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NSE Intra-day chart (05 February 2020)
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Market Commentary 06 February 2020
Benchmarks to make a cautious start; RBI's policy outcome eyed


Exuberance continued over the Dalal Street on Wednesday, with Sensex and Nifty ending higher by around 0.90% each. The markets made a cautious start but soon staged sharp recovery, aided with Minister of State for Finance Anurag Thakur's statement that the Foreign Direct Investment (FDI) in India has been increasing on an annual basis and was at $34.90 billion till November of this fiscal. In early noon deals, volatility hit over the street, as rating agency CRISIL warned of potentially high stress in non-banking financial companies' (NBFCs) wholesale book well above the reported bad loan numbers by March, indicating rising risks to their retail books. However, in the second half of the day, bourses bounced to intraday high points, as Indian service sector started a new year 2020 on a strong footing, on the back of fastest increase in new orders and output. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index surged to 55.5 in January from 53.3 in December. Further, the Nikkei India Composite PMI Output Index also rose from 53.7 in December to 56.3 in January. Traders got encouragement, after the Central Board of Direct Taxes (CBDT) Chairman P C Mody said that the tax department is reasonably confident of meeting the revised direct tax collection of Rs 11.7 lakh crore in current fiscal. Finally, the BSE Sensex gained 353.28 points or 0.87% to 41,142.66, while the CNX Nifty was up by 109.50 points or 0.91% to 12,089.15.


The US markets ended higher on Wednesday, extending the rally seen over the course of previous sessions, on the heels of reports of breakthroughs in the developments of treatments for the coronavirus. A private report noted traders are pointing to a Chinese TV report indicating a research team at Zhejiang University has found an effective drug to treat people with the new virus. Other private report also said that a leading British scientist has made a significant breakthrough in the race for a coronavirus vaccine by reducing a part of the normal development time from two to three years to just 14 days. Traders seemed to ignore the response by the World Health Organization, which stated there are no known treatments against the virus. Meanwhile, President Donald Trump said that the US is working closely with the Chinese government to contain the virus. Confirmed coronavirus cases in China are near 25,000, claiming the lives of 490 people. On the economic data front, with a jump in the value of imports outpacing an increase in the value of exports, the Commerce Department released a report showing the US trade deficit widened in the month of December. The Commerce Department said the trade deficit widened to $48.9 billion in December from a revised $43.7 billion in November. Street had expected the deficit to widen to $48.2 billion from the $43.1 billion originally reported for the previous month. Besides, indicating a modestly faster rate of growth in US service sector activity in the month of January, the Institute for Supply Management (ISM) released a report showing an increase by its non-manufacturing index. The ISM said its non-manufacturing index rose to 55.5 in January from a revised 54.9 in December, with a reading above 50 indicating service sector growth. Street had expected the non-manufacturing index to inch up to 55.1 from the 55.0 originally reported for the previous month.


Crude oil futures ended higher on Wednesday after US government data revealed a drop in both US gasoline and distillate stockpiles. Gasoline inventories dropped for the first week in thirteen, while distillates fell for a third consecutive week. The Energy Information Administration (EIA) data showed an unexpected supply decline of 100,000 barrels for gasoline, while distillate stocks fell by 1.5 million barrels for week ended January 31.  However, domestic supplies of crude posted a second straight weekly climb. The EIA said US crude supplies rose by 3.4 million barrels for the week ended January 31. The American Petroleum Institute on Tuesday reported a climb of 4.2 million barrels. Crude oil futures for March gained $1.14 or 2.3 percent to settle at $50.75 a barrel on the New York Mercantile Exchange. April Brent surged $1.32 or 2.5 percent to settle at $55.28 a barrel on London's Intercontinental Exchange.


Indian rupee strengthened marginally against dollar on Wednesday, as bankers and exporters took to selling of American currency. Traders took some solace with report that the Foreign Direct Investment (FDI) in India has been increasing on an annual basis and was at $34.90 billion till November of this fiscal. Some optimism also came with a monthly survey indicating that India's services sector activity surged to a seven-year high in January driven by sharp increase in new business orders, leading to job creation and business optimism amid favorable market conditions. Besides, positive trend in equity market supported the rupee. However, gains remain capped as investors remained on sidelines ahead of the Reserve Bank of India's (RBI) monetary policy decision tomorrow. On the global front, dollar climbed towards a recent two-month high on Wednesday on the back of firmer Asian markets and expectations Beijing will manage to limit the spread of a deadly virus, though the yen's strength indicated broader sentiment remained cautious. Finally, the last traded price of rupee was 71.24, 1 paise stronger from its previous close of 71.25 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 8110.23 crore against gross selling of Rs 7187.27 crore, while in the debt segment, the gross purchase was of Rs 2386.17 crore with gross sales of Rs 6270.38 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.00 crore against gross selling of Rs 2.94 crore.


The US markets ended higher on Wednesday as markets let coronavirus fears abate and focused instead on positive macroeconomic data out Wednesday. Asian markets are trading in green on Thursday, following encouraging economic data, while investors keep a wary eye on the impact of the coronavirus outbreak. Indian markets ended significantly higher on Thursday with encouraging service sector activity data helping underpin investors' sentiment. Today, the markets are likely to make a cautious start amid surge in crude oil prices overnight and ahead of the Reserve Bank of India's (RBI) sixth bi-monthly monetary policy statement for 2019-20 to be out later in the day. The Monetary Policy Committee (MPC) of RBI is expected to maintain status quo on policy rates in its last monetary policy for the current financial year, despite the economic slowdown. There will be some cautiousness with NITI Aayog member Ramesh Chand's statement that the Indian agriculture sector faces issues in making available customised technology to farmers and implementation of policy reforms, especially at the state level. However, some support may come later in the day with report that the Fifteenth Finance Commission (15th FC) will set up a panel later this month to examine the fiscal and debt situation of the Centre and states and present a road map, on the lines of the erstwhile Fiscal Responsibility and Budget Management panel. Also, a another private report stated that India can achieve the target, to become a $5 trillion economy by 2025, by using automation technologies such as, artificial intelligence, natural language processing and machine learning that will drive increased efficiencies and new jobs resulting in economic growth in the next few years. Meanwhile, the Union Cabinet has approved amendments to the Banking Regulation Act to empower the RBI to regulate co-operative banks as the government was looking to tighten scrutiny around co-operative banks after the collapse of Punjab and Maharashtra Co-operative (PMC) Bank. There will be some buzz in the insurance stocks with finance secretary Rajiv Kumar's statement that the government aims to complete the merger of three state-owned general insurance companies-National Insurance Co, United India Insurance Co, and Oriental Insurance Co-the end of March. Automobile stocks will be in focus with credit rating agency ICRA's statement that the penetration of electric vehicles in the country is likely to remain low at 3-5 per cent till 2025 due to higher prices of EVs compared to its internal combustion engine (ICE) counterparts, as well as the inadequate public charging infrastructure. There will be lots of earnings reaction based on the performance of the companies.


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  • Reliance Industries has acquired 10.9% stake in Saavn Media from the existing shareholders for a total consideration of Rs 653.93 crore. 
  • Sun Pharma's one of wholly owned subsidiaries has launched ABSORICA LD capsules in US for the management of severe recalcitrant nodular acne in patients 12 years of age and older. 
  • JSW Steel has signed Indian cricketer Rishabh Pant as its brand ambassador to promote its steel products which include JSW Colouron+ color coated sheets & JSW Neosteel TMT bars, for a three year period.  
  • Tata Motors is planning to launch at least four more products in the next 18-24 months with focus on sustainability and electric vehicles.
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