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NSE Intra-day chart (18 June 2020)
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Market Commentary 19 June 2020
Markets to get a cautious start amid lackluster Asian cues

 

Indian equity benchmarks ended Thursday's session near day's high with a gain of over two percent each, on the back of strong buying in banking, financial and metal stocks despite weak cues from global markets. Key bourses started the day on tepid note, as border tensions between India and China continued to simmer while COVID-19 infections surged. But, markets soon inched higher and traded in fine fettle as traders found some support with Federation of Indian Export Organisations (FIEO) President S K Saraf's statement that the ongoing India-China border tensions may not have any immediate impact on the bilateral trade relations. Some optimism also came as Prime Minister Narendra Modi told the Chief Ministers of 14 States and the Lieutenant-Governor of a Union Territory to think about Unlock 2, following the graded opening of economic activities under Unlock 1 since June 1. Markets extended northward moment in the last leg of trade, as investments through participatory notes (P-notes) in the domestic capital market rose to Rs 60,027 crore till May-end, making it the second consecutive monthly increase. Sentiments also remained buoyant with report that the finance ministry has released Rs 15,187 crore to 28 states as grants to rural local bodies to help them restart economic activity. The basic grants can be used by the local bodies for location-specific felt needs, except for salary or other establishment expenditure. Investors paid no heed towards global rating agency Fitch Ratings' report in which it has revised India's outlook to negative from stable, stating that the coronavirus pandemic has significantly weakened the country's growth prospects for the year and exposed the challenges associated with a high public-debt burden. Finally, the BSE Sensex gained 700.13 points or 2.09% to 34,208.05, while the CNX Nifty was up by 210.50 points or 2.13% to 10,091.65.

 

The US markets ended higher on Thursday, but the Dow Jones closed lower for a second straight session, as investors digested a weekly report on the labor market in the US and contended with signs of rising cases and hospitalizations of COVID-19 in several states. New US cases and hospitalizations remain a source of anxiety for investors, with Texas, Arizona, Florida and Oklahoma reporting growing infections. 259 new cases over the previous day in Oklahoma, with President Donald Trump set to hold a campaign rally in Tulsa over the weekend. Florida reported more than 2,600 new cases and Arizona more than 1,800. On the economic data front, the Labor Department released a report showing first-time claims for unemployment benefits fell by much less than expected in the week ended June 13. The Labor Department said initial jobless claims dropped to 1.508 million, a decrease of 58,000 from the previous week's upwardly revised level of 1.566 million. Street had expected jobless claims to tumble to 1.300 million from the 1.542 million originally reported for the previous week. Meanwhile, the Philadelphia Federal Reserve released a separate report showing an unexpected expansion in regional manufacturing activity in the month of June. The Philly Fed said its diffusion index for current general activity soared to a positive 27.5 in June from a negative 43.1 in May, with a positive reading indicating an expansion in regional manufacturing activity. Street had expected the index to show a much more modest increase to a negative 23.0, which would have still indicated a contraction.

 

Crude oil futures ended higher on Thursday after major producers at an OPEC-led meeting of the Joint Ministerial Monitoring Committee (JMMC), stressed the importance of full compliance with pledged production cuts and made moves to ensure that certain countries make up for failing to fully meet their reduction targets last month. The JMMC pegged its compliance with those production cuts at 87% in the month of May. It reiterated the importance that all participating countries reach 100% of their pledged cuts and that they make up for any previous shortfalls in the upcoming months of July, August and September. Crude oil futures for July rose 88 cents or 2.3 percent to settle at $38.84 a barrel on the New York Mercantile Exchange. August Brent crude gained 80 cent or 2 percent to settle at $41.51 a barrel on London's Intercontinental Exchange.

 

Indian rupee strengthened marginally against dollar on Thursday, tracking weak US dollar and gains in the domestic equity market. Traders took some support with FIEO President S K Saraf's statement that the ongoing India-China border tensions may not have any immediate impact on the bilateral trade relations. However, gains remain capped as anxiety remained among traders as Fitch Ratings revised India's outlook to negative from stable, stating that the coronavirus pandemic has significantly weakened the country's growth prospects for the year and exposed the challenges associated with a high public-debt burden. On the global front, sterling dipped against the dollar and euro on Thursday as some investors braced for a larger-than-expected increase in the Bank of England's quantitative easing programme to combat the economic fallout of the COVID-19 pandemic. Finally, the rupee ended at 76.14, 2 paise stronger from its previous close of 76.16 on Wednesday.

 

The FIIs as per Thursday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 6492.93 crore against gross selling of Rs 5715.91 crore, while in the debt segment, the gross purchase was of Rs 733.22 crore with gross sales of Rs 1208.94 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.24 crore against gross selling of Rs 1.34 crore.

 

The US markets ended mostly higher on Thursday as traders digest a mixed batch of US economic data. Asian markets are trading mixed on Friday as investors continued to monitor the situation surrounding a recent uptick in coronavirus cases in some countries. Indian markets ended higher with notable gains on Thursday, with heavyweight Reliance Industries and banks leading the surge despite mixed cues from global cues. Today, the markets are likely to make cautious start amid mixed cues from Asian peers and India-China border tensions continued. Rising coronavirus cases may also impact the sentiments as India has added nearly 14,000 cases of coronavirus in 24 hours, taking its total to 367,264. There will be some cautiousness as the Asian Development Bank projected India's economy to contract by four per cent in the current financial year against its earlier prediction of a growth of four per cent as measures to contain Covid-19 have significantly disrupted activities. Traders will be concerned with Icra's report that earnings of India Inc fell by nearly a fourth in January-March as compared to the year-ago period due to legacy problems, warning of deeper impact in the June quarter due to Covid-19-induced lockdown. Absolute earnings of the corporate India contracted by 22% and 12% in Q4FY20 and FY20, respectively. However, traders may take encouragement with Prime Minister Narendra Modi's statement that economic indicators show that India is ready for a swift bounce back as business activity and demand are back to the level seen before the Covid-19 pandemic. Some support may also come with report that the government is working on steps to reduce import dependence on China and boost domestic manufacturing. Besides, the United Nations Conference on Trade and Development (UNCTAD) has said that India's economy could prove the most resilient in South Asia and its large market will continue to attract market-seeking investments to the country even as it expects a dramatic fall in global foreign direct investment (FDI). There will be some buzz in the coal stocks as  Prime Minister Narendra Modi launched the first-ever coal auction for commercial mining, ending the monopoly of Coal India in a bid to curb import dependence despite having the fourth-largest reserves in the world. There will be some reaction in sugar stocks with Food Secretary Sudhanshu Pandey's statement that the government is considering a proposal to increase the minimum selling price (MSP) of sugar from Rs 31 per kg in order to help millers clear cane dues of about Rs 22,000 crore to farmers.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,091.65

9,920.73

10,186.88

BSE Sensex

34,208.05

33,627.71

34,532.20

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

589.65

96.35

94.60

97.65

State Bank of India

582.62

179.65

173.62

183.17

Axis Bank

437.74

405.40

390.25

414.30

ICICI Bank

392.87

352.00

341.23

358.73

Zee Entertainment Enterprises

379.17

174.40

168.12

178.07

 

  • NTPC's wholly owned subsidiary North Eastern Electric Power Corporation has commissioned commercial operation at Unit-1 of 150 MW of Kameng Hydro Electric Project. 
  • Tata Motors' wholly owned subsidiary -- Jaguar Land Rover has launched a limited edition of its SUV Range Rover to commemorate 50 years of the iconic model. 
  • TCS and IBM have expanded their global alliance to help clients accelerate their digital and cognitive enterprise transformations to IBM public cloud using IBM Cloud Paks. 
  • Bajaj Auto has launched split seat variant of Pulsar 125.
News Analysis