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NSE Intra-day chart (08 July 2020)
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Market Commentary 09 July 2020
Benchmarks to make positive start on sanguine global cues

 

Indian benchmark indices have witnessed a choppy trade for the most part of the session and came under heavy pressure in the last minutes of the trade, thus snapping the five-day gaining streak. Domestic markets followed volatility in global equities as rising number of COVID-19 cases across the world stoked concerns over economic recovery. Today's session started with marginal gains, as traders took some support with NITI Aayog CEO Amitabh Kant's statement that India will bounce back with a vengeance with green shoots in the economy already being visible, amidst the multiple challenges thrown up by the Covid-19 pandemic. Adding some optimism, the finance ministry said banks have sanctioned loans of about Rs 1,14,502 crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector reeling under the economic slowdown caused by the COVID-19 pandemic. However, key indices turned highly volatile in late morning session, as market participants got anxious with a private report that the country's economy is likely to show a double-digit contraction in the April-June quarter due to the restriction on economic activities on account of the COVID-19 pandemic. After that, market witnessed sudden fall in final hour of trade and settled with losses of nearly a percent, as sentiments weakened further with Crisil Research's survey report stating that as much as 90 per cent of private equity and venture capital investors foresee a decline in fund-raising activities over the next 6 to 12 months because of the Covid-19 pandemic. Meanwhile, Union minister for road transport and highways Nitin Gadkari chaired a high-level meeting with railway minister Piyush Goyal and environment minister Prakash Javadekar to expedite pending infrastructure projects in the country, particularly those stuck due to inter-ministerial approvals. A key issue discussed in the meeting was outstanding forest clearance for 187 highway projects. Finally, the BSE Sensex lost 345.51 points or 0.94% to 36,329.01, while the CNX Nifty was down by 93.90 points or 0.87% to 10,705.75.

 

The US markets settled higher on Wednesday with tech shares leading gains. The Nasdaq continued to benefit from strong gains by tech giants like Apple, which surged up by 2.3 percent after Deutsche Bank raised its price target on the company's stock to $400 per share from $380 per share. Notable gains by Amazon, Netflix and Facebook also helped lift the tech-heavy index to a new record closing high. Shares of National General Holdings also soared after the insurance company agreed to be acquired by Allstate for approximately $4 billion or $34.50 per share in cash.  However, upside remained capped amid persistent concern that the coronavirus outbreak could stall an economic recovery and as US-China tensions ramped up. The US crossed more than 3 million confirmed cases on Tuesday, and set a single-day record of more than 60,000. On the economic data front, after reporting a sharp drop in US consumer credit in the previous month, the Federal Reserve released a report showing consumer credit continued to decline in the month of May. The Fed consumer credit slumped by $18.2 billion in May after plunging by a revised $70.2 billion in April. Street had expected credit to decrease by $15.5 billion compared to the $68.7 billion nosedive originally reported for the previous month. The continued decrease in consumer credit came as another sharp drop in revolving credit more than offset a rebound in non-revolving credit.

 

Crude oil futures ended higher on Wednesday as a rise in US crude imports and a weekly fall in gasoline supplies suggested an improvement in energy demand, even as domestic crude inventories posted a surprise climb. The Energy Information Administration reported that US crude inventories rose by 5.7 million barrels for the week ended July 3. That followed a fall of 7.2 million barrels the week before and compared with a forecast by S&P Global Platts for an average decline of 3.7 million barrels. The American Petroleum Institute on Tuesday reported an increase of about 2 million barrels.  However, total net petroleum imports stood at 5.01 million barrels per day, up from 2.88 million a week earlier. Imports of commercial crude oil were at 7.39 million barrels per day, up from 5.97 million. Crude oil futures for August gained 28 cents or 0.7 percent to settle at $40.90 a barrel on the New York Mercantile Exchange. September Brent crude rose 21 cents or 0.5 percent to settle at $43.29 a barrel on London's Intercontinental Exchange.

 

Declining for the third straight session, Indian rupee depreciated against dollar on Wednesday, on account of sustained dollar demand from importers and banks. Sentiments remained fragile with Reserve Bank of India's statement that foreign exchange policy has been to only curb extreme volatility but recent actions suggest it is not letting the local unit appreciate despite its relative underperformance versus peers. Some negativity also came with private report that the country's economy is likely to show a double-digit contraction in the April-June quarter due to the restriction on economic activities on account of the COVID-19 pandemic. On the global front, dollar dipped slightly on Wednesday as investors weighed hopes for a swift economic recovery against fears about resurgence in the pandemic, particularly in the United States. Finally, the rupee ended at 75.02, 9 paise weaker from its previous close of 74.93 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4039.10 crore against gross selling of Rs 5704.92 crore, while in the debt segment, the gross purchase was of Rs 1957.80 crore with gross sales of Rs 1984.49 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.58 crore against gross selling of Rs 6.51 crore.

 

The US markets ended considerably higher on Wednesday as investors looked past tensions between Washington and Beijing and sought out tech companies thought to be insulated from rising coronavirus infections. Asian markets are trading mostly in green on Thursday as investors await the release of Chinese inflation data. Indian markets snapped five-day winning streak and ended lower with around a percent cut amid concerns over a delay in economic recovery as new coronavirus cases continued to surge. Today, the start of session is likely to be positive after a rally in US markets overnight and similar trends in Asian peers. Traders will be taking encouragement as the Cabinet approved the development of affordable rental housing complexes (ARHCs) for urban migrants and poor as a sub-scheme under the Pradhan Mantri (PM) Awas Yojana. This initiative was first announced by Finance Minister Nirmala Sitharaman as part of the Atmanirbhar Bharat package in May. Some support will also come with a private report that hiring activities in June remained muted on a year-on-year basis, but registered an increase over the previous month amid nationwide relaxations of coronavirus-induced lockdown norms. Traders may take note of report that the National Association of Software and Services Companies (Nasscom) has launched Nasscom Launchpad in New Jersey, to promote cross border trade through partnerships. However, there may be some cautiousness with government data showing that India's total number of Covid-19 cases has now jumped to 768,206, and the death toll stands at 21,144, with over 24,000 new cases. Meanwhile, the SBI Ecowrap report said that India needs to take a calibrated call in reducing import dependence from China and not through sudden stops. The agriculture stocks will be in focus as the government approved setting up an agri-infra fund with a corpus of Rs 1 lakh crore to provide financial support to agri-entrepreneurs, start-ups, agri-tech players and farmer groups for infrastructure and logistics facilities. There will be some reaction in insurance stocks as the government, post a cabinet meeting, said that the merger process of three ailing public sector general insurance companies has been stopped and instead the focus will be on their profitable growth. Traders will be looking ahead to the start of April-June (Q1) 2020 earnings season for IT companies, with the industry's big-wigs Tata Consultancy Services scheduled to declare its Q1 results later in the day.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,705.75

10,638.92

10,810.22

BSE Sensex

36,329.01

36,099.31

36,693.57

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

State Bank of India

1,430.83

191.90

187.72

196.77

IndusInd Bank

813.36

552.60

530.57

576.07

Tata Motors

558.91

105.35

102.75

109.40

ICICI Bank

463.18

368.95

364.67

376.12

Axis Bank

458.79

444.15

436.30

456.70

 

  • Reliance Industries' wholly-owned subsidiary -- Jio Platforms has received the subscription amount of Rs 43,574 crore from Jaadhu Holdings, LLC. 
  • Bharti Airtel has launched new propositions for its mobile customers in India, as part of its strategic alliance with ZEE5. 
  • TCS has launched Quartz Smart Solution for Crypto Services, a next-gen, digitally powered offering for banks and investment firms. 
  • Adani Ports and SEZ has received approval to issue of US dollar-denominated foreign currency bonds to raise nearly $1.25 billion.
News Analysis