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NSE Intra-day chart (13 November 2020)
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Market Commentary 17 November 2020
Benchmarks to make optimistic start amid firm global cues

 

Indian equity benchmarks ended Friday's session, the last trading day of Samvat 2076 on a positive note after oscillating between gains and losses during the day, led by buying interest in metal, realty and healthcare shares. The benchmarks had a gap-down opening, as data released by the government showing that retail inflation inched up to 7.61 per cent in October, remaining above the comfort level of the Reserve Bank. Inflation stood at 7.27 per cent in September 2020. It was 4.62 per cent in October 2019. The rise in general inflation was mainly on account of elevated food prices. Volatility struck bourses in late morning session as traders remained concerned with report that India has reported 43,861 fresh Covid-19 cases in the past 24 hours. The total caseload now stands at 8,727,900. The country's death toll has mounted to 128,686. However, local indices gave up all of their initial losses and managed to close in green, as industrial production, measured on the basis of Index of Industrial Production (IIP), grew slightly by 0.2 per cent in September 2020 with higher output of mining and power generation sectors. The IIP had contracted by 4.6 per cent in September 2019, while 7.36 per cent contraction posted in August 2020. Some support also came with Finance Minister Nirmala Sitharaman's statement that perishable goods are putting upward pressure on inflation and the government is working on both short and medium-term measures for controlling price rise. Adding to the optimism, auto industry body SIAM said that the stimulus measures announced by the government would help in accelerating economic activity in many critical sectors. It appreciates the proactive role being played by the government for supporting a quick and sustainable revival of the economy. Finally, the BSE Sensex rose 85.81 points or 0.20% to 43,443.00, while the CNX Nifty was down by 29.15 points or 0.23% to 12,719.95.

                             

The strength on markets came following more upbeat reports on the coronavirus vaccine front, with Moderna (MRNA) reporting positive results from a trial of its vaccine candidate. Moderna said that the trial of its potential coronavirus vaccine has met the statistical criteria pre-specified in the study protocol for efficacy, with a vaccine efficacy of 94.5 percent. Chief Executive Officer of Moderna -- St├ęphane Bancel said this is a pivotal moment in the development of our COVID-19 vaccine candidate. Since early January, we have chased this virus with the intent to protect as many people around the world as possible. He added all along, we have known that each day matters. This positive interim analysis from our Phase 3 study has given us the first clinical validation that our vaccine can prevent COVID-19 disease, including severe disease. On the economic front, New York manufacturing activity unexpectedly expanded at a slower rate in the month of November, according to a report released by the Federal Reserve Bank of New York. The New York Fed said its general business conditions index fell to 6.3 in November from 10.5 in October. While a positive reading still indicates growth in regional manufacturing activity, Street had expected the index to rise to 13.5. Looking ahead, the index for future business conditions held steady at 33.9, suggesting that firms remained optimistic about future conditions.

 

Crude oil futures ended higher on Monday as strong economic data from China and Japan and hopes about Organization of Petroleum Exporting Countries (OPEC) and allies continuing to curb output helped ease concerns about energy demand outlook. The Organization of Petroleum Exporting Countries and their allies are due to meet on Tuesday and it is likely that the cartel will suggest changes to production quotas when all the ministers meet on November 30 and December 1. Further, encouraging reports on Covid-19 vaccine front contributed as well to oil's uptick. Close on the heels of Pfizer's announcement last week about the phase 3 trial of its virus vaccine proving more than 90% effective, Moderna announced over the weekend that the late stage trial of its vaccine has proved 94.5% effective in preventing the disease. Crude oil futures for December gained $1.21 or about 3 percent to settle at $41.34 a barrel on the New York Mercantile Exchange. However, January Brent crude rose $1.00 or 2.4 percent to settle at $43.80 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally higher against dollar on Friday, on persistent selling of the American currency by exporters. Traders remained positive as industrial production, measured on the basis of Index of Industrial Production (IIP), grew slightly by 0.2 per cent in September 2020 with higher output of mining and power generation sectors. Meanwhile, Finance Minister Nirmala Sitharaman said that the Indian economy is witnessing a strong recovery after a long and strict lockdown. On the global front, dollar slipped on Friday and risk appetite in currency markets eased, as worries about the economic fallout from surging COVID-19 cases in Europe and the United States tempered initial enthusiasm about a possible vaccine. Finally, the rupee ended at 74.62, 2 paise stronger from its previous close of 74.64 on Thursday.

 

The FIIs as per Friday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 12178.92 crore against gross selling of Rs 8619.87 crore, while in the debt segment, the gross purchase was of Rs 74.80 crore with gross sales of Rs 393.03 crore. Besides, in the hybrid segment, the gross buying was of Rs 17.70 crore against gross selling of Rs 25.70 crore.

 

The US markets ended higher on Monday following more upbeat news on the coronavirus vaccine front, with Moderna (MRNA) reporting positive results from a trial of its vaccine candidate. Asian markets are trading mostly in green on Tuesday as vaccine hopes once again lifted Wall Street to record highs. Indian markets ended modestly higher on Friday despite mixed global cues and worrying inflation data for October. Indian equity, currency and debt markets remain closed on Monday for Diwali Balipratipada. Today, the markets are likely to make optimistic start on vaccine hopes tracking gains in global markets. Traders will be taking encouragement as US-based biotechnology firm Moderna Inc said its vaccine candidate has been found to be 94.5 percent effective in preventing COVID-19, based on Phase 3 trials. Some support will also come with a private report that the Indian economy is seen recovering faster than expected and the Reserve Bank is likely to have come to an end of the rate easing cycle. However, market participants may be concerned with government data India's exports fell 5.12 per cent to $24.89 billion in October, after recording positive growth in September, on account of drop in shipments of petroleum products, gems and jewellery, leather and engineering goods. Besides, trade deficit in October narrowed to $8.71 billion as against $11.75 billion in the corresponding month a year ago. There may be cautiousness with government data showing that the wholesale price-based inflation rose to an eight-month high of 1.48 percent in October, as manufactured products turned costlier. The WPI inflation was 1.32 percent in September and zero percent in October last year. This is the highest level of Wholesale price index-based (WPI) inflation since February when it was 2.26 percent. There will be some buzz in aviation stocks as Civil aviation minister Hardeep Singh Puri said that domestic aviation operations reached a new high on occasion of Diwali as 2,25,097 passengers flew on 1,903 flights. Gold relates stocks will be in focus with data from the Commerce Ministry showing that gold imports, which have a bearing on the current account deficit, declined 47.42 percent to $9.28 billion during April-October due to fall in demand in the wake of the COVID-19 pandemic. There will be some reaction in mining industry stocks with report that the Centre is planning to come out with the proposed mining reforms in a month or so and the auction of mineral blocks will kickstart two to three months after the amendments take place. There will be lots of earnings reaction based on the performance of the companies.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

12,719.95

12,639.79

12,768.04

BSE Sensex

43,443.00

43,156.83

43,625.71

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

 

Support  (Rs)

 

Resistance (Rs)

 

(in Lacs)

State Bank of India

706.76

229.45

222.81

233.36

ICICI Bank

348.15

485.55

473.04

492.59

Tata Motors

325.67

146.35

144.46

149.11

Axis Bank

288.13

610.35

592.31

620.36

ITC

281.99

187.10

185.50

188.75

 

  • Dr. Reddy's Laboratories has launched Succinylcholine Chloride Injection USP, 200 mg/10 mL (20 mg/mL) approved by the USFDA. 
  • Reliance Industries has entered into a definitive agreement, for making capital contribution, up to $50 million, in Breakthrough Energy Ventures II, L.P. 
  • TCS has entered into agreement with PFI under which TCS will acquire the staff and select assets of Pramerica, PFI's subsidiary based in Letterkenny, Ireland. 
  • Wipro is bringing in a new operating model from January 1, 2021 under which its business will be restructured into four SMUs.
News Analysis