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NSE Intra-day chart (16 April 2020)
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Market Commentary 17 April 2020
Benchmarks to make gap-up start following global markets

 

In a volatile trading session, Indian stock markets traded in green for most part of the day and ended with gains of over half a percent, on the back of buying by participants. With that, the markets snapped two sessions' losing streak, recapturing their crucial 8,990 (Nifty) and 30,600 (Sensex) bastions. Domestic bourses made negative start, tracking losses in global markets as investors fretted over rising number of Covid-19 cases and its impact on the world economy. Sentiments remained in lackluster mood as the government data showed that India's merchandise exports plunged by 34.57% in March 2020 as compared to same period of last year, due to a steep decline in shipments of leather, gems and jewellery and petroleum products. This is expected to be the steepest fall in monthly exports since 2008-09, when shipments dipped by 33.3% in March 2009. Imports during March 2020 too decreased by 28.72% to $31.16 billion as compared to $43.72 billion in March 2019. However, markets have recouped all of their losses and traded higher in late morning deals, taking support from NITI Aayog Vice Chairman Rajiv Kumar's statement that India's gross domestic product (GDP) will see strong recovery from the second quarter (Q2) of the current fiscal year (FY21) as economic activities resume. He also hoped that the government will unveil fiscal measures to jumpstart growth, which has plummeted due to the COVID-19 crisis. Market participants also got comfort after a top official from the International Monetary Fund said that Asia doing better than other regions in the world in their fight against the deadly coronavirus and may recover faster. However, markets trimmed some of gains in dying hour of trade as some anxiety remained among traders with Fitch Ratings stating that the Indian government has less fiscal room to support the economy compared to many of its peers and the country's credit profile would weaken if a wider fiscal deficit increases the debt-GDP ratio. Finally, the BSE Sensex gained 222.80 points or 0.73% to 30,602.61, while the CNX Nifty was up by 67.50 points or 0.76% to 8,992.80.

 

The US markets ended higher on Thursday as President Donald Trump prepares to announce guidelines for states on reopening the country later in the day. Citing encouraging developments, Trump said that some states could reopen before current social distancing guidelines expire on May 1. Traders will keep a close eye on Trump's new guidelines, which are likely to be announced at his daily coronavirus press briefing after the close of trading. Trump has been eager to reopen at least some parts of the country even though health officials have warned reopening too early could lead to a spike in coronavirus infections. Ahead of the announcement from Trump, New York Governor Andrew Cuomo said his state's shutdown of non-essential businesses will be extended in coordination with other states until May 15th. The markets were also reacting to the Labor Department's report on first-time claims for US unemployment benefits in the week ended April 11. The report showed more than 5 million filed for unemployment last week, although that reflects a decrease from the more than 6 million that filed for the first time in the previous week. The Labor Department said initial jobless claims dropped to 5.245 million, a decrease of 1.370 million from the previous week's revised level of 6.615 million. Street had expected jobless claims to drop to 5.105 million from the 6.606 million originally reported for the previous month. While more than 22 million people have filed for unemployment in recent weeks due to the coronavirus-induced shutdown, the drop in claims may be seen as an optimistic sign among some investors.

 

Crude oil futures ended flat on Thursday. Oil prices failed to find support at the key $20 a barrel mark on the back of a global glut in crude. The shutdown of major economies in the effort to contain the COVID-19 pandemic has led to slowdown in demand for oil and expectations for further growth in surplus supplies. A recent agreement by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, was encouraging, but reports on demand from agencies like the IEA suggest it's not enough to offset the drop in demand. Besides, the Energy Information Administration (EIA) reported that domestic supplies of natural gas rose by 73 billion cubic feet for the week ended April 10. That was generally in line with average expectations for an increase of 71 billion cubic feet. Crude oil futures for May ended flat at $19.87 a barrel on the New York Mercantile Exchange. June Brent crude added 13 cents or 0.5 percent to settle at $27.82 a barrel on London's Intercontinental Exchange.

 

Extending weakness for the second day, Indian rupee depreciated considerably against dollar on Thursday, on increased demand for the US currency from importers. Traders remain concerned with the government data showing that India's exports dipped by 34.57% to $21.41 billion in March, while Imports fell by 28.72% to $31.16 billion. Besides, trade deficit narrowed to $9.76 billion in March this year from $11 billion in the same month last year. Sharp rise in coronavirus cases in the country along with dollar's strength against major global currencies overseas also weighed on the domestic unit. Traders failed to get respite with NITI Aayog Vice Chairman Rajiv Kumar's statement that India's gross domestic product (GDP) will see strong recovery from the second quarter (Q2) of the current fiscal year (FY21) as economic activities resume. On the global front, dollar edged higher against its peers on Thursday after dire retail and factory data showed the severity of the collapse in U.S. economic activity caused by the novel coronavirus outbreak. Finally, the rupee ended at 76.87, 43 paise weaker from its previous close of 76.44 on Wednesday.

 

The FIIs as per Thursday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 13726.79 crore against gross selling of Rs 12817.47 crore, while in the debt segment, the gross purchase was of Rs 1261.89 crore with gross sales of Rs 924.47 crore. Besides, in the hybrid segment, the gross buying was of Rs 18.17 crore against gross selling of Rs 6.33 crore.

 

The US markets ended higher on Thursday as President Donald Trump prepares to announce guidelines for states on reopening the country. Asian markets are trading in green on Friday as investors await the release of major Chinese economic data expected to be out ahead. Indian markets ended notably higher buoyed by gains in finance, energy and power stocks despite weak cues from global markets. Today, the start of session is likely to be gap-up tracking positive global cues on a report that a Gilead Sciences drug was showing effectiveness in treating the coronavirus. Investors will be eyeing the Reserve Bank of India (RBI) Governor Shaktikanta Das' media address later in the day. Traders will be getting some encouragement with report that Prime Minister Narendra Modi reviewed the impact of COVID-19 on the Indian economy and a possible second stimulus to boost sectors hit hard by the pandemic. Modi held discussions with Finance Minister Nirmala Sitharaman as the pandemic hit sectors from small industries to the aviation sector hard with millions of jobs at stake. Traders may take note of the International Monetary Fund's statement that Asia doing better than other regions in the world in their fight against the deadly coronavirus and may recover faster. It also said that the impact of the deadly coronavirus on Asia will be severe, across the board, and unprecedented. Though, investors are likely to continue to track the trend in coronavirus cases. As per the Worldometer tally, the number of coronavirus cases in India has risen to 13,430 with 448 deaths. Also, there may be some cautiousness with a research report by SBI stating that India's GDP growth may slide to 1.1% in the current financial year, on account of the impact of coronavirus outbreak on the economy. There will be some buzz in the agriculture stocks as the government set the foodgrain production target at 298.3 million tonnes for the 2020-21 crop year, up 2% from the record output achieved in the current year, banking on forecast of a normal monsoon. Real estate stocks will be in focus with a Knight Frank-Ficci-Naredco Real Estate Sentiment Index Q1 2020 Survey showing that the sentiment in the real estate industry touched all time low in March quarter due to Covid-10 crisis. There will be some reaction in fertilizer stocks as the government said it is closely monitoring the production and distribution of fertilisers to ensure that soil nutrients are made available to farmers during the upcoming rabi (summer-sown) season, amid the COVID-19 outbreak. Steel stocks will also be in limelight with Crisil's report that steel demand in India is expected to decline 14-17% this fiscal, as the construction activities are likely to get further impacted due to the second phase of lockdown.   

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

8,992.80

8,858.55

9,090.40

BSE Sensex

30,602.61

30,145.79

30,929.82

                                                 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

611.66

188.50

182.53

192.18

State Bank of India

564.94

342.00

324.97

353.42

ICICI Bank

544.90

82.70

78.35

85.85

ITC

479.11

74.65

71.97

76.37

Axis Bank

423.45

422.55

406.50

432.80

 

  • Larsen & Toubro's arm -- L&T Heavy Engineering has won significant contracts in Q4 of FY20. 
  • Bharti Airtel's subsidiary -- Airtel Payments Bank has created a dedicated Fight Corona section under the banking section of the Airtel Thanks app to equip its customers in these difficult times. 
  • Moody's Investors Service has placed under review for downgrade Tata Steel's Ba2 corporate family rating. 
  • M&M's step-down wholly owned subsidiary -- Mahindra Renewables has completed the sale of Divine Solren to CLP India, for a consideration of Rs 124.47 crore.
News Analysis