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NSE Intra-day chart (24 June 2020)
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Market Commentary 25 June 2020
Benchmarks to make gap-down opening amid sell-off in global markets

 

Snapping a four-session gaining run, Indian equity benchmarks ended Wednesday's trade on a negative note with losses of over one and half percent, tracking a selloff in banking, telecom and financial stocks and weak cues from global markets. Key gauges kicked off session in the green, 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. Sentiments remained positive with Fitch Solutions' statement that the country's farm trade, which was disrupted during the COVID-19 lockdown due to logistic issues in March-June, is expected to rebound in the second half of the calendar year 2020.  Some optimism also came with a private report stating that unemployment rate in the country dropped sharply to pre-lockdown level at 8.5% in the third week of June, after reaching a peak to 27.1% in the first week of May due to the lockdown. However, Indian indices pared all their gains and witnessed heavy selling pressure in the second half of the session, as traders turned cautious, with ratings agency S&P Global Ratings' statement that companies in India face further potential rating downside if the recovery in corporate earnings is prolonged beyond 18 months. About 35 per cent of credit ratings on Indian corporates have either a negative outlook or are on CreditWatch with negative implications. Domestic sentiments also got hit after India Ratings and Research in its report said that India's economy is likely to shrink by 5.3 per cent this fiscal, the lowest GDP growth in the Indian history and the sixth instance of economic contraction. Finally, the BSE Sensex lost 561.45 points or 1.58% to 34,868.98, while the CNX Nifty was down by 165.70 points or 1.58% to 10,305.30.

 

The US markets ended sharply lower on Wednesday as investors worried that rising coronavirus cases in many American states will set back economic recovery. Fueling the renewed concerns, Florida and California both reported their single biggest daily increases in new cases of COVID-19. Florida's Department of Health confirmed 5,508 new cases on Tuesday, while the California Department of Public Health reported an additional 7,149 cases. New York, New Jersey and Connecticut announced 14-day quarantines on visitors from states with high COVID-19 infection rates. The travel advisory, which impacts residents of nine states, raises concerns about the pace of business activity resuming after lockdowns imposed to contain the spread of the pandemic. The nation's seven-day average of daily new Covid-19 cases spiked more than 30 percent compared with a week ago. On the international trade front, the US is considering imposing tariffs on some $3.1 billion worth of goods from France, German, Spain and the UK, on products, including beer, gin, olives and trucks, also creating headwinds for stocks and igniting fears of a fresh trade war as the American economy reels from the pandemic. The Trump administration also has been threatening to re-imposing tariffs on imports of aluminum from Canada on July 1 as the new USMCA, or the United States Mexico Canada Agreement, which replaced the North American Free Trade Agreement, is set to take effect. Meanwhile, the International Monetary Fund (IMF) cut its economic forecast for 2020, saying that the coronavirus pandemic has caused an unprecedented decline in global activity. The IMF dropped its global economic growth expectations for this year to negative 4.9%. That's almost two percentage points lower than three months ago.

 

Crude oil futures ended deeply in red on Wednesday on rise in coronavirus cases. The World Health Organization pointed to rising cases of coronavirus in the US, China, Latin America, reigniting worries of a possible second wave of the epidemic. Further oil prices also fell as US government data reveal a third straight weekly climb in domestic crude inventories. The Energy Information Administration reported that US crude inventories rose for a third week in a row, by 1.4 million barrels for the week ended June 19. That compared with a forecast by S&P Global Platts for an average decline of 100,000 barrels. The American Petroleum Institute on Tuesday reported a climb of roughly 1.7 million barrels. Crude oil futures for August dropped $2.36 or 5.9 percent to settle at $38.01 a barrel on the New York Mercantile Exchange. August Brent crude fell $2.32 or 5.4 percent to settle at $40.31a barrel on London's Intercontinental Exchange.

 

Indian rupee ended weaker against the US dollar on Wednesday, on increased demand for the greenback from importers and banks. Traders remain concerned with Chief Economic Advisor (CEA) Krishnamurthy V Subramanian's statement that shutting the doors to other countries will not help India. His comments came after the nationwide clamour for a boycott of Chinese goods is getting louder, following the fierce clash between the troops of India and China in eastern Ladakh that left 20 Indian Army personnel dead. Broad strength in US dollar also weighed on the rupee. On the global front; dollar regained some ground on Wednesday after two straight days of losses, as money markets tempered hopes of a rapid global economic recovery. Finally, the rupee ended at 75.72, 6 paise weaker from its previous close of 75.66 on Tuesday.

 

The FIIs as per Wednesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 5041.59 crore against gross selling of Rs 4912.04 crore, while in the debt segment, the gross purchase was of Rs 1150.35 crore with gross sales of Rs 695.37 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.49 crore against gross selling of Rs 7.06 crore.

 

The US markets settled sharply lower on Wednesday as it seemed traders could no longer ignore the spiking number of new coronavirus cases in several US states. Asian markets are trading in red on Thursday as surging US coronavirus cases, global trade tensions and an IMF downgrade to economic projections knocked confidence in a recovery. Indian markets snapped a four-day winning streak and ended lower on Wednesday on account of heavy selling in banking, pharma and metal stocks. Today, the markets are likely to make gap-down opening tracking sell-off in the global peers. Market participants will also react to the burgeoning Covid-19 cases in India. The country saw a sharp spike of over 16,500 coronavirus cases. The country's total count of infections now stands at 472,985. More than 14,900 have died from the highly contagious virus. Besides, there will be some volatility in the markets as the F&O contracts for the June series are due to expire today. Traders will be concerned as the International Monetary Fund (IMF) projected a sharp contraction of 4.5 per cent for the Indian economy in 2020, a historic low, citing the unprecedented coronavirus pandemic that has nearly stalled all economic activities, but said the country is expected to bounce back in 2021 with a robust six per cent growth rate. However, some support may come later in the day as Union Minister Nitin Gadkari launched the Credit Guarantee Scheme for Sub-ordinate Debt to provide Rs 20,000 crore of guarantee cover to two lakh micro, small and medium enterprises (MSMEs). Meanwhile, in a relief for taxpayers, the Centre has extended the deadline for filing income tax returns (original as well as revised) for FY2018-19 to July 31, 2020. The last date for filing income tax returns for FY2019-20 has also been extended to November 30, 2020. Besides, easing compliance requirements due to continuing adverse impact of the coronavirus pandemic, market regulator SEBI gave another month's extension till July 31 to listed companies for submitting their fourth-quarter as well as annual results. There will be some buzz in the banking stocks as the government decided to bring Urban Co-operative Banks (UCBs) and Multi-State Co-operative Banks under the governance of the Reserve Bank of India (RBI). Metal stocks will be in focus with a private report that Aluminium Association of India (AAI) has approached the ministry of finance and the ministry of commerce and Industry to implement remission of duties or taxes on export products (RoDTEP) scheme, a move aimed to compete and substitute Chinese aluminium exports to major economies in the world.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,305.30

10,207.12

10,478.32

BSE Sensex

34,868.98

34,540.42

35,452.04

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

Tata Motors

1,254.62

104.80

102.40

109.00

State Bank of India

746.70

184.60

180.70

191.70

ICICI Bank

579.56

348.10

335.40

370.40

ITC

546.53

191.85

187.10

195.65

IndusInd Bank

432.58

481.70

461.72

516.07

 

  • Wipro has been awarded a strategic, multiyear infrastructure modernization and digital transformation services engagement by Germany based energy company E.ON. 
  • Cipla is going to price its generic version of antiviral drug remdesivir at less than Rs 5,000 per vial in keeping with its conviction of providing access to the medicines at affordable cost. 
  • Asian Paints has reported 2.07% fall in its consolidated net profit attributable to owner of Rs 461.89 crore for Q4FY20 as against Rs 471.65 crore for Q4FY19. 
  • Maruti Suzuki India has launched distinctive loyalty program - Maruti Suzuki Rewards.
News Analysis