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NSE Intra-day chart (18 December 2020)
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Market Commentary 21 December 2020
Domestic markets to get negative start amid weakness in global peers

 

Indian equity benchmarks ended Friday's choppy session at record closing highs but with small gains, tracking gains in index majors Infosys, Bajaj Auto and SBI. After making cautious start, benchmarks traded with a negative bias for most part of the day, as pessimism spread among the investors with a private report stated that venture investments by private equity and venture capital funds were 27 percent lower on yearly basis in November at $3.9 billion, and more than halved from the $8.5 billion reported in October. Some anxiety also came with a  private report stating that the current pandemic is likely to shape consumer thinking and consequently impact shopping behaviour, and the overall consumption growth is likely to get delayed by up to two years. It also said that the household consumption is going to be negatively impacted over 2020 and 2021. Market participants also took a note of Finance Minister Nirmala Sitharaman's statement that the government has taken several measures to support the economy but no amount of intervention will be adequate to deal with the crisis triggered by the COVID-19 pandemic. However, last hour buying in select IT, TECK and healthcare stocks helped indices to settle the day in the green. Some support came as ICRA pegged the contraction in the economy at 7.8 per cent for 2020-21. Before the GDP numbers for Q2 were out, it had predicted the fall in the economy at 11 per cent. It said improving economic fundamentals, a bright outlook for the rabi season, and the visibility of vaccine availability are expected to strengthen demand. Traders also found some solace with Union Minister Piyush Goyal's statement that sustainability has become an important element of decision-making both in the government and the corporate sector of the country. He said sustainable development will further enhance the scale and speed of growth in the years to come. Besides, CBDT said further adding to the recovery signals, advance tax payment by companies has shown a massive 49 per cent growth to Rs 1,09,506 crore in the third quarter this fiscal. Finally, the BSE Sensex rose 70.35 points or 0.15% to 46,960.69, while the CNX Nifty was up by 19.85 points or 0.14% to 13,760.55.

 

The US markets ended lower on Friday on account of profit taking, as traders cashed in on recent gains after yesterday's climb to record closing highs. Optimism about a new fiscal stimulus bill contributed to the strength on Thursday, although traders may be waiting for more concrete developments before continuing to push stocks higher. In remarks on the Senate floor, Senate Majority Leader Mitch McConnell, R-Ken., said an agreement on a new relief package appears to be close at hand and suggested lawmakers are likely to work through the weekend to reach a deal. Upbeat news on the coronavirus vaccine front helped limit the downside for the markets, with an FDA advisory panel giving a positive recommendation to Moderna's (MRNA) vaccine candidate. Upbeat news on the coronavirus vaccine front helped limit the downside for the markets, with an FDA advisory panel giving a positive recommendation to Moderna's (MRNA) vaccine candidate. On the economic data front, a report released by the Conference Board showed its index of leading US economic indicators increased by slightly more than expected in the month of November. The Conference Board said its leading economic index rose by 0.6 percent in November after climbing by 0.8 percent in October. Street had expected the index to increase by 0.5 percent.

 

Crude oil futures ended higher on Friday amid hopes that energy demand will pick up gradually following another coronavirus vaccine getting the nod from the US drug regulator. The recent data from Energy Information Administration (EIA) that showed a sharp drop in crude oil stockpiles last week continued to support oil prices. Oil is also continuing to be supported by the recent decision of the Organization of the Petroleum Exporting Countries and allies to slow the pace of a planned increase in supplies next year. According to a report released by Baker Hughes, the number of active U.S. rigs drilling for oil rose by 5 to 263 this week, continuing to rise for a fourth straight week. The total active U.S. rig count, including those drilling for natural gas, increased by 8 to 346. Crude oil futures for January gained $0.74 or 1.5 percent to settle at $49.10 a barrel on the New York Mercantile Exchange. February Brent crude rose nearly 1.5 percent to settle at $52.26 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 ICRA pegged the contraction in the economy at 7.8 per cent for 2020-21. Before the GDP numbers for Q2 were out, it had predicted the fall in the economy at 11 per cent. It said improving economic fundamentals, a bright outlook for the rabi season, and the visibility of vaccine availability are expected to strengthen demand. On the global front; pound fell on Friday, reversing some of its recent gains, as EU chief negotiator Michel Barnier warned that there were just hours left to reach a Brexit trade deal with London. Finally, the rupee ended at 73.56, 3 paise stronger from its previous close of 73.59 on Thursday.

 

The FIIs as per Friday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 8906.82 crore against gross selling of Rs 6273.46 crore, while in the debt segment, the gross purchase was of Rs 640.10 crore with gross sales of Rs 305.79 crore. Besides, in the hybrid segment, the gross buying was of Rs 12.83 crore against gross selling of Rs 15.29 crore.

 

The US markets ended lower on Friday pulled down by uncertainty around a coronavirus stimulus deal. Asian markets are trading mixed on Monday as investors gave a cautious welcome to news a deal had been struck on a long-awaited US stimulus bill, though difficult Brexit talks dragged on with no agreement in sight. Indian markets ended flat but at record highs for the fifth straight session led by gains in IT, pharma and FMCG sectors. Today, the markets are likely to make negative start of new week tracking weakness in global peers amid rising coronavirus cases and fresh lockdowns in some countries. With 24,589 fresh Covid-19 cases, India's caseload stood at 10,056,248. The country's death toll has mounted to 145,843. With 1,896,518 cases, Maharashtra has the highest number of coronavirus cases, followed by Karnataka 909,469, Andhra Pradesh 878,723, Tamil Nadu 806,000, and Kerala 705,869. However, some respite may come later in the day with Union Minister Anurag Singh Thakur's statement that India has the potential to achieve double-digit growth through a healthy dose of digital services and manufacturing base expansion which will be driven by demand from the rural sector, youth and the aspirational middle class. Some support may come with Finance Minister Nirmala Sitharaman's statement that India would be the engine of global growth, along with a few other countries, contributing to the revival of the global economy in a significant way. Traders may take note of report that foreign portfolio investors (FPI) pumped in Rs 54,980 crore in Indian markets in December so far amidst availability of excess liquidity in global markets and expectation of fresh stimulus package by various central banks, among others. There will be some buzz in power stocks as India's power consumption grew 4.8 percent to 50.36 billion units (BU) in the first half of December this year, compared to 48.04 BU during December 1-15 last year, showing consistency in economic activities. Banking stocks will be in focus as the RBI data showed that bank credit grew by 5.73 percent to Rs 105.04 lakh crore while deposits increased by 11.34 percent to Rs 145.92 lakh crore in the fortnight ended December 4. There will be some reaction in jewelry industry stocks as the data from the commerce ministry showed that gold imports fell 40 per cent to $12.3 billion during April-November due to fall in demand in the wake of the COVID-19 pandemic. Sugar industry stocks will be in limelight as the government cannot reduce the minimum price at which sugar mills have to purchase sugarcane from farmers.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

13,760.55

13,688.49

13,802.74

BSE Sensex

46,960.69

46,718.66

47,114.37

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

460.65

180.55

177.64

182.49

Oil & Natural Gas Corporation

364.81

99.00

97.34

101.49

NTPC

335.97

103.75

102.80

104.75

State Bank of India

298.16

271.45

266.99

273.94

Tata Steel

253.51

631.25

625.89

638.74

 

  • Cipla's step-down associate company Avenue Therapeutics has received an update from the US health regulator for its new drug application for intravenous tramadol. 
  • Reliance Industries and bp have started production from the R Cluster, ultra-deep-water gas field in block KG D6 off the east coast of India. 
  • Infosys has divested one-third of its holding in US-based wearable device startup Whoop for about $10 million (about Rs 73.5 crore).  
  • Hero MotoCorp has donated a specially designed First Responder Vehicle to the health authorities in Jagraon, Ludhiana.
News Analysis