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NSE Intra-day chart (05 November 2018)
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Market Commentary 06 November 2018
Markets to make positive start amid mixed global cues


The Indian equity indices failed to sparkle on first day of Diwali week, with both the Sensex and the Nifty ending Monday's trading session with notable losses. The start of the day was cautious, affected by a private report stating that with global crude prices remaining elevated, the rupee is likely to be under pressure, and may touch the 76 levels against the US currency over the next three months. Domestic sentiments also got hit with another private report showing that overseas investors pulled out a massive Rs 38,900 crore (over $5 billion) from the capital markets in October, the steepest outflow in nearly two years, on rising crude oil prices, depreciating rupee and worsening current account deficit. With this, the total outflow from the capital markets (equity and debt together) has reached over Rs 1 lakh crore so far this year. The trade remained in negative during the day, as former RBI governor and top economist Raghuram Rajan said that cross-border capital flows have been a source of financial fragility and he underscored that countries should see how best they can benefit from cross-border flows, without incurring the costs. Separately, raising concerns over recent liquidity crisis in non-banking financial companies (NBFC), the industry chamber, Associated Chambers of Commerce and Industry of India (ASSOCHAM) has stated that the Reserve Bank of India (RBI) should provide a liquidity credit line of Rs 30,000-40,000 crore to non-banking financial companies (NBFC) as a temporary relief from tight liquidity conditions. However, positive data of India's services PMI helped the markets to trim some of their losses in the last leg of the trade. India's services sector activity signaled a solid and stronger improvement in business conditions in the month of October, aided by accelerating new work along with easing inflationary pressures. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose to 52.2 in October from 50.9 in September. Some relief also came with Prime Minister Narendra Modi's statement that he has announced measures for Micro, Small and Medium Enterprises (MSMEs) will add strength to the sector. He also stated that bigger markets and better opportunities for the MSMEs was a win-win situation. Soothing some worries, a private report said that the government has generated higher-than-expected revenues from customs duties, which may help it rein in the fiscal deficit within its FY19 target of 3.3 percent of gross domestic product. Traders took note of eminent economist Arvind Panagariya's statement that India and several other Asian countries have in the past defied the belief that protectionism is good for developing economies as these nations reaped benefits of opening up trade and lower tariffs. Finally, the BSE Sensex lost 60.73 points or 0.17% to 34950.92, while the CNX Nifty was down by 29.00 points or 0.27% to 10524.00.


The US markets ended mostly higher on Monday, as oil prices lifted energy stocks and defensive sectors such as real estate and utilities gained, but a drop in Apple's shares dragged down the Nasdaq. However, trading was subdued as traders reluctant to make significant moves ahead of Tuesday's highly anticipated midterm elections, which will decide control of both the House and Senate. Democrats are seen as having a much better chance to claim a majority in the House than in the Senate, but controlling the lower chamber would still allow Democrats to hinder Trump's agenda. The Federal Reserve's looming monetary policy announcement also kept some traders on the sidelines, with the Fed due to announce is latest decision on Thursday. While the Fed is widely expected to leave interest rates unchanged, traders will keep a close eye on the accompanying statement for clues about an expected rate hike in December. Meanwhile, traders shrugged off a report from the Institute for Supply Management showing a modest slowdown in the pace of growth in the service sector in the month of October. The ISM said its non-manufacturing index dipped to 60.3 in October after climbing to 61.6 in September, although a reading above 50 still indicates growth in the service sector. Street had expected the index to drop to 59.3. Last month, the ISM said the non-manufacturing index unexpectedly rose in September, reaching its highest level since the inception of the composite index in 2008. Dow Jones Industrial Average surged 190.87 points or 0.76 percent to 25,461.70 and S&P 500 was gained 15.25 points or 0.56 percent to 2,738.31, while Nasdaq declined 28.14 points or 0.38 percent to 7,328.85.


Giving up most of the early gains, crude oil futures ended lower on Monday as the US government decided to grant waivers to some buyers of Iranian crude. According to reports, US President Donald Trump has said that he wants to go slow on Iranian sanctions, as doesn't want to drive up oil prices. This decision by the Trump administration and recent data showing crude oil stockpiles in the US to have increased for six successive weeks eased concerns about tighter supplies in the market. Benchmark crude oil futures for December dropped 4 cents or less than 0.1 percent to settle at $63.10 a barrel on the New York Mercantile Exchange. January Brent crude rose 34 cents or 0.5 per cent to settle at $73.17 a barrel on London's Intercontinental Exchange.


Reversing two straight sessions of uptrend, Indian rupee ended significantly weaker against the Greenback on Monday, on account of buying in American currency by banks and importers. Sentiments weakened with a private report stating that with global crude prices remaining elevated, the rupee is likely to be under pressure, and may touch the 76 levels against the US currency over the next three months. Moreover, the greenback's strength against other currencies overseas also put pressure on the rupee. Traders failed to take support with a monthly survey indicating that the country's services sector in October expanded at the quickest pace since July, driven by significant increase in new business orders, which in turn led to robust workforce expansion. The seasonally adjusted Nikkei India Services Business Activity Index rose to 52.2 in October, from 50.9 in September. On the global front, dollar held steady against most of its major peers on Monday, supported by expectations of tighter US monetary policy. Finally, the rupee ended at 73.12, 67 paise weaker from its previous close of 72.45 on Friday.


The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 7428.03 crore against gross selling of Rs 7563.61 crore, while in the debt segment, the gross purchase was of Rs 5110.24 crore with gross sales of Rs 905.39 crore.


The US markets ended mixed on Monday ahead of highly anticipated midterm elections but oil prices lifted energy stocks and defensive sectors. Asian markets were trading mixed on Tuesday with markets seemingly in a holding pattern after a muted US session ahead of midterm elections. Indian markets ended lower on first trading day of the week following negative Asian cues coupled with profit booking and weak rupee. Today, the markets are likely to make positive start amid mixed global cues as sentiment was tempered ahead of the US midterm elections. There will be some support with a private report that the government has generated higher-than-expected revenues from customs duties, which may help it rein in the fiscal deficit within its FY19 target of 3.3% of gross domestic product (GDP). Also, traders will be getting some encouragement with rating agency Crisil's report that the rupee may appreciate to 71 against the dollar by March 2019 on positives like the dip in crude prices and the $75-billion currency swap with Bank of Japan.  However, there may be some cautiousness with report that excessive competition at times can result in stress in a particular sector, Finance Minister Arun Jaitley said pointing out that these are challenges of the growing economy. He also said that with the growing economy, the role of each regulator will expand. Traders may take note of S&P Global Ratings' statement that most of its rated Indian companies and banks can withstand the recent sharp depreciation in the rupee, but a deep and sustained decline could squeeze their margins. It said most emerging market issuers are buffered against further currency depreciation and do not face immediate downgrade risk from currency depreciation. There will be some buzz in power sector stocks with report that average spot power price at Indian Energy Exchange (IEX) rose 45.5% in October at Rs 5.94 per unit over Rs 4.08 per unit in the year-ago month. IEX witnessed highest ever sales volume of 7,125 million units (MU) during the month due to higher demand, coal shortage, lower wind and hydro power generation. There will be lots of earnings announcements too, to keep the markets in action.


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



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  • SBI has reported a fall of 61.50% in its net profit at Rs 751.58 crore for Q2FY19 as compared to Rs 1,952.30 crore for Q2FY18. 
  • ONGC has reported 4.7% fall in its total Crude Oil Production at 12.294 MMT in H1FY19 from 12.894 MMT in H1FY18. 
  • Maruti Suzuki India has reported 6.5% rise in its production to 150,497 vehicles in October 2018, as compared to 141,269 vehicles in October 2017. 
  • Cipla has reported a fall of 10.78% in its net profit at Rs 377.05 crore for Q2FY19 as compared to Rs 422.59 crore for Q2FY18.
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