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NSE Intra-day chart (23 June 2020)
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Market Commentary 24 June 2020
Markets to get flat-to-negative start amid coronavirus concerns

 

Rising for the fourth straight session, Indian equity benchmarks ended Tuesday's session near day's high level, following reports that Indian and Chinese armies reached a consensus to de-escalate tensions on the border. Positive cues from global markets and sustained foreign fund inflow also kept investor sentiment higher. Key indices made an optimistic start, as traders took encouragement with Niti Aayog Vice Chairman Rajiv Kumar's statement that India will transform into a middle-income country from a lower middle-income economy by 2030. Kumar also said that India will witness a recovery in investment cycle by April 2021 and beef up efforts on trade front as well. However, the stock markets soon turned cautious with report that Moody's Investors Service has projected that the Indian economy to shrink 3.1% in 2020 and said clashes with China on the border also suggest rising geopolitical risks in the Asian region where countries are particularly vulnerable to changes in geopolitical dynamics. But, key gauges regained traction in late morning deals, as sentiment got a boost with Commerce and industry minister Piyush Goyal's statement that India's exports in the first two weeks of June have reached above 80% level of the same period last year and would be only 10-12% lower in the month compared to June 2019. Market-men also took support from the Fitch Ratings' report that India is very likely to come out with another round of fiscal stimulus package, worth about 1 percent of Gross Domestic Product (GDP) in the coming months. Fitch, which recently revised India's sovereign rating outlook to negative from stable, said it has factored in the outgo for additional fiscal stimulus while deciding on the rating action. Buying got intensified in late afternoon session, taking support from private report stated that even though India relies sizeably on Chinese imports, there are 40 sectors where domestic substitutes do exist and switching part of the requirements to local alternatives can reduce the trade deficit with the northern neighbour by $8.5 billion in a single year. Finally, the BSE Sensex gained 519.11 points or 1.49% to 35,430.43, while the CNX Nifty was up by 159.80 points or 1.55% to 10,471.00.

 

The US markets settled higher on Tuesday, extending the upward move seen over the course of the previous session, with the Nasdaq Composite booking another record close, helped by improving economic data and optimism on Wall Street about the ability of the US to respond to rising COVID-19 cases. Some support also came in as Treasury Secretary Steven Mnuchin said he anticipates a new round of coronavirus stimulus to pass Congress in July, while stressing that he also expects China will hold up its end of the Phase 1 trade agreement with Washington. Besides, Apple posted an all-time record close, as investors responded to announcements from the tech giant's Worldwide Developers Conference. However, Dr. Anthony Fauci, the nation's top infectious disease expert, warned that the next couple of weeks are going to be critical in terms of the addressing a disturbing surge in COVID-19 cases across the United States. He also reiterated a cautious optimism about the prospects for the development of a vaccine by year's end or early 2021. On the economic data front, new home sales in the US showed a substantial increase in the month of May, according to a report released by the Commerce Department. The report said new home sales spiked by 16.6 percent to an annual rate of 676,000 in May from a significantly downwardly revised rate of 580,000 in April. Street had expected new home sales to jump 2.7 percent to an annual rate of 640,000 from the 623,000 originally reported for the previous month. The downwardly revised data for April indicates new home sales plunged by 5.2 percent during the month compared to the previously reported 0.6 percent uptick. New home sales in the Northeast skyrocketed by 45.5 percent to a rate of 32,000, home sales in the West soared by 29.0 percent to a rate of 169,000 and home sales in the South surged up by 15.2 percent to a rate of 402,000.

 

Crude oil futures ended lower on Tuesday with conflicting US government statements on the status of US-China trade deal. White House trade adviser Peter Navarro stoked confusion among investors overnight when he said that the trade agreement was over. Trump then said that the deal was fully intact. Further, oil prices also fell as worries about energy demand resurfaced amid reports showing a sharp surge in coronavirus cases across several states in America. US case tally surging with more than half the states trending up as death toll tops 120,000. Crude oil futures for August declined 36 cents or 0.9 percent to settle at $40.37 a barrel on the New York Mercantile Exchange. August Brent crude fell 45 cents or 1 percent to settle at $42.63 a barrel on London's Intercontinental Exchange.

 

Rising for the second consecutive day, Indian rupee has displayed a stronger trend against dollar on Tuesday, on continued selling of the American currency by exporters and banks. Sentiments remained buoyant with Fitch Ratings' latest report stating that India is very likely to come out with another round of fiscal stimulus package, worth about 1 percent of Gross Domestic Product (GDP) in the coming months. Fitch, which recently revised India's sovereign rating outlook to negative from stable, said it has factored in the outgo for additional fiscal stimulus while deciding on the rating action. Sustained foreign fund inflows, rising domestic equities and easing oil rates lifted investors' confidence in the Indian rupee markets. On the global front, pound rose versus the dollar but was little changed against the euro in early London trading on Tuesday, ahead of UK PMI data for June and the expected announcement of further lockdown easing measures. Finally, the rupee ended at 75.66, 38 paise stronger from its previous close of 76.03 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 5704.77 crore against gross selling of Rs 5273.96 crore, while in the debt segment, the gross purchase was of Rs 1093.12 crore with gross sales of Rs 909.93 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.04 crore against gross selling of Rs 7.63 crore.

 

The US markets ended higher on Tuesday as White House trade adviser Peter Navarro clarifyed his remarks about the US-China trade deal. Asian markets are trading mostly in green on Wednesday amid US assurances that the China trade deal was intact. Indian markets ended higher for a fourth straight session on Tuesday amid buying across the board despite rising coronavirus cases in the country. Today, markets are likely to make flat-to-negative start on concerns about rising coronavirus cases in India. India has again seen a sharp spike in the number of coronavirus cases, with its total rising to 456,115. Around 14,483 people have died in the country from Covid-19 so far. Investors will be concerned with Chief Economic Advisor Krishnamurthy V Subramanian's statement that shutting the doors to other countries will not help India, amid the current anti-Chinese sentiment triggered by the Sino-India border tension and talks of an import substitution policy. However, traders may take encouragement later in the day as the Finance Ministry cited green shoots of recovery in agriculture, manufacturing and services sectors, and said the prompt policy measures taken by the government and RBI have helped reinvigorate the economy with minimal damage. Some support may also come with Union Minister Nitin Gadkari's statement that integrated approach to transportation system, diversification of agriculture into energy and power, and development of industrial clusters outside metro cities are the need of the hour to boost the Indian economy. Meanwhile, the market regulator SEBI has eased preferential allotment rules for fund-raising by stressed companies, and also granted eligible companies exemption from making an open offer. There will be some buzz in the aviation stocks with report that India may soon allow airlines from the US, France, UK, Germany among others to operate flights to and from India for approved categories of passengers. Auto stocks will be in focus with Fitch Ratings' statement that auto volumes are expected to recover partly in the second half of the ongoing financial year as sales gradually increase after the easing of lockdown measures since May. There will be some reaction in the IT stocks with ICRA's statement that the temporary suspension of H1-B and L-1 visas by the US is a mildly negative development for the Indian IT companies as their dependence on permits has gone down lately. Insurance stocks will be in limelight as IRDAI allowed the health and general insurers to offer short-term health insurance policies that will give coverage against the coronavirus infection.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,471.00

10,353.60

10,536.55

BSE Sensex

35,430.43

35,022.03

35,660.50

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

686.39

104.40

102.20

106.30

State Bank of India

654.88

192.45

189.17

194.42

IndusInd Bank

457.17

520.40

503.73

530.53

ICICI Bank

324.95

376.15

367.47

381.57

Indian Oil Corporation

317.97

89.35

88.17

90.52

 

  • Maruti Suzuki India has introduced the BS6 compliant S-CNG variant of its Mini SUV, S-PRESSO. 
  • ICICI Bank has launched Insta Education Loan where customers will get instant sanction letter for education loans upto Rs 1 crore. 
  • Larsen & Toubro's construction arm -- L&T construction has secured contracts for its various businesses.
  • Bajaj Finance has launched online Fixed Deposit facility for customers.
News Analysis