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NSE Intra-day chart (31 January 2018)
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Market Commentary 01 February 2018
Markets to make flat-to-positive start ahead of Union Budget


Indian equity benchmarks ended the Wednesday's trade with marginal losses, as traders opted to stay away from buying risky assets ahead of upcoming budget to be released on February 01, 2018. Markets started the session on pessimistic note and extended losses to breach their crucial 11,000 (Nifty) and 35,900 (Sensex) levels, as traders remained cautious with Chief Economic Adviser Arvind Subramanian's statement that elevated stock prices are a matter of concern and could correct sharply if they are not backed by growth, requiring heightened vigilance. Subramanian added that the situation was similar to the US in 2006 and he cannot prevent the run-up but can control the cleanup. So, if something happens, he can lower interest rates and inject money into the economy. Subramanian said the macro environment had turned adverse with oil prices having risen above $60 a barrel and staying there, the interest rate cycle changing globally and elevated asset prices in India and across the world. However, markets took some support near day's lows and pared most of their early loses with traders taking solace with report that India has been ranked sixth in the list of wealthiest countries with total wealth of $8,230 billion, while the United States topped the chart. Traders also get some comfort with ratings agency Moody's statement that recently introduced goods and services tax (GST) mechanism is still a work in progress that will ultimately result in formalisation of economy. It added that it was a necessary step to help banks and such reforms should continue. Traders also took some comfort with rating agency ICRA enlightening that with banks credit outpacing deposits in the last few months, pushing up the credit-deposit ratio, lenders are likely raise deposit rates in the near-term. Besides, ahead of the February 1 Budget, a debate has been brewing about the exemption of long-term capital gains tax on stocks. Finally, the BSE Sensex declined 68.71 points or 0.19% to 35,965.02, while the CNX Nifty was down by 21.95 points or 0.20% to 11027.70.


The US markets closed higher on Wednesday, after the Federal Reserve did nothing to discourage expectations for a March rate rise, but ended the session with modest gains while booking the biggest monthly rise since March 2016. Monthly gains for the S&P and the Dow were the strongest since March 2016. The US Federal Reserve kept interest rates unchanged but said inflation likely would rise this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell. Citing solid gains in employment, household spending and capital investment, the Fed said it expected the economy to expand at a moderate pace and the labor market to remain strong in 2018. Still, the Fed left its benchmark short-term rate at a range of 1.25% to 1.5%. On the economy front, private-sector employment was strong for the second straight month in January, as employers added 234,000 jobs. Details of ADP's report showed that small private-sector businesses added 58,000 jobs in January, medium-sized businesses added 91,000 and large businesses added 85,000. The Dow Jones Industrial Average added 72.5 points or 0.28 percent to 26,149.39, the Nasdaq gained 9 points or 0.12 percent to 7,411.48, and the S&P 500 edged higher by 1.38 points or 0.05 percent to 2,823.81.


Crude oil futures ended higher on Wednesday as a surprise decline in U.S. gasoline supplies helped ease concerns about lackluster demand. American gasoline inventories fell by 1.98 million barrels last week, the first draw since early November. However, U.S. oil stockpiles jumped last week. The Energy Information Administration reported a 6.8-million-barrel build in U.S. crude oil inventories for the week ending January 26. That is a much larger build than analysts were expecting. Last week, the International Energy Agency (IEA) projected that U.S. output would surpass Saudi Arabia, which is trimming production as part of its supply quota agreement with Russia and OPEC. Benchmark crude oil futures for March delivery increased 23 cents or 0.4% at $64.73 a barrel on the New York Mercantile Exchange. Brent crude for March delivery gained by 3 cents to $69.05 a barrel on the ICE.


Indian rupee ended marginally higher against dollar on Wednesday due to sustained selling of the US currency by exporters and banks. Traders took some sense of relief with ratings agency Moody's statement that recently introduced goods and services tax (GST) mechanism is still a work in progress that will ultimately result in formalisation of economy. It added that it was a necessary step to help banks and such reforms should continue. However, gains were limited as traders maintained cautious approach ahead of fiscal deficit data for April-December and annual gross domestic product (GDP) data for fiscal year 2017, to be announced later in the day. On the global front, dollar fell by a quarter of a percent on Wednesday, putting it on track for its biggest monthly drop in nearly two years as US President Donald Trump's first State of the Union address failed to offer any comfort to ailing dollar bulls. Finally, the rupee ended at 63.58, 3 paise stronger from its previous close of 63.61 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 6193.86 crore against gross selling of Rs 6161.70 crore, while in the debt segment, the gross purchase was of Rs 2320.57 crore with gross sales of Rs 1313.00 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.30 crore against gross selling of Rs 7.25 crore.


The US markets ended with marginal gains on Wednesday after the Federal Reserve announced its widely expected decision to leave interest rates unchanged. The Fed's accompanying statement was seen as slightly more hawkish, reinforcing expectations the central bank will raise rates at its next meeting in March. Asian indices were trading mostly in green as economic data from around the region improved. Japanese markets edged higher as a weaker yen lifted investor sentiment. Indian equity benchmarks ended slightly lower on Wednesday, as investors awaited cues from budget that will be the last full year budget of the government before next year's Lok Sabha election. Today, the start is likely to be flat-to-positive as traders will be watchful ahead of the budget 2018, to be presented by Finance Minister Arun Jaitley later in the day. Investors are eagerly awaiting the federal budget, as the government aims to woo back rural voters and small businesses ahead of state elections. Some cautiousness may come with report that growth of the eight core sectors slowed to a five-month low of 4% in December 2017 due to negative performance of segments like coal and crude oil. The output growth recorded in December is the lowest since July 2017, when these core sectors had witnessed 2.9% expansion. However, traders may get some support from report that the Central Statistics Office has revised the Gross Domestic Product (GDP) growth rate for 2015-16 to 8.2 per cent from the earlier estimates of 8 per cent and kept the 2016-17 growth unchanged at 7.1 per cent. The real GDP or GDP at constant (2011-12) prices for the years 2016-17 and 2015-16 stands at Rs 121.96 lakh crore and Rs 113.86 lakh crore respectively, showing growth of 7.1 per cent during 2016-17 and 8.2 per cent during 2015-16. Auto stocks will be in focus today, on declaring their monthly sales number for January. There will be lots of important earnings announcements to keep the market buzzing for the day.


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  • M&M has signed a Share Subscription Agreement on January 30, 2018, for subscribing up to 26% of the share capital of M.I.T.R.A
  • NTPC has listed its $6 billion Medium-Term Note programme on India International Exchange at IFSC, GIFT City.
  • Wipro's wholly owned subsidiary - Wipro LLC has completed investment of $9.9 million in Harte Hanks.
  • Tata Motors has bagged an order for supply of 3,000 trucks worth Rs 600 crore from logistics company Rivigo.
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