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NSE Intra-day chart (26 February 2020)
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Market Commentary 27 February 2020
Benchmarks to get pessimistic start amid weak global cues


Indian equity benchmarks continued to fall for the fourth straight day on Wednesday, with Sensex and Nifty ending lower by around a percent. The start of the day was lackluster as Care Ratings in its latest report projected India's Gross Domestic Product (GDP) growth at 4.5% for the third quarter (Q3) of current fiscal year (FY20), which is lower than 6.6% GDP growth recorded in the corresponding period a year ago. Adding more worries among market participants, the payroll data of the Employees' State Insurance Corporation (ESIC) showed that around 12.67 lakh jobs were created in December 2019 lower against 14.59 lakh in the previous month. In the last leg of the trade, markets fell sharply to settle near day's low points, after Moody's Analytics said that a global recession is likely if coronavirus becomes a pandemic, and the odds of that are uncomfortably high and rising with infections surging in Italy and Korea. Traders overlooked former NITI Aayog Vice Chairman Arvind Panagariya's statement that India's slowdown has bottomed out and now its economy needs to be opened up if the country wants to realise the ambition of a 10 per cent growth rate. He said in the next fiscal year, India's GDP growth is expected to be 6 per cent and then it will get back to 7-8 per cent which has been the case in the last 15-16 year period. Finally, the BSE Sensex slipped 392.24 points or 0.97% to 39,888.96, while the CNX Nifty was down by 119.40 points or 1.01% to 11,678.50.


The US markets ended mostly lower on Wednesday as the rapid spread of COVID-19 infections and deaths outside of China continued to hang over markets. Dozens of American and European companies have now warned of the epidemic's impact on their supply lines and earnings, including Microsoft which lowered its earnings guidance after the market closed Wednesday. Traders shrugged off a Commerce Department report showing new home sales jumped to their highest level in over twelve years in the month of January. The report said new home sales spiked by 7.9 percent to an annual rate of 764,000 in January after jumping by 2.3 percent to an upwardly revised rate of 708,000 in December. Street had expected new home sales to surge up by 2.3 percent to an annual rate of 710,000 from the 694,000 originally reported for the previous month. With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 778,000 in July of 2007. The jump in new home sales came as sales in the Midwest and West soared by 30.3 percent and 23.5 percent, respectively. New home sales in the Northeast also shot up by 4.8 percent, while new home sales in the South tumbled by 4.4 percent. The Commerce Department also said the median sales price of new houses sold was a record high $348,200 in January, up 7.4 percent from $324,100 in December and up 14 percent from $305,400 in the same month a year ago. 


Crude oil futures ended lower on Wednesday, magnifying losses to a fourth successive session, on worries about the spread of COVID-19 outside China, and its impact on demand for crude. Meanwhile, data from the Energy Information Administration (EIA) revealed that US crude supplies edged up by 500,000 barrels for the week ended February 21. S&P Global Platts expected the data to show a rise of 2.8 million barrels. The American Petroleum Institute on Tuesday reported a climb of 1.3 million barrels. The EIA data also showed supply declines of 2.7 million barrels for gasoline and 2.1 million barrels for distillates. Crude oil futures for April declined $1.17 or 2.3 percent to settle at $48.73 a barrel on the New York Mercantile Exchange. April Brent crude fell $1.52 or 2.8 percent to settle at $53.43 a barrel on London's Intercontinental Exchange.


Indian rupee continued its upward momentum for the second day on Wednesday on persistent selling of the American currency by exporters. Traders took some support with NITI Aayog Vice Chairman Arvind Panagariya's statement that India's slowdown has bottomed out and now its economy needs to be opened up if the country wants to realise the ambition of a 10 per cent growth rate. He said in the next fiscal year, India's GDP growth is expected to be 6 per cent and then it will get back to 7-8 per cent which has been the case in the last 15-16 year period. However, strengthening of the American currency vis-a-vis other currencies overseas along with losses in the domestic equity market kept the gain in rupee in check. On the global front, dollar recovered from a two-week low on Wednesday as investors reduced expectations that the U.S. Federal Reserve will signal more policy easing as a deadly virus spread quickly outside China. The last traded price of rupee was 71.66, 19 paise stronger from its previous close of 71.85 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 5723.78 crore against gross selling of Rs 7561.99 crore, while in the debt segment the gross purchase was of Rs 698.00 crore with gross sales of Rs 758.10 crore. Besides, in the hybrid segment the gross buying was of Rs 16.73 crore against gross selling of Rs 14.94 crore.


The US markets ended mostly lower on Wednesday as investors continued to weigh the fast-spreading coronavirus and its impact on the economy. Asian markets are trading in red in early deals on Thursday, struggling to find a footing as the rapid global spread of the coronavirus left investors on edge and seeking safety in gold and bonds. Indian markets ended lower for fourth straight session on Wednesday amid renewed worries about the economic impact of the coronavirus outbreak. Today, the start of the F&O series expiry session is likely to be negative as global markets extended losses over concerns that the coronavirus outbreak is turning into a pandemic. There will be some cautiousness with a private report that the Gross Domestic Product (GDP) growth will stay flat at 4.5 per cent in the October-December 2019. It also said that India faces the risk of getting impacted by coronavirus epidemic economically because of its high reliance on Chinese imports for various goods. Though, fall in crude oil prices overnight may support the domestic markets. Some support may also come with Finance Minister Nirmala Sitharaman's statement that the government is keeping a close watch on the impact of the coronavirus outbreak on the Indian economy. Traders may take note of a private report that notwithstanding a slowdown in consumption due to the sluggish economy, the Indian retail market is estimated to reach $1.3 trillion by 2025, helped by multiple structural, socio demographic and economic drivers. Meanwhile, the Reserve Bank of India said that all new floating rate loans given to medium enterprises will be linked with external benchmarks from April 1. The move is aimed at further strengthening monetary policy transmission so that benefits of reduction in key lending rate (repo) can be passed on to medium enterprises also. There will be some buzz in the textile stocks as the Union Cabinet approved the National Technical Textiles Mission with an outlay of Rs 1,480 crore to position India as a leading manufacturer of technical fabrics that are mostly used in industrial applications. Auto stocks will be in focus with Moody's Investors Service's report that car sales in India are expected to be relatively flat this year after plunging 11.8 per cent in 2019 amid slowing economic growth. There will be some reaction in banking stocks with Finance Minister Nirmala Sitharaman's statement that there is no uncertainty related to the merger of Public Sector Banks (PSBs). 


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  • Reliance Industries' telecom arm Reliance Jio Infocomm has added 82,308 customers in December 2019. 
  • Sun Pharma's wholly owned subsidiary has launched Riomet ER in the US as an adjunct to diet and exercise to improve glycemic control in patients 10 years of age and older with type 2 diabetes mellitus. 
  • HCL Technologies has successfully completed its first year of delivering digital workplace services to KONE Corporation. 
  • Tata Motors' wholly owned subsidiary -- JLR has commenced bookings of the new Land Rover Defender in India.
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