders to jump by 1.2 percent compared to the 0.7 percent decrease originally reported for the previous month. The bigger than expected rebound in factory orders came as durable goods orders soared by 2.4 percent in December after plunging by 3.1 percent in November. The rebound was unrevised from the previously reported data. New orders for non-durable goods also showed a significant increase, surging up by 1.1 percent in December after climbing by 0.7 percent in November.

 

Crude oil futures ended lower on Tuesday on concerns over the outlook for energy demand amid the rapidly spreading coronavirus outbreak in China. US prices below $50 a barrel for the first time in more than a year. Market participants were worried that the spread of the virus could have a substantial economic impact on the second-largest economy and the biggest importer of crude oil. As of midnight Monday, China had 20,438 diagnosed coronavirus cases, with 425 deaths, according to China's National Health Commission. Oil Prices dropped even as the Organization of the Petroleum Exporting Countries and its allies considered deeper production cuts to stem a coronavirus-inspired tumble in the commodity that entered a bear market a day ago. Crude oil futures for March declined 50 cents or 1 percent to settle at $49.61 a barrel on the New York Mercantile Exchange. April Brent fell 49 cents or 0.9 percent to settle at $53.96 a barrel on London's Intercontinental Exchange.

 

Indian rupee strengthened against dollar on Tuesday on increased selling of the American currency by exporters and banks. Sentiments remained positive with Minister of State for Finance Anurag Thakur's statement that the economy is not in recession and India recorded the highest average growth among the G-20 nations during 2014-19. The minister also mentioned about continuous measures being taken by the government to improve the overall investment climate and boost the economic growth. A spectacular relief rally in local equities coupled with softening crude oil prices also supported the forex sentiment. However, gains remain capped as anxiety remained among the traders with Fitch Ratings' statement that India is expected to clock a GDP growth of 5.6% in the next financial year, as Budget 2020 has not materially altered its view on the country's growth outlook. On the global front, Sterling fell to nearly a six-week low on Tuesday, extending the previous day's losses, undermined by dollar strength across the board and renewed hard Brexit fears after Prime Minister Boris Johnson's tough tone on European Union trade talks. Finally, the last traded price of rupee was 71.27, 11 paise stronger from its previous close of 71.38 on Monday.

 

The FIIs as per Tuesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 9548.40 crore against gross selling of Rs 7697.83 crore, while in the debt segment, the gross purchase was of Rs 1358.51 crore with gross sales of Rs 1155.36 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.29 crore against gross selling of Rs 2.66 crore.

 

The US markets ended higher on Tuesday as fears of a heavy economic impact from the coronavirus outbreak waned after China's central bank intervened. Asian markets are trading in green on Wednesday on hopes of additional Chinese stimulus to lessen the economic impact of the coronavirus outbreak. Indian markets ended significantly higher on Tuesday, as investors opted for low-level buying in beaten-down stocks, tracking firm global cues and the recent slide in crude prices. Today, the markets are likely to make flat-to-positive start tracking positive cues from global markets. Investors will be eyeing services PMI data for the month of January due later in the day. Also, The RBI's Monetary Policy Committee meeting will be closely monitored by the domestic market participants. Traders will be taking some support with report that India and the US are set to seal a trade deal during President Donald Trump's planned visit to India in the last week of this month. Some support will also come with report that the Foreign Direct Investment (FDI) in India has been increasing on an annual basis and was at $34.90 billion till November of this fiscal. The FDI stood at $62 billion in the full 2018-19 fiscal, while at $60.90 billion in 2017-18 and $60.22 billion during 2016-17. Though, some cautiousness may come with report that direct tax collections from April 2019 to February 3, 2020, are at Rs 7.40 lakh crore versus the revised budget estimates of Rs 11.70 lakh crore. Investors may take note of Moody's Investors Service's statement that economic growth projections made by Finance Minister Nirmala Sitharaman in her Budget for 2020-21 appear ambitious given the structural and cyclical challenges facing the Indian economy. Stating that growth outlook will remain weak, it has put real GDP growth during the current fiscal ending March 31 at 4.9 per cent, slightly below the government's forecast of 5 per cent. For the next fiscal, it estimated real GDP growth of 5.5 per cent, lower than 6-6.5 per cent projected by the government's Economic Survey. Meanwhile, Markets regulator SEBI came out with a common application form for registration of foreign portfolio investors in order to enhance operational flexibility and ease of access to Indian capital market. NBFCs stocks will be in focus with rating agency CRISIL's report that realty exposure of non-banking financial companies (NBFCs), which is out of moratorium, has a bad loan ratio of over 10 per cent as of September 2019 and the fear is rest of the book under moratorium may go the same way. 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

11,979.65

11,846.65

12,049.40

BSE Sensex

40,789.38

40,331.58

41,033.06

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,382.31

34.95

34.13

36.08

SBI

511.42

306.25

299.72

310.17

Tata Motors

490.35

165.70

161.73

169.13

ITC

357.68

215.65

210.67

219.12

ZEEL

229.76

244.50

232.77

262.12

 

  • Bajaj Auto has registered a fall of 3% in total sales to 394,473 units in January 2020 against 407,150 units in January 2019. 
  • L&T's construction arm has been awarded an order by Etihad Rail Company PJSC for the design and build of freight handling facilities at 7 strategic locations across UAE. 
  • IOC has reported product sales volumes including exports at 23.409 MT for the third quarter of FY20. 
  • Tata Motors has commenced bookings for its Harrier BSVI range, with the introduction of the much- awaited Automatic Transmission variants.
News Analysis