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NSE Intra-day chart (17 March 2020)
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Market Commentary 18 March 2020
Benchmarks to get flat-to-positive start amid gains in global markets

 

Dalal Street got hit by another day of steep losses on Tuesday, as Sensex & Nifty settled down by around 2.5% each. Markets started on a cautious note, amid Care Ratings' report that corporate India is expecting a 0.5% hit on economic growth in FY2020-21 if the coronavirus pandemic lasts longer, pushing up fiscal deficit and creating more bad loans for the bank. But, indices soon staged recovery to remain in green for the most part of the session, aided with RBI Governor Shaktikanta Das' statement that RBI has many provisions to provide cushion to the sagging economy, however, that will completely depend on the circumstances. The RBI has announced two key measures that the central bank will take to improve the liquidity condition of the Indian economy and financial markets. But, key benchmarks failed to hold their gains in last hour of the trade and ended in red terrain, on the back of weak cues from the global markets. Traders remained worried with Minister of State for Finance Anurag Thakur's statement that India's near-term macroeconomic outlook is vulnerable to disruption of trade with China on account of coronavirus outbreak. The coronavirus outbreak, first in China and now having being confirmed in more than 100 countries, has emerged as a key risk to human health as well as global growth outlook through numerous channels like trade, production and supply chain disruptions as well as decline in demand. Finally, the BSE Sensex slipped 810.98 points or 2.58% to 30579.09, while the CNX Nifty was down by 230.35 points or 2.50% to 8,967.05.

 

The US markets ended higher on Tuesday on account of bargain hunting, with traders picking up stocks at reduced levels following the sharp decline seen yesterday. Sentiments got boost on White House plans that could inject $1 trillion into the US economy to cushion the blow of the coronavirus. Positive sentiment was also generated in reaction to President Donald Trump's pledge to support industries that have been hit particularly hard by the outbreak, such as airlines. He added that the United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. The US will be stronger than ever before. On the economic data front, a report released by the Commerce Department showed a modest decrease in business inventories in the US in the month of January. The Commerce Department said business inventories edged down by 0.1 percent in January after coming in unchanged in December. The slight drop in inventories matched Street estimates. The modest decrease in business inventories was partly due to a continued decline in wholesale inventories, which fell by 0.4 percent in January after slipping by 0.3 percent in December. Manufacturing inventories also dipped by 0.1 percent in January after climbing by 0.4 percent in December, while retail inventories were unchanged after edging down by 0.1 percent in the previous month. 

 

Crude oil futures ended lower on Tuesday as traders focused on expectations for a massive hit to demand from the global spread of COVID-19, and an increase in supply as Russia and Saudi Arabia engage in a global price war. Meanwhile, Russia and Saudi Arabia show no signs of backing away from a price war initiated after Moscow rejected calls by the Organization of the Petroleum Exporting Countries for major producers to implement deeper production cuts. Crude oil futures for April fell $1.75 or 6.1 percent to settle at $26.95 a barrel on the New York Mercantile Exchange. May Brent crude declined $1.32 or 4.4 percent to settle at $28.73 a barrel on London's Intercontinental Exchange.

 

Indian rupee gave away most of its gains and strengthened a bit against dollar on Tuesday, driven by weakening of the greenback in overseas markets. Traders took some support with RBI Governor Shaktikanta Das' statement that RBI has many provisions to provide cushion to the sagging economy, however, that will completely depend on the circumstances. The RBI has announced two key measures that the central bank will take to improve the liquidity condition of the Indian economy and financial markets. But most of the gains were trimmed as Moody's Investors Service lowered India's GDP growth forecast for 2020 calendar year to 5.3 per cent, on coronavirus implications on the economy. Moody's had in February projected a 5.4 per cent real GDP growth for India in 2020. This too was a downgrade from 6.6 per cent earlier forecast. On the global front, dollar's rally gathered steam on Tuesday as nervous traders rushed to buy the most liquid currency amid fragile sentiment and signs of growing pressure in offshore dollar funding markets. The last traded price of rupee was 74.23, 2 paise stronger from its previous close of 74.25 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 6968.78 crore against gross selling of Rs 11668.63 crore, while in the debt segment, the gross purchase was of Rs 974.36 crore with gross sales of Rs 12428.95 crore. Besides, in the hybrid segment, the gross buying was of Rs 43.49 crore against gross selling of Rs 22.44 crore.

 

The US markets ended higher on Tuesday as the White House and Federal Reserve unveiled massive stimulus measures to help the economy deal with the coronavirus pandemic. Asian markets are trading mostly higher in nearly on Wednesday following positive cues from Wall Street overnight. Indian markets closed sharply lower on Tuesday amid worries that the coronavirus pandemic will tip the global economy into recession. Today, the benchmarks are likely to get flat-to-positive start amid gains in global markets. Some support will come with the Reserve Bank of India's (RBI) report that overseas investment by domestic firms stood at $2.37 billion in February 2020. In the year-ago same period, companies in India invested $2.36 billion. Traders may take note of report that the Reserve Bank of India (RBI) has reduced the capital requirements for payment aggregators to Rs 15 crore at the time of application for the license from Rs 100 crore proposed earlier. Besides, a research report by the State Bank of India stated that a combination of monetary as well as fiscal policy measures are called for to salvage the economy from the collateral damage from the fallout of the spread of coronavirus disease-COVID-19. Though, there may be some cautiousness amid worries over coronavirus outbreak. According to the health ministry, the number of novel coronavirus cases in India rose to 139 so far, while one more person died taking the death toll to three. Also, traders will be concerned as S&P Global Ratings lowered India's economic growth forecast to 5.2% for 2020, saying the global economy is entering a recession amid the coronavirus pandemic. Meanwhile, markets regulator Securities & Exchange Board of India (SEBI) asked merchant bankers to provide to investors an updated copy of the 'General Information Document' for public issues, having information about UPI mechanism and the reduced timeline for IPOs. Metal stocks will be in focus with private report that the spread of coronavirus, coupled with rising threats of cheap imports from China, Japan and South Korea, has kept the lid on domestic steel prices and forced producers to consider pruning production in the short term, amid subdued demand. There will be some reaction in e-commerce sector stocks as the Centre said that it has proposed certain amendments to the Competition law for greater regulation of e-commerce platforms and ensure that presence of etailers has no severe impact on local jobs. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

8,967.05

8,787.17

9,275.37

BSE Sensex

30,579.09

29,966.69

31,619.73

                                                 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Yes Bank

2,234.63

58.65

44.67

68.77

Tata Motors

718.49

77.95

75.23

82.83

State Bank of India

654.15

215.15

208.17

226.02

ITC

476.58

149.15

144.87

154.62

ICICI Bank

472.33

367.25

351.35

395.80

 

  • Maruti Suzuki India has introduced the BS6 S-CNG variant of country's best-selling multi-purpose van, Eeco. 
  • HDFC Bank has executed an agreement for selling 19,650 equity shares held by it in Softcell Technologies at Rs 43.55 per equity share for cash consideration of Rs 8.56 lakh. 
  • IOC is planning to set up an LPG bottling plant in Mizoram, besides upgrading 100 retail outlets across the Northeast in the next financial year. 
  • Dr. Reddy's Laboratories has launched Ziprasidone Mesylate for Injection, 20 mg (base)/ml Single-dose Vials, approved by the USFDA.
News Analysis