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NSE Intra-day chart (12 February 2020)
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Market Commentary 13 February 2020
Markets to make a negative start amid weak economic data


Indian equity markets jumped high on Wednesday's trading session to settle higher, in tandem with the global peers. After a firm start, markets remained bullish throughout the day, aided with Finance Minister Nirmala Sitharaman's statement that the economy is not in trouble and green shoots are visible with the country moving towards a $5 trillion economy. Traders remained optimistic, amid the Reserve Bank of India's (RBI) latest report outward Foreign Direct Investment (OFDI) showing that investments by Indian firms in foreign countries rose by 42.85 percent to $2.10 billion in January 2020 as compared to $1.47 billion in the same month a year ago. Markets maintained their strong gains in the second half of the trading session, after Minister of State for Finance Anurag Singh Thakur said that the Centre has released Rs 81,043 crore as GST compensation to states for April-September 2019. He also said that GST compensation cess collection has shown upward trend since October 2019. Markets participants got relief, 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. Finally, the BSE Sensex gained 349.76 points or 0.85% to 41,565.90, while the CNX Nifty was up by 93.30 points or 0.77% to 12,201.20.


The US markets ended higher on Wednesday, with all three major benchmarks registering all-time closing highs, buoyed by signs of a slowdown in the number of new cases of COVID-19 -a strain of coronavirus that emerged in Wuhan, China late last year. China's National Health Commission on Wednesday said 2,015 new cases of the disease caused by the new viral infection had been reported over the last 24 hours, declining for a second day. That brought the number of cases in mainland China to 44,653, although experts have warned that a substantial number may have gone uncounted. The commission said there were 97 additional deaths from the virus in the last 24 hours, bringing the mainland total to 1,113. Traders also kept an eye on Federal Reserve Chairman Jerome Powell's testimony before the Senate Banking Committee. Powell's prepared remarks mirrored those he delivered before the House Financial Services Committee on Tuesday. In his prepared remarks, Powell said the Fed is closely monitoring the coronavirus outbreak but also highlighted the resilience of the US economy.


Crude oil futures ended sharply higher on Wednesday amid expectations that the Organization of the Petroleum Exporting Countries (OPEC) and allies will significantly cut crude production, and on reports from China that the number of new infections due to the coronavirus has come down a bit. However, US government showed a third straight weekly rise in crude inventories that was bigger than market expectations. According to the data released by the Energy Information Administration (EIA), crude stockpiles in the US were up by 7.5 million barrels in the week ended February 7. The American Petroleum Institute on Tuesday reported a rise of 6 million barrels. Crude oil futures for March rose $1.23 or 2.5 percent to settle at $51.17 a barrel on the New York Mercantile Exchange. April Brent surged $1.78 or 3.3 percent to settle at $55.79 a barrel on London's Intercontinental Exchange.


Indian rupee depreciated for second straight session against the US dollar on Wednesday, due to increased demand of the greenback from the importers and the banks. Traders remained on sidelines ahead of the release of Consumer Price index (CPI) for January and Index of Industrial Production (IIP) data for December later in the day. Moreover, dollar's strength against major global currencies overseas affected the rupee. However, losses remain capped as some optimism came 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. On the global front, dollar held near a four-month high on Wednesday amid hopes the spread of the coronavirus had slowed, with the New Zealand dollar gaining after the central bank dropped a bias towards lowering interest rates. The last traded price of rupee was 71.34, 7 paise weaker from its previous close of 71.27 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 7201.64 crore against gross selling of Rs 5044.21 crore, while in the debt segment, the gross purchase was of Rs 1506.69 crore with gross sales of Rs 1417.67 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.64 crore against gross selling of Rs 0.04 crore.


The US markets ended higher on Wednesday as investors concern over the coronavirus receded amid hopes the rate of infections is slowing. Asian markets are trading mostly higher in early deals on Thursday following the positive cues from Wall Street. Indian equity markets ended higher for second straight day on Wednesday led by FMCG, bank stocks.  Today, the markets are likely to make pessimistic start and traders will be negatively reacting to the economic data announced after the market hours yesterday. India's retail inflation based on Consumer Price Index (CPI) spiked to 7.59 per cent for the month of January 2020 from 7.35 per cent in December 2019, due to costlier food products like vegetables, pulses and protein-rich items. Inflation in January is well above the Reserve Bank of India's (RBI) medium-term target of 4 per cent for the fourth straight month. Meanwhile, Industrial production contracted by 0.3 per cent in December 2019 as against 2.5 per cent growth in same month a year ago, weighed by a decline in the manufacturing sector. The IIP growth during April-December period of the current fiscal decelerated to 0.5 per cent from 4.7 per cent expansion in the same period of 2018-19. However, some respite may come later in the day with Chief Economic Advisor Krishnamurthy Subramanian's statement that the coronavirus outbreak in China provides an opportunity for India to expand exports. India is one of China's leading trade partners in Asia and has a huge trade deficit with that country. He said China imports a lot of components, parts, assembles and integrates and then exports them. India has been following the same pattern in terms of mobile manufacturing in the country. So, if one looks from this perspective, it provides a good opportunity for India. Meanwhile, Union Minister Nitin Gadkari has said that the government is targeting khadi and village industries to boost job creation in the rural and tribal areas and improve purchasing power of people. He said 'our focus is on village industries including honey, kulhads, bamboo, fishing, bio-fuels towards employment generation in the agriculture, rural and tribal sectors and to enhance their purchasing power through favourable policies.' There will be some buzz in the insurance stocks as the Cabinet approved the proposal for capital infusion and immediate release of Rs 2,500 crore for three public sector general insurance companies in the light of the critical financial position and breach of regulatory solvency requirements. 


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  • Government has offloaded 2.91 per cent stake in Coal India through the sixth further fund offer of CPSE ETF Mutual Fund scheme.
  •  Dr. Reddy's Laboratories has entered into a definitive agreement with Wockhardt to acquire select divisions of its branded generics business.
  • Bharti Airte's wholly owned subsidiary--Network i2i is planning to raise funds worth up to $250 million through perpetual bonds.
  • TCS has launched Jile 4.0, a major release of its on-the-cloud enterprise Agile DevOps platform that enables software teams to manage, automate and measure the end-to-end software delivery value stream from ideation to deployment.
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