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NSE Intra-day chart (04 May 2021)
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Market Commentary 05 May 2021
Markets to get positive start; all eyes on RBI Governor's speech

 

Tuesday turned out to be a disappointing day of trade for Indian equity benchmarks where frontline gauges failed to hold on to their early gains and ended the day near intraday lows with Sensex and Nifty ending below their crucial 48,300 and 14,500, respectively. Sentiments remained optimistic amid report that Indian exporters are expecting continuous growth in the country's outbound shipments despite increase in COVID-19 cases as their order books are encouraging and there is a pick-up in demand in rich markets. Federation of Indian Export Organisations (FIEO) President S K Saraf said that in most of the states, manufacturing and exports related services have been exempted from the restrictions and inter-state movement of cargo is permitted by the central government. However, selloff in late afternoon mainly played spoil sports for domestic markets as traders turned pessimistic after Goldman Sachs has lowered its estimate for India's economic growth to 11.1 per cent in fiscal year to March 31, 2022, as a number of cities and states announced lockdowns of varying intensities to check spread of coronavirus infections. Traders also remained concerned after CMIE's managing director and chief executive Mahesh Vyas said the situation on the employment front is expected to continue to remain challenging going forward as well. He said in the month of April, compared to March, we have lost 75 lakh jobs. That is what has caused the jump in the unemployment rate. The national unemployment rate touched 7.97 per cent as per the Centre's proprietary data, with urban areas witnessing higher stress at 9.78 per cent and rural joblessness at 7.13 per cent. Adding more pessimism, domestic agency India Ratings and Research expects the overall recovery path to be pushed back for most of the service-oriented sectors to FY22, owing to a major supply-side disruption from the second wave of COVID-19 infections. Markets made an optimistic start and traded in green terrain for most part of the day as the country reported a decline in new coronavirus cases for the third day running. Finally, the BSE Sensex fell 465.01 points or 0.95% to 48,253.51, while the CNX Nifty was down by 137.65 points or 0.94% to 14,496.50.

 

The US markets ended mostly lower on Tuesday with the Nasdaq showing a particularly steep drop amid weakness among technology stocks. The Nasdaq reached a record intraday high during trading last Thursday but has pulled back sharply since then, falling to its lowest closing level in a month. Traders were cashing in on tech stocks that benefited from the coronavirus-induced lockdowns as more states continue to lift restrictions. Additional selling pressure was generated in reaction to comments from Treasury Secretary Janet Yellen, who suggested interest rates may have to rise modestly to prevent the economy from overheating amid the recent spike in government spending. The comments from Yellen come even though the Federal Reserve has repeatedly indicated interest rates are likely to remain at near-zero levels for the foreseeable future. On the economic data front, a report released by the Commerce Department showed the U.S. trade deficit hit a new record high in the month of March. The Commerce Department said the trade deficit widened to $74.4 billion in March from a revised $70.5 billion in February. The trade deficit was nearly in line with estimates, as street had expected the deficit to widen to $74.5 billion from the $71.1 billion originally reported for the previous month.

 

Magnifying their previous session's gains, crude oil futures ended higher on Tuesday amid continued optimism about increased demand for fuel in the US and parts of Europe during the summer. EU officials proposed easing restrictions on visiting the 27-nation bloc as vaccination campaigns across the continent gather speed. In the US, New York State, New Jersey and Connecticut will ease most of their pandemic curbs on businesses, including retail stores, food services and gyms, beginning on May 19. Traders bet on hopes that relaxations in restrictions on movement in the US will help lift oil demand. However, the surge in coronavirus cases in Asia, especially in India and Japan, has raised concerns energy demand from the region will drop amid the rising possibility of a shutdown. Crude oil futures for June rose $1.20 or 1.9 percent to settle at $65.69 barrel on the New York Mercantile Exchange. July Brent crude gained $1.28 or 1.9 percent to settle at $68.84 a barrel on London's Intercontinental Exchange.

 

Continuing previous session gain, Indian rupee ended higher against American currency on Tuesday, due to selling of the US currency by exporters and banks. Traders were taking support as Indian exporters are expecting continuous growth in the country's outbound shipments despite increase in COVID-19 cases as their order books are encouraging and there is a pick-up in demand in rich markets. Federation of Indian Export Organisations (FIEO) President S K Saraf said that in most of the states, manufacturing and exports related services have been exempted from the restrictions and inter-state movement of cargo is permitted by the central government. On the global front, dollar extended gains on Tuesday, partially unwinding a month long decline as investors weighed chances that interest rates will be forced higher by a roaring U.S. economic recovery and awaited upcoming data and policy speeches for clues. Finally, the rupee ended 73.85, stronger by 10 paise from its previous close of 73.95 on Monday.

 

The FIIs as per Tuesday's data were net seller in equity segment, while net buyer in debt segment. In equity segment, the gross buying was of Rs 5545.47 crore against gross selling of Rs 7215.49 crore, while in the debt segment, the gross purchase was of Rs 774.54 crore against gross selling of Rs 736.24 crore. Besides, in the hybrid segment, the gross buying was of Rs 15.67 crore against gross selling of Rs 28.08 crore.

 

The US markets ended mostly lower on Tuesday as investors dumped megacap growth stocks to seek shelter in more defensive parts of the market, amid concerns on rising interest rate and uncertainty over an upcoming jobs report. Asian markets are trading mostly in green on Wednesday amid thin trade due to holidays in Japan, China and South Korea. Indian markets closed around 1 percent lower on Tuesday following weak global cues, selling by foreign institutional investors (FIIs) and concern over spiralling coronavirus infections. Today, the start of session is likely to be positive tracking gains in Asian peers. Traders will be eyeing the RBI Governor Shaktikanta Das' unscheduled speech at 10 am today as the nation faces an unrelenting second wave of Covid-19 pandemic. Some support will come with report that Brihanmumbai Municipal Corporation (BMC) received a fresh stock of one lakh COVID vaccine doses and it will resume vaccination of people above 45 years at government vaccination centres. Upbeat earning from several companies may also support the market sentiments. However, traders may be concerned as India reported 382,691 fresh Covid-19 cases. With this, the cumulative caseload stands at 20,658,234, Worldometer showed. There may be some cautiousness as S&P Global Ratings said an ongoing second wave of COVID-19 infections in India could hurt its near-term economic recovery and possibly diminish growth for the full year. It added that India's COVID wave will inevitably hit the recovery and could push growth below 10%. Also, Wall Street brokerage Goldman Sachs has lowered its estimate for India's economic growth to 11.1 per cent in fiscal year to March 31, 2022, as a number of cities and states announced lockdowns of varying intensities to check spread of coronavirus infections. There will be some reaction in telecom stocks as the Department of Telecom approved applications of telecom companies -- Reliance Jio, Bharti Airtel, Vodafone and MTNL -- for conducting 5G trials but none of them will be using technologies of Chinese entities. Auto stocks will be in focus with a private report that auto sales in April have started showing the impact of lockdowns that has put the brakes on the recovery of the sector. With more states announcing lockdowns and some more OEMs expecting to go for maintenance shutdowns, as many as 50 per cent of the dealers are likely to be impacted by the move. IT stocks will be in limelight as computer major Dell and contract manufacturers Foxconn, Wistron and Flextronics are among the 19 companies that have filed their applications under the production linked incentive (PLI) scheme for IT hardware. There will be some important earnings announcements too to keep the markets buzzing.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

14,496.50

14,397.54

14,659.44

BSE Sensex

48,253.51

47,936.47

48,783.55

 

Nifty Top volumes

 

Stock

 

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

State Bank of India

577.49

351.50

346.84

359.54

Tata Motors

386.40

289.45

285.09

296.79

Adani Ports and SEZ

314.00

768.75

758.54

780.49

Oil & Natural Gas Corporation

308.11

109.65

108.14

110.74

Hindalco Industries

297.67

362.55

353.35

378.10

  • Cipla's associate company -- GoApptiv has incorporated a wholly-owned subsidiary company namely Iconphygital with effect from May 03, 2021. 
  • Bharti Airtel's subsidiary -- Airtel Payments Bank is planning to offer an increased interest rate of 6 per cent per annum on savings account deposit of over Rs 1 lakh.
  • HCL Technologies has inked a multi-year contract with Hitachi ABB Power Grids to build a new greenfield digital foundation as part of a global transformation program. 
  • JSW Steel's subsidiary -- JSW Steel USA Ohio Inc has signed a long-term agreement with Allegheny Technologies Inc.
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