Markets end on flat note: Sensex erases early gains after a choppy session, Nifty slips; M&M top loser

Sensex ended marginally lower after a choppy session on Friday as investors weighed the fiscal impact of the government''s economic stimulus.

FP Staff May 15, 2020 16:26:52 IST
Markets end on flat note: Sensex erases early gains after a choppy session, Nifty slips; M&M top loser

The markets made a negative start in continuation with the previous day's fall, shrugging off the positive trade in global markets amid investors’ optimism about the re-opening of the US economy from coronavirus lockdowns and possibility of more stimulus which could fuel a recovery.

While remaining in the red for most of the trading time, the markets recovered in the last session amid value by market participants ahead of the third set of announcements on the fiscal stimulus package. Market ended on a flat note, however for the week it ended 1.7 percent lower despite govt announcement of Rs 20 lakh crore economic relief package. Selling was broad-based and except FMCG, metal all sectoral indices ended in red with sharp selling witnessed in nifty bank index. Going forward, investors will keep a close eye on the finance minister announcements and economic lockdown 4.o measures to combat COVID-19.

Sensex ended marginally lower after a choppy session on Friday as investors weighed the fiscal impact of the government''s economic stimulus.

According to market experts, participants fear that the Rs 20 lakh crore package may not result in direct and immediate boost to demand, raising doubts over the country''s economic revival in the near term.

After slumping over 350 points during the day, the 30-share index pared most losses to settle 25.16 points or 0.08 percent lower at 31,097.73. Similarly, NSE Nifty slipped 5.90 points, or 0.06 percent, to close at 9,136.85.

M&M was the top laggard in the Sensex pack, cracking over 4 percent, followed by Axis Bank, IndusInd Bank, Hero MotoCorp, Sun Pharma and ICICI Bank.

Markets end on flat note Sensex erases early gains after a choppy session Nifty slips MM top loser

Representational image. Reuters

On the other hand, Bharti Airtel, Asian Paints, Tata Steel, NTPC, HUL and Reliance ended with gains.

Besides uncertainty over the effectiveness of the fiscal stimulus package, the spike in COVID-19 cases in the country is weighing on investor sentiment, experts noted.

Sumeet Bagadia, Executive Director, Choice Brokin, said, "Finall, the Nifty settled its weekly closing at 9,129-level with the loss of 13 points only after giving a flat opening. Through the trading session, we have seen a flat movement with no major indication on the chart. However, as per the OI, the Nifty has strong support at 9060 to 9000 level and the Index made low of 9050 which suggests a bounce back movement in the upcoming trading session. Even we haven’t seen any convincing move in any large Cap Constituents normally which lead the Index. At present level, the Index has strong support at 9,060-9,000 while upside resistance comes at 9,350 level."

Manish Hathiramani, Index Trader and Market Analyst, Deen Dayal Investments said: "The Nifty50 moved indecisively today. While it started the day with a sharp move down, it halted at the 9,050-level. This could be a psychological support for investors and traders or it could also be because it's the last day of the trading week and people would prefer evaluating their stand on Monday. Either ways, a break of 9,040 would lead to a further downside which could even take this market to 8,750-8,800 levels. The 9,400-9,450-mark continues to remain in the resistance zone," he said.

Paras Bothra, President of Equity Research, Ashika Stock Broking, said, "Domestic markets were marginally lower as US-China tensions escalated and mixed data out of China cast doubt over the strength of the country's consumer spending and service sectors. Finance Minister Nirmala Sitharaman announced the second tranche of economic stimulus of Rs 20 lakh crore to support the migrant workers, small farmers, street vendors and affordable housing. Experts however were disappointed given the lower fiscal spend of Rs 1 lakh cr. Markets recouped losses in the second half led by buying in metal, energy and infra stocks while auto, bank, IT, pharma stocks remained under pressure," he said.

Rupee settles 2 paise down at 75.58 against US dollar

The rupee pared initial gains and provisionally settled 2 paise lower at 75.58 against the US dollar on Friday as investors awaited fresh cues from further announcements on the fiscal stimulus package.

Forex traders said the local currency was trading in a narrow range amid rising risk-aversion in the broader financial markets, according to a PTI report

At the interbank foreign exchange, the rupee opened at 75.51, but pared initial gains, and finally settled for the day at 75.58—lower by just 2 paise over its previous close.

During the trading session, the rupee witnessed an intra-day high of 75.45 and a low of 75.59 against the greenback.

On Thursday, the rupee had settled 10 paise lower at 75.56 against the US dollar.

Finance Minister Nirmala Sitharaman will announce the next tranche of the stimulus package later in the day.

Forex traders said market participants are concerned about the implications of the Rs 20-lakh-crore economic stimulus package on the fiscal deficit, as there is still no clarity on how the package would be financed.

World stocks win a respite, oil prices jump over 3%

World stocks rose on Friday and oil prices jumped more than 3 percent, taking the sting out of a week that has seen sentiment hit as deteriorating US-China relations added to worries over how fast economies could recover from the coronavirus shock.

Oil prices rose to their highest levels in more than a month LCOc1 CLc1 on signs that demand from China is picking up, Reuters said.

European shares opened broadly higher with stock markets in London, Paris and Frankfurt tracking overnight gains in US and Asian markets.

US stock market futures pointed to a positive open for Wall Street shares.

Data showing China’s industrial output in April rose 3.9 percent from a year earlier, expanding for the first time this year, bought some comfort to markets.

Still, after a bruising week, a broad measure of European stocks was set to end the week 3 percent lower - the biggest weekly fall since the mid-March rout in global stocks.

MSCI’s world stock index, a touch firmer on Friday, is down around 2.5 percent this week.

“After a brutal few days for stock markets, a late turnaround in banking and energy stocks saw US markets recover from their lowest levels this month, to closer higher for the first time this week last night,” said Michael Hewson, chief market analyst at CMC Markets. “With Asia markets also having a positive session...markets here in Europe have opened higher as we come to the end of what is still likely to be the worst week for European stocks since early March.”

Analysts said this week’s drop, while a natural correction after a rally since mid-March, also reflected growing concerns about rising US-China tensions.

US President Donald Trump on Thursday signaled a further deterioration of his relationship with China over the novel coronavirus, saying he has no interest in speaking to President Xi Jinping right now and suggesting he could even cut ties with Beijing.

“There is no doubt that the optics around the trade/diplomacy backdrop have worsened in the last week and this has had a negative influence,” said Chris Bailey, European strategist at Raymond James in London.

“There has also been a subtle change in the perceptions of market participants, for example the negative interest rate debate getting a very good airing in the United States.”

US Federal Reserve Chair Jerome Powell has brushed off the notion that the Fed could push rates below 0% after futures tied to Fed interest rate policy expectations recently began pricing a small chance of sub-zero U.S. rates within the next year.

Two year US Treasury yields are trading at just 0.15 percent, while short-dated bond yields in Britain have dipped back below 0 percent this week.

Faced with an exceptional hit from the coronavirus crisis, central bankers are under intense pressure to do more to shore up battered economies.

The German economy contracted by 2.2 percent in the first quarter, its steepest three-month slump since the 2009 financial crisis as shops and factories were shut in March to contain the spread of the coronavirus, preliminary data showed on Friday.

An electronic stock information board displaying zero numbers on the latests stock prices before the opening of the first trading day after the week-long Lunar New Year holiday at a brokerage house in Shanghai, China, February 15, 2016.

Dollar dips

Elsewhere, the dollar was a touch softer against major currencies. The euro was around 0.1 percent firmer at $1.0815, while the dollar dipped 0.15 percent to 107.08 yen.

Britain's pound was about a fifth of a percent weaker against the euro and the dollar, with focus on talks between Britain and European Union leaders on their future relationship.

 

--With inputs from agencies

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