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Market Commentary 27 April 2020
Markets to open in green amid positive global cues

 

Indian equity benchmarks ended volatile session on a pessimistic note with losses of over one and half percent on Friday, on the back of weak global cues after a report that an experimental antiviral drug for the coronavirus flopped in its first randomised clinical trial. Key indices failed to sustain the momentum of the last two trading sessions, with Sensex and Nifty slipping below their crucial 31,350 and 9,200 levels, respectively. Key bourses started the session with a gap-down opening, as traders were concerned with rising coronavirus cases in the country. Selling further crept in with the Confederation of Indian Industry's (CII) report that India's GDP is likely to range between a decline of 0.9% and a growth of 1.5% in the current financial year, with the economy undergoing a turbulent phase caused by the coronavirus-induced lockdown. However, markets had begun to recover and have cut their respective intra-day loss in afternoon session, as traders found some support with report that Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman will again meet on April 24 to finalise a second stimulus package for industry, the poor and farmers. Though, both indices failed to hold the recovery and slipped back to opening levels at the end of the session, as some anxiety remained among traders with Former Finance Secretary Subhash Chandra Garg's statement that the unavailability of data is the main reason why the government has not been able to announce a stimulus package for coronavirus-stricken businesses, including MSMEs. Finally, the BSE Sensex lost 535.86 points or 1.68% to 31,327.22, while the CNX Nifty was down by 159.50 points or 1.71% to 9,154.40.

 

The US markets ended higher on Friday as investors scooped up technology shares and picked over beleaguered financials-bullish signs after the week started with a historic fall in oil prices to unprecedented negative levels. Tenuous signs of stability in the price of oil, have provided some support for equities, but doubts about the severity of the economic recession unfolding due to the COVID-19 pandemic leave investors worried about the durability of recent crude gains. Investors also were encouraged by President Trump signing into law the much-awaited $484 billion coronavirus aid package that includes a second round of funding for small businesses under the Paycheck Protection Plan (PPP). The measure contains another $320 billion to help small businesses. It also has about $75 billion for hospitals, $25 billion for coronavirus testing and $60 billion for the Small Business Administration's Economic Injury Disaster Loan program.

 

Crude oil futures ended higher for a third straight session on Friday, but US oil prices posted a record weekly loss of more than 32%, as investors attempted to take stock of a historic collapse in prices that cast a spotlight on problems of oversupply and dwindling storage in the energy complex. Some producers in the US are cutting production while other participants have said they would aim to cut output ahead of a May 1 deadline to enact global reductions under a historic pact forged by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group collectively known as OPEC+. Crude oil futures for June gained 44 cents or 2.7 percent to settle at $16.94 a barrel on the New York Mercantile Exchange. June Brent crude added 11 cents or 0.5 percent to settle at $21.44 a barrel on London's Intercontinental Exchange.

 

Snapping its two-day gaining streak, Indian rupee weakened considerably against the US currency on Friday, on account of fresh dollar demand from banks and importers. Sentiments turned pessimistic with the Confederation of Indian Industry's (CII) report that India's GDP is likely to range between a decline of 0.9% and a growth of 1.5% in the current financial year, with the economy undergoing a turbulent phase caused by the coronavirus-induced lockdown. Market participants were concerned that the sharp rise in coronavirus cases could weigh on the global as well as domestic economy. Weak trend in domestic stock markets along with firm dollar in the overseas market were also a reason behind fall in the rupee. On the global front, dollar was headed for its best week since early April on Friday as tumbling oil prices weighed on commodity currencies and division over Europe's emergency fund dragged on the euro. Finally, the rupee ended at 76.46, 40 paise weaker from its previous close of 76.06 on Thursday.

 

The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 6570.24 crore against gross selling of Rs 6087.70 crore, while in the debt segment, the gross purchase was of Rs 1647.96 crore with gross sales of Rs 766.15 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.06 crore against gross selling of Rs 8.59 crore.

 

The US markets ended higher on Friday after President Donald Trump signed a $484 billion stimulus package that will replenish a fund for small-business lending and direct money to hospitals and efforts to ramp up US testing capacity in the fight against COVID-19. Asian markets are trading in green on Monday ahead of a busy week for earnings and central bank meetings, with much chatter the Bank of Japan (BOJ) will announce more stimulus steps. Indian markets ended lower on Friday with tepid cues from global markets and rising coronavirus infections in India kept investors nervous. Today, the start of new week is likely to be optimistic tracking positive cues from global markets. Traders will be getting encouragement with the MSME Minister Nitin Gadkari's statement that the government may soon set up a Rs 1 trillion revolving fund for micro, small and medium enterprises (MSMEs) to bring in much-needed liquidity for small businesses if the Prime Minister's Office accepts the proposal. Some support will also come with a private report that India is considering a goods and services tax (GST) relief package to counter the impact of Covid-19 and help prop up the economy. Also, the Reserve Bank of India's (RBI) data showed that the country's foreign exchange reserves surged by $3.09 billion to $479.57 billion in the week to April 17, due to an increase in foreign currency assets. Traders may take note of the government's statement that India's chemical exports rose by 7% to Rs 2.68 lakh crore during April-January period of the last fiscal, and became the top exporting sector in the country for the first time. However, traders may be concerned with the Worldometer data report showing that India's total count of coronavirus (Covid-19) cases has reached 27,890 and the death toll currently stands at 882. There may be some cautiousness with CARE Ratings' statement that the country's GDP growth is likely to decline to 1.1% in the current financial year 2020-21 due to the coronavirus pandemic. The domestic rating agency added that the estimate has a downward bias, saying predicting the recovery is very difficult at present. Besides, remaining risk-averse amid the coronavirus pandemic, overseas investors have withdrawn net Rs 10,347 crore from Indian capital markets in April so far. Agriculture related stocks will be in focus with Agriculture Ministry's data showing that area sown to rice increased by 37.70% to 34.73 lakh hectare so far in the kharif (summer) season of the 2020-21 crop year. There will be some important result announcements to keep the markets in action. 

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

9,154.40

9,098.17

9,253.77

BSE Sensex

31,327.22

31,122.91

31,686.88

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

State Bank of India

651.47

179.75

177.83

182.83

Reliance Industries

617.11

1,417.00

1,344.48

1,492.23

Tata Motors

400.54

74.20

73.17

76.07

ICICI Bank

385.13

334.85

329.82

341.57

Axis Bank

357.73

403.95

396.92

415.32

 

  • ICICI Bank is planning to launch mobile ATM services in Tamil Nadu after its successful launch in New Delhi, Mumbai and Varanasi. 
  • L&T construction arm -- L&T construction Transportation Infrastructure IC in consortium with Kyosan Electric Manufacturing Co., Japan has bagged order for its Railway Strategic Business unit. 
  • RIL has cut crude oil processing at its exports-only refinery at Jamnagar in Gujarat in March by close to one-fourth. 
  • M&M has raised Rs 1000 crore on private placement basis and allotted 6.78% 10,000 nos. of Rated, Listed, Unsecured, Redeemable NCDs of Rs 10,00,000 each for cash at par.
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