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Published on 7/04/2020 6:40:42 PM | Source: Motilal Oswal Financial Securities Ltd 

Daily Market Commentary 7 April 2020 by Mr. Siddhartha Khemka, Motilal Oswal

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Below is the Views On Market commentary : Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Private Ltd

“Indian equity markets bounced back sharply, tracking the global markets, amidst hopes that the coronavirus spread might have peaked in key global centres due to fall in death rates. Benchmarks posted biggest absolute one-day gain with Sensex rising 2,476 points to close at 30,067 level (+9%) while Nifty50 was up 708 points to close at 8,792 level (+8.8%). In percentage terms, the indices rise was the biggest since May 2009. The overall market breadth was positive with Nifty Midcap 100 up 5.3% while Nifty Smallcap 100 was up 3.5%. All the sectors ended in green with Private Banks being the biggest gainer, up 11.1%, followed by Pharma (+10.4%), Auto (+9.4%) and FMCG (+8.1%). VIX continues to cool down for the fourth day in a row, down 5.9% to close at one-month low of 52 level. On the currency front, the rupee surged by 49 paise to 75.64 against the US dollar. Brent crude futures, on the other hand, rose 2.5% to $33.9/barrel on fresh hopes of an OPEC meeting this week which might reach an agreement to reduce oversupply and shore up the market.

Market expects MSCI to rebalance MSCI India weight in the emerging market (EM) index after India moved into a new regime that increased sector-wise limits for the Foreign Portfolio Investment (FPI). We expect the implementation to take place with rebalancing in May’20. The rebalance will be announced on 12th May’20 and flows will take place on 29th May’20 (end of day). This may attract $1.3 billion in passive flows to India. The government eased curbs on exports of 24 active pharmaceutical ingredients (APIs) and their formulations, which lifted the Pharma Index. Market sentiments got further boosted amid reports that the FM is working on a second relief package for the Indian economy to mitigate negative impact due to COVID-19.

While the global tally of the Covid-19 infections has crossed 13 lakh, with over 74,000 deaths, there has been some decline witnessed in new COVID-19 cases globally. In this environment, the infection curve has yet to flatten in India. Thus, market would continue to remain volatile with swing on either side as it would track global markets along with the trend in coronavirus cases. For markets to sustain an uptrend, more positive news on the virus containment as well as lifting of lockdown is needed.

Technically, we may see further bounce in Nifty towards 9000 then 9300 zone. But sustainable move above its key resistance of 9000 - 9300 zone would be a challenge for the bulls. On the flipside, immediate support is now inching higher to 8550 and then 8400-8350 zone.”

 

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