Daily Markets Update - June 1, 2020 - Mr. Deepak Jasani, Head Retail Research, HDFC Securities
Indian equities continued the rally on the fourth straight day on June 1 after government relaxed some lockdown norms to revive the economy. At close, the Nifty was up 245.85 points or 2.57% at 9826.15. Indices gave up some gains after reaching an intra day peak of 9931 at 1215 Hrs. Buoyant Asian and European markets helped sentiments. Volumes were also healthy suggesting high delivery activity. Financials, Materials and Auto stocks did well while Pharma stocks came under selling pressure.
Asian shares advanced to three-month highs on Monday as progress on re-opening economies helped offset jitters over riots in U.S. cities and unease over Washington's power struggle with Beijing.
India is likely to receive 102% rainfall of a long-term average this year, the IMD said on Monday in its 2nd long range forecast, raising expectations for higher farm output in India, which is reeling from the new coronavirus pandemic.
European stocks rose in thin holiday trade (markets in Germany, Switzerland, Denmark and Norway were closed for Whit Monday holidays) on Monday after U.S. President Donald Trump stopped short of threatening tariffs on China and a private survey showed that China's manufacturing sector moved into expansion territory in May.
Meanwhile, the downturn in the euro area manufacturing sector eased noticeably in May as companies restarted work, final data from IHS Markit showed. The manufacturing Purchasing Managers' Index improved to 39.4 in May from April's record low of 33.4. The U.K. manufacturing sector activity contracted as expected in the month of May, the final report from IHS Markit revealed with a score of 40.7.
U.S. stock futures edged lower Monday on concern that escalating tensions between Washington and Beijing will weigh on trade between the world's two largest economies. Bloomberg News reported on Monday that China has halted some imports of U.S. soy. Such a move could add to the friction between the two countries, and sour the prospects for existing and new trade agreements.
Technically, Nifty has filled the downgap of 9731 made on May 04 and in the process has formed a bullish island reversal. 9889-9932 could be the resistance for the Nifty while 9584-9598 could be the support in the near term.