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NSE Intra-day chart (25 February 2021)
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Market Commentary 26 February 2021
Markets to get gap-down start amid weak global cues


Indian equity benchmarks ended Thursday's volatile session by over half percent higher each, with energy, oil and gas and metal stocks accounting for most of the gains, amid strong cues from global peers. The benchmarks staged a gap up opening, as traders took encouragement with a private report that India's economy is likely to have returned to growth in the December quarter due to the easing of restrictions on movement after the first wave of the coronavirus epidemic peaked. Some support also came in as the Reserve Bank of India (RBI) announced yet another round of Open Market Operations (OMO) or simultaneous purchase and sale of gilts on March 4. Under this, the RBI will buy Rs 15,000 crore worth bonds in four different papers and sell Rs 150,000 crore worth bonds in two different securities. However, the benchmarks came off intraday highs due to monthly expiry of February futures and option contracts. Some concern also came with Reserve Bank of India (RBI) Governor Shaktikanta Das' statement that the central bank is concerned over the impact of cryptocurrencies may have on the financial stability in the economy and has conveyed the same to the government. He said we have certain major concerns about cryptocurrencies. But key indices managed to end session with over half percent gains each, as Moody's projected India's growth for the next financial year beginning April 1, to 13.7 percent, from 10.8 percent estimated earlier, on the back of normalisation of activity and growing confidence in the market with the rollout of COVID-19 vaccine. Some optimism also remained among traders with S&P Global Ratings' statement that an improvement in macroeconomic conditions is likely to alleviate stress for India's banking sector. It said the Indian government's strong efforts to shield banks from the COVID-19 pandemic have largely been successful, but a hit from the pandemic is inevitable. Traders also took a note of private report stated that the number of ultra-high networth individuals (UHNWIs), with wealth of $30 million or more, is expected to rise 63 percent over the next five years to 11,198 in India, the second fastest growth in the world. Finally, the BSE Sensex rose 257.62 points or 0.51% to 51,039.31, while the CNX Nifty was up by 115.35 points or 0.77% to 15,097.35..


The US markets ended lower on Thursday amid a continued increase in treasury yields, which led to renewed concerns about interest rates despite Federal Reserve Chair Jerome Powell's assurances of ultra-easy monetary policy for the foreseeable future. The yields on ten-year notes and thirty-year bonds once again rose to their highest levels in a year, with the ten-year yield briefly spiking above 1.6 percent in intraday trading. The increase in yields came following the release of a batch of largely upbeat US economic data, including a report from the Labor Department showing a steep drop in first-time claims for US unemployment benefits in the week ended February 20th. The Labor Department said initial jobless claims tumbled to 730,000, a decrease of 111,000 from the previous week's revised level of 841,000. Street had expected jobless claims to drop to 838,000 from the 861,000 originally reported for the previous week. The Commerce Department also released a report showing new orders for US manufactured durable goods spiked by much more than expected in the month of January. The report said durable goods orders soared by 3.4 percent in January after jumping by an upwardly revised 1.2 percent in December. Street had expected durable goods orders to surge up by 1.1 percent compared to the 0.5 percent increase that had been reported for the previous month.


Crude oil futures ended higher for fourth straight session on Thursday amid hopes global energy demand will see a significant rise and hit pre-Covid-19 levels by the end of this year. It is widely expected that global oil demand will reach 100 million barrels per day by the end of the year thanks to the faster momentum in coronavirus vaccine rollouts across the world. Lower crude production in the US, and the Federal Reserve's pledge to keep interest rates at near-zero levels for the foreseeable future also contributed to the rise in crude oil prices in recent sessions. The Energy Information Administration in a report said a rare winter storm in Texas caused US crude production to drop by more than 10%, or 1 million barrels per day (bpd), last week. Crude oil futures for April surged $0.31 or 0.5 percent to settle at $63.53 barrel on the New York Mercantile Exchange. However, April Brent crude fell $0.16 or 0.2 percent to settle at $66.88 a barrel on London's Intercontinental Exchange.


Snapping its four-day gaining streak Indian rupee depreciated against dollar on Thursday due to demand for American currency from banks and importers. Traders were worried with Reserve Bank of India (RBI) Governor Shaktikanta Das' statement that the central bank is concerned over the impact of cryptocurrencies may have on the financial stability in the economy and has conveyed the same to the government. However, downfall remain capped as Moody's projected India's growth for the next financial year beginning April 1, to 13.7 percent, from 10.8 percent estimated earlier, on the back of normalisation of activity and growing confidence in the market with the rollout of COVID-19 vaccine. On the global front, rally in risk currencies on Thursday helped Britain's pound steady near $1.41, a day after it hit its highest levels in nearly three years. Finally, the rupee ended at 72.43, 8 paise weaker from its previous close of 72.35 on Wednesday.


The FIIs as per Thursday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 6018.79 crore against gross selling of Rs 6319.26 crore, while in the debt segment, the gross purchase was of Rs 1048.81 crore with gross sales of Rs 2778.91 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.64 crore against gross selling of Rs 37.32 crore.


The US markets closed in red on Thursday as technology-related stocks remained under pressure following a rise in US bond yields. Asian markets are trading lower on Friday tracking fall on Wall Street overnight. Indian markets ended higher but off day's high on Thursday led by energy and metal stocks. Today, the markets are likely to make gap-down start of session following sell-off in the global peers. All eyes will be on the Q3 gross domestic product (GDP) data, to be released later in the day, which will shed light on whether the economy continued to be in recession in the third quarter of FY21 or it ended with the second quarter only. However, some respite may come later in the day as India Inc said privatisation except in strategic sectors would unleash exciting opportunities, boost investments in infrastructure and create jobs. Some support may come as Union Finance Minister Nirmala Sitharaman said this year's budget has negated the notion that welfare state is a socialist prerogative, and added that it has given a directional change to the Indian economy, wherein the government trusts wealth creators and citizens. Meanwhile, a nationwide bandh call has been given by the Confederation of All India Traders (CAIT) to protest against rising fuel prices, the E-Way Bill, and the complex structure of the Goods and Services Tax (GST). Marketplaces across India are likely to remain shut on Friday as over 40,000 trader associations have responded to the cause. Metal stocks will be in focus as industry body Indian Steel Association (ISA) said there is an urgent need to increase and improve the logistics arrangement for the domestic steel sector. There will be some reaction in auto component industry stocks as industry body Automotive Component Manufacturers Association of India (ACMA) said the domestic auto component industry is expected to log in double-digit growth next fiscal, as demand picks up month on month after a prolonged period of downturn. There will be some buzz in pharma stocks as Union Minister for Chemicals & Fertilisers D V Sadananda Gowda said the government is continuously working to reduce regulatory compliance burden on the pharma industry in a bid to improve ease of doing business in the country. Besides, RailTel's shares will make their stock market debut today. The Rs 819 crore initial public offering (IPO) from the Ministry of Railways, its second public issue of 2021, had earlier this month garnered a subscription tally of 42.39 times.


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