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NSE Intra-day chart (18 June 2021)
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Market Commentary 21 June 2021
Benchmarks to make gap-down opening amid weak global cues


Indian equity benchmarks closed on a flat note after a volatile trade on Friday amid a largely negative trend in global stocks. Markets made positive start, as traders took some support with the Confederation of Indian Industry (CII) urged the government to provide a fiscal stimulus worth Rs 3 trillion along with direct cash transfers to perk up domestic demand. The industry body also sought expansion in the Reserve Bank of India (RBI) balance sheet to meet the demand exigencies of the pandemic. Also, India maintained 43rd rank on an annual World Competitiveness Index compiled by the Institute for Management Development (IMD) that examined the impact of COVID-19 on economies around the world this year. However, key indices soon erased initial gains and slipped over half a percent in morning trades, as sentiments turned pessimistic with a private report stated that lockdowns imposed by the states in April and May to contain the second wave of the deadly COVID-19 pandemic has likely led to the economy contracting 12 per cent in the June quarter as against 23.9 per cent contraction in the same quarter in 2020. Markets remained weak in late afternoon deals, as assessment made by the Reserve Bank stating that the devastating second wave of the coronavirus pandemic in April-May is estimated to have cost the nation Rs 2 lakh crore in terms of output. It also said the second wave's toll is mainly in terms of the hit to domestic demand on account of regional and specific containment rather than a nation-wide lockdown. But markets recovered lost ground in fag end of a trading session as buying emerge in Telecom and FMCG stocks. Traders took note of report that Union Minister of State for Labour & Employment (Independent Charge) Santosh Gangwar has said that India is committed to improve employment outcomes for all youth in India, including women and vulnerable section of the people, through an enduring, long-term commitment for better opportunities. He said that the government is making all-out efforts to improve the bridge between education and employment, and to prepare young people for the future of work. Finally, the BSE Sensex rose 21.12 points or 0.04% to 52,344.45, while the CNX Nifty was down by 8.05 points or 0.05% to 15,683.35.


The US markets ended sharply lower on Friday amid concerns about the outlook for monetary policy continued to weigh on the markets following the Federal Reserve's announcement on Wednesday. The Fed's forecast for two interest rates hikes in 2023 has led to speculation that the central bank will soon start tapering its asset purchases. Fed Chair Jerome Powell said the central bank would provide advance notice before making any changes to its asset purchases, but traders remain on edge about stocks losing a key layer of support. The Dow extended a recent downtrend, which saw the blue chip index close lower for the fifth straight sessions and eight out of the past ten. However, overall trading activity was somewhat subdued with a lack of major US economic data keeping some traders on the sidelines. Brokerage stocks moved sharply lower over the course of the session, dragging the NYSE Arca Broker/Dealer Index down by 2.7 percent to its lowest closing level in a month. Substantial weakness was also visible among oil stocks, reflected by the 2.8 percent slump by the NYSE Arca Oil Index. The weakness in the oil sector came despite a rebound by the price of crude oil. Natural gas, gold and networking stocks also saw considerable weakness on the day, moving lower along with most of the other major sectors.


Crude oil futures ended higher on Friday amid optimism about energy demand in the US thanks to reopening of businesses after Covid-19 lockdowns. However, oil's upside was limited due to concerns about outlook for energy demand in Europe following reports showing coronavirus cases rose to four-month highs. According to a report from Baker Hughes, US energy firms added oil and natural gas rigs for a second week in a row, with surging oil prices prompting some drillers to return to the wellpad. The report showed oil and gas rig count rose by nine to 470 this week, the highest since April 2020. The total rig count rose by 204, up 77% over this time last year. Crude oil futures for July gained $0.60 or 0.8 percent to settle at $71.64 barrel on the New York Mercantile Exchange. August Brent crude rose 43 cents or 0.6 percent to settle at $73.51 a barrel on London's Intercontinental Exchange.


Erasing previous session drubbing, Indian rupee ended stronger significantly against dollar on Friday, owing to dollar sale by exporters and banks. Traders took encouragement as the CII urged the government to provide a fiscal stimulus worth Rs 3 trillion along with direct cash transfers to perk up domestic demand. Traders ignored report that RBI has revealed that the devastating second wave of the coronavirus pandemic in April-May is estimated to have cost the nation Rs 2 lakh crore in terms of output. On the global front, dollar was headed for its best week in nearly nine months on Friday, with rival currencies struggling to shake the pressure exerted by the Federal Reserve's sudden hawkish shift in tone. Finally, the rupee ended 73.86, stronger by 22 paise from its previous close of 74.08 on Thursday.


The FIIs as per Friday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 6766.95 crore against gross selling of Rs 7680.66 crore, while in the debt segment, the gross purchase was of Rs 403.81 crore with gross sales of Rs 530.25 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.58 crore against gross selling of Rs 10.74 crore.


The US markets ended lower on Friday with investors wary of a more hawkish stance from the US Federal Reserve, while the dollar posted the strongest gains in over a year and oil prices continued a steady climb. Asian markets are trading mostly in red on Monday as Japan's markets plummeted in the morning. Indian markets recovered from the day's losses to end flat on Friday. Today, the markets are likely to make gap-down opening amid sell-off in the global markets. There will be some cautiousness as Care Ratings said the credit growth for FY22 is likely to remain in low double-digit on the back of muted economic activity. However, downside may remain capped as India's fresh Covid cases have stayed below 1 lakh for the last 14 days while on Sunday, the country reported 58,419 fresh cases, the lowest in 81 days. Some support may come as Chief Economic Advisor (CEA) K V Subramanian said the government is open to coming out with more measures to boost the economy which has been hit by the second wave of the coronavirus pandemic. Also, Reserve Bank Governor Shaktikanta Das has pitched for policy support from all sides -- fiscal, monetary and sectoral -- to nurture recovery of the economy hit by the second wave of the coronavirus pandemic. Meanwhile, the Finance Industry Development Council (FIDC) has urged the Ministry of Micro, Small & Medium Enterprises (MSME) to address issues faced by MSME borrowers and the NBFCs catering to these enterprises. Besides, foreign portfolio investors (FPIs) pumped in a net Rs 13,667 crore so far in June as Indian markets continued to remain attractive to overseas investors. There will be some buzz in oil & gas sector stocks as the commerce and industry ministry floated a draft cabinet note seeking inter-ministerial views on a proposal to allow up to 100 percent foreign investment under automatic route in oil and gas PSUs, which have an 'in-principle' approval for disinvestment. Telecom stocks will be in focus reacting to their subscribers' data. Reliance Jio added 79.18 lakh wireless subscribers, Bharti Airtel added 40.5 lakh users and Vodafone Idea gained 10.8 lakh customers during March. There will be some buzz in insurance industry stocks with investment information firm ICRA's statement that the general insurance industry is expected to clock 7 to 9 per cent growth in gross direct premium income during FY22. This will be supported by growth in health segment and uptick in motor segment.


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



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