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NSE Intra-day chart (11 February 2020)
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Market Commentary 12 February 2020
Benchmarks to get a positive start; IIP, CPI data eyed


After two days fall, Indian equity bourses came back in green terrain on Tuesday. The start of the day was fabulous, amid reports that Finance Minister Nirmala Sitharaman met industry representatives on the proposed direct tax dispute resolution scheme that provides opportunity to taxpayers to pay outstanding taxes and get waiver of interest and penalty. Some support also came with Finance Minister Nirmala Sitharaman's statement that bad loans of public sector banks (PSBs) came down to Rs 7.27 lakh crore at the end of September 2019 from Rs 8.96 lakh crore at the end of March 2018. Key indices held their notable gains during whole trading session, on account of positive cues from the global markets. Traders got encouragement, after the Reserve Bank of India (RBI) announced detailed rules for exempting incremental car, home and micro, small and medium enterprises (MSMEs) loans from maintaining cash reserve ratio (CRR). The street also got some relief with Agriculture Minister Narendra Singh Tomar's statement that India is on track to become self-sufficient in production of the protein-rich commodity and will further boost the output to meet global demand. Finally, the BSE Sensex gained 236.52 points or 0.58% to 41,216.14, while the CNX Nifty was up by 76.40 points or 0.63% to 12,107.90.


The US markets ended mostly higher on Tuesday as investors attributed the bullish trading in stocks to hopes that the Fed would ease policy if a global economic shock from the coronavirus made its way to US shores. Federal Reserve Chairman Jerome Powell said during testimony before the House Financial Services Committee that the central bank is closely monitoring the coronavirus outbreak but also highlighted the resilience of the US economy. In prepared remarks, Powell noted some of the uncertainties around trade have diminished following the signing of the phase one US-China trade deal but cautioned risks to the outlook remain. However, Powell pointed out that the US economy has recently appeared resilient to global headwinds, with economic activity increasing at a moderate pace over the second half of last year. Besides, recent reports suggesting the rate of growth in coronavirus infections has slowed also generated optimism Chinese efforts to contain the outbreak are working. China's National Health Commission said in its daily update that 108 deaths were reported in the previous 24 hours, bringing the total to 1,016 deaths in mainland China since the disease emerged in December. The number of new, confirmed cases fell to 2,478 from 3,062 a day earlier, bringing the total to 42,638 on the mainland, including some of whom have since recovered and been released from treatment.


Crude oil futures ended higher on Tuesday on reports the number of new cases infected from the coronavirus is slowing down. According to reports, the number of confirmed infections due to coronavirus in China grew, to at least 42,638 from about 40,000 a day earlier. However, the daily tally of new cases dropped compared with previous days. Hubei recorded 2,097 new infections on Monday, compared with 2,618 a day earlier. Meanwhile, traders were also looking for signs as to whether Russia will go along with an OPEC+ recommendation to curb oil output by an additional 600,000 barrels a day. Russia's hesitation in endorsing the proposal was blamed in part for pressure on crude prices Monday. A larger meeting of OPEC+ remains scheduled for March 5-6, stoking concerns that producers are waiting too long to take action in the wake of the demand impact from the coronavirus. Crude oil futures for March gained 37 cents or 0.8 percent to settle at $49.94 a barrel on the New York Mercantile Exchange. April Brent surged 74 cents or 1.4 percent to settle at $54.01 a barrel on London's Intercontinental Exchange.


Indian rupee depreciated marginally against dollar on Tuesday due to fresh demand for the American currency from banks and importers. Traders remain concerned ahead of the macro-economic data like Index of Industrial Production (IIP), Consumer Price Index (CPI) and Wholesale Price Index (WPI) to be out tomorrow. However, traders took some support with Finance Minister Nirmala Sitharaman's statement the economy is not in trouble and green shoots are visible with the country moving towards a $5 trillion economies. Listing initiatives taken by the government, she said, increasing FDI, rise in factory output and over Rs 1 lakh crore GST collection in the past three months are indications of green shoots in the economy. On the global front, Sterling enjoyed some respite on Tuesday after British economic growth showed no change in the fourth quarter in spite of market expectations it would be slower. But the currency remained around its lowest levels for this year amid uncertainty over Britain's trade relationship with the European Union. The last traded price of rupee was 71.29, 1 paise weaker from its previous close of 71.28 on Monday.


The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 4613.48 crore against gross selling of Rs 5116.33 crore, while in the debt segment, the gross purchase was of Rs 4828.30 crore with gross sales of Rs 2679.31 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.19 crore against gross selling of Rs 2.58 crore.


The US markets ended mostly higher on Tuesday as Chinese officials said the deadly coronavirus epidemic could be contained by April. Asian markets are trading mostly in green on Wednesday amid hopes the worst of the coronavirus in China may have passed, although prevailing uncertainty about the outbreak has kept investors wary. Indian markets ended higher on Tuesday as buying was seen across the board led by gains in banks, auto, and metal stocks. Today, the markets are likely to extend previous session's gains with positive start amid firm global cues and traders will be eyeing government release of Index of Industrial Production (IIP) and Consumer Price Index (CPI) later in the day, in a bid to map economic activity. Investors will be getting encouragement with principal economic adviser at the finance ministry Sanjeev Sanyal's statement that Indian economic growth is poised to bounce back after slipping to a more than six-year low of 4.5% in the July-September quarter as the government has taken measures to prop up investments and consumer demand. Some support will also come with Finance Minister Nirmala Sitharaman's statement that the government has taken several steps, including tax refund scheme and enhanced credit to exporters, to boost outbound shipments. Market participants will also be reacting to the Reserve Bank of India's (RBI) data showing that investments by Indian firms in foreign countries in January 2020 rose by nearly 40% to $2.10 billion on a yearly basis. Meanwhile, the government has approached the National Company Law Appellate Tribunal seeking additional 270 days to complete the resolution process of 105 IL&FS group companies. There will be some buzz in the sugar stocks with report that Indian sugar production estimates for the 2019/20 season are unlikely to be revised upwards by much from 26 million tonnes, when the Indian Sugar Mills Association (ISMA) meets to review figures towards February-end. Gems and jewellery industry stocks will be in focus with the Gem Jewellery Export Promotion Council (GJEPC) report showing that gems and jewellery exports witnessed a 8.45% decline in January to Rs 21,146.59 crore as against Rs 23,099.57 crore a year ago. There will be some reaction in logistics industry stocks with ratings agency Moody's Investors Service's statement that coronavirus outbreak in China is expected to have a minimal impact on the Indian ports its rates due to low China-related throughput they handle. There will be lots of important earnings announcements too, to keep the markets in action.


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