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Market Commentary 01 April 2021
Benchmarks likely to make gap-up opening amid gains in global peers


Indian equity benchmarks ended the last trading session of the financial year 2020-21 (FY21) on a tepid note with losses of over a percent each, as rising bond yields in US stoked fears of foreign outflows from emerging markets like India. The benchmark opened gap down and traded with negative bias throughout the session, amid concerns over rising Covid cases in the country, with the Centre warning that Covid-19 situation in the country is turning from bad to worse. The sentiments remained down-beat with a report by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) stated that India's economic output in 2021 is expected to remain below the 2019 level despite roll-out of the vaccine to deal with the menace of the coronavirus pandemic. Traders remained cautious with Moody's Analytics statement that India's inflation is at uncomfortably high level, which is an exception among Asian economies. It said higher fuel prices will keep upward pressure on retail inflation and keep the RBI from offering further rate cuts. Retail inflation rose to 5 per cent in February, from 4.1 per cent in January. Markets extend losses in afternoon trading, as sentiments were fragile as the World Bank stating that India's economy has bounced back amazingly from the COVID-19 pandemic and nationwide lockdown over the last one year, but it is not out of the woods yet. Market participants overlooked a private report stated that the gig economy can serve up to 90 million jobs in the non-farm sectors in India with a potential to add 1.25 percent to the GDP over the long term. It also said the gig economy, where workers get hired typically for short durations, can lead to transactions of over $250 billion over the long term. Meanwhile, the Finance Ministry said the Centre has released Rs 30,000 crore to the states as GST compensation on March 27, and about Rs 63,000 crore is pending for the current fiscal. Finally, the BSE Sensex fell 627.43 points or 1.25% to 49,509.15, while the CNX Nifty was down by 154.40 points or 1.04% to 14,690.70.


The US markets ended mostly higher on Wednesday. The rally by technology stocks reflected window dressing on the final day of the first quarter, as the tech-heavy Nasdaq underperformed the Dow and the S&P 500.  The advance on the day helped the Nasdaq surge up by 2.8 percent for the quarter, although that compares to a 5.8 percent jump by the S&P 500 and a 7.8 percent spike by the Dow. The Dow and the S&P 500 have also recently reached new record highs, while the Nasdaq remains well off its highs set last month. Meanwhile, traders were also reacting to the details of President Joe Biden's infrastructure and economic recovery plan. The plan calls for spending approximately $2 trillion over eight years, with the proposal including investments in transportation infrastructure and accelerating the transition to clean energy. A report from payroll processor ADP showing strong private sector job growth in the month of March also generated some positive sentiment. ADP said private sector employment surged up by 517,000 jobs in March after climbing by an upwardly revised 176,000 jobs in February. Street had expected employment to jump by 550,000 jobs compared to the addition of 117,000 jobs originally reported for the previous month. Besides, on Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs. Street currently expect employment to jump by 639,000 jobs in March after climbing by 379,000 jobs in February. The unemployment rate is expected to drop to 6.0 percent from 6.2 percent.


Crude oil futures ended sharply lower on Wednesday on concerns about the market's recovery after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC+, lowered their 2021 demand growth forecast. OPEC+ has lowered its oil demand growth forecast for this year by 300,000 barrels per day (bpd). The Organization of the Petroleum Exporting Countries and allies are set to meet on Thursday, to decide on output policy. Meanwhile, data released by Energy Information Administration (EIA) showed crude inventories dropped by 876,000 barrels last week versus expectations for a build of 107,000 barrels. The EIA said gasoline inventories also declined by 1.735 million barrels last week compared with expectations for a 730,000-barrel build. According to a report released by the American Petroleum Institute (API) on Tuesday, US crude stockpiles increased by 3.9 million barrels in the week ended March 26. Crude oil futures for May fell $1.39 or 2.3 percent to settle at $59.16 barrel on the New York Mercantile Exchange. June Brent crude declined 53 cents or 0.83 percent to settle at $63.64 a barrel on London's Intercontinental Exchange.


Erasing prevision session losses, Indian rupee ended substantially stronger on fresh selling of American currency by banks and exporters. Traders mood were upbeat as World Bank has scaled up its projection for India's economic growth by 4.7 percentage points to 10.1 per cent for Financial Year 2021-22, citing a strong rebound in private consumption and investment growth. Adding optimism, India has emerged as the biggest recipient of foreign portfolio investments this fiscal with net inflows worth Rs 2.6 lakh crore, driven by ample liquidity in global markets and hopes of faster economic recovery. Investments in the equities segment touched Rs 2,74,503 crore, which is the highest quantum of money recorded ever since the National Securities Depository began making FPI data publicly available. On the global front, pound edged higher against the dollar and the euro on Wednesday as traders look past economic data in Britain and focused on a planned re-opening of shops in April. Finally, the rupee ended 73.12, stronger by 26 paise from its previous close of 73.38 on Tuesday.


The FIIs as per Tuesday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 7003.36 crore against gross selling of Rs 6608.35 crore, while in the debt segment, the gross purchase was of Rs 1877.79 crore against gross selling of Rs 1016.68 crore. Besides, in the hybrid segment, the gross buying was of Rs 16.84 crore against gross selling of Rs 29.42 crore.


The US markets ended mostly higher on Wednesday after big tech rallied and as President Joe Biden announced a multi-trillion-dollar infrastructure investment plan. Asian markets are trading mostly in green on Thursday following overnight gains on Wall Street. Indian markets ended the final session of the financial year 2020-21 (FY21) a percent lower dragged by banking, financial and IT stocks. Today, the start of fiscal year 2021-22 (FY22) is likely to be firm with gap-up opening tracking gains in global markets. Traders will be taking encouragement with Reserve Bank data showing that India's current account deficit narrowed to $1.7 billion or 0.2 per cent of the GDP in the December quarter as against $2.6 billion or 0.4 per cent of GDP in the year-ago period. Some support will come as the foreign portfolio investors (FPI) have pumped in more than Rs 2.75 lakh crore ($37 billion) in the Indian equity market during FY2020-2021. This is the highest ever investment by foreign investors into Indian equities in the last two decades. Traders may take note of report that the central government's fiscal deficit at the end of February worked out to be 76 per cent of the revised estimate, indicating that it is likely to remain within the projections made by Finance Minister Nirmala Sitharaman last month. Meanwhile, the government has extended the existing foreign trade policy (FTP) for six more months up to September 30 this year due to the Covid-19 pandemic, according to a notification. FTP provides guidelines for enhancing exports to push economic growth and create jobs. However, there may be some concern as India has recorded a massive surge in the number of Covid-19 cases. In the last 24 hours, the country registered 72,182 cases. With the latest addition, the country's tally has soared to 12,220,669, Worldometer showed this morning. With active cases hitting 585,215, India is now the 5th-worst hit country. The death toll from the deadly infection jumped to 162,960. There may be some cautiousness with report that the combined output of the eight core sector industries fell at the fastest pace in 6-months, contracting 4.6 percent in February, from a year ago, confirming fears that a recovery in industrial growth would be slower than expected. Also, after remaining in surplus for three quarters, India's current account balance recorded a deficit of $1.7 billion (0.2 per cent of Gross Domestic Product - GDP) in the quarter ended December 2020 (Q3FY21). Food processing sector stocks will be in limelight as the government approved the PLI scheme for the sector, entailing an outlay of Rs 10,900 crore. There will be some reaction in banking stocks as the Finance Ministry notified that government will infuse Rs 14,500 crore through recapitalisation bonds in four public sector banks. Shares of auto companies will be in focus as they are set to unveil their March sales figures today.


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



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  • TCS has renewed its strategic partnership and services footprint with Nationwide Building Society to help strengthen the latter's enterprise agility and operational resilience. 
  • Asian Paints has unveiled Cherish as the Colour of the Year for 2021. 
  • Maruti Suzuki India has partnered with Karnataka Bank to offer vehicle financing options for potential car buyers. 
  • Cipla has entered into an agreement to become a partner in ABCD Technologies LLP.
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