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NSE Intra-day chart (01 February 2018)
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Market Commentary 02 February 2018
Markets to make soft-to-cautious start


Budget session turned out to be a quiet day of trade with Sensex and Nifty ending marginally lower after Finance Minister Arun Jaitley proposed a long-term capital gains tax. However, markets made firm start and traded with traction ahead of budget as traders took support with report that the Central Statistics Office revised the Gross Domestic Product (GDP) growth rate for 2015-16 to 8.2% from the earlier estimates of 8% and kept the 2016-17 growth unchanged at 7.1%. 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% during 2016-17 and 8.2% during 2015-16. But, once the Finance Minister started announcing budget, markets witnessed a sharp sell-off and even breached their crucial 35,600 (Sensex) and 10,900 (Nifty) levels after Arun Jaitley proposed to levy long-term capital gains tax (LTCG) of 10% on gains exceeding Rs 100,000 from sale of equity shares. Moreover, finance minister Arun Jaitley revised the fiscal deficit for FY18 to 3.5% from 3.2% targeted earlier. Selling proved short-lived and markets got strong support near those levels and pared all of their losses to back into green terrain. However, selling in last leg of trade dragged markets slightly in red, as investors remained concerned with report that India's core sector output grew at a slower pace of 4.0% in December 2017, from 7.4% in November 2017, on the back of declining coal and crude oil output. According to the data released by the ministry of Commerce and Industry showed the combined Index of eight core industries stood at 129.1 in December, 2017, which was 4.0% higher compared to the index of December, 2016. Meanwhile, consumers are continuing to hold back on discretionary spending with categories such as television, home appliances, fashion, lifestyle and apparel posting poor sales in the October-December quarter, with no recovery in sight in January as well, despite almost all brands and retailers running end-of-season and Republic Day sales. Finally, the BSE Sensex declined 58.36 points or 0.16% to 35,906.66, while the CNX Nifty was down by 10.80 points or 0.10% to 11,016.90.


The US markets closed mostly lower on Thursday, switching between gains and losses as fears of a pick-up in inflation and rising bond yields fostered emerging volatility on Wall Street, while Dow notched slight gain. Thursday's trading action puts the Dow on track to register its biggest weekly fall since September 9, 2016, the S&P 500 is on pace for its steepest weekly slump since November 4, 2016, while the Nasdaq Composite is on pace for its worst such trading stretch since June. On the economy front, the productivity of US firms and workers fell at a 0.1% annual pace in the fourth quarter. The Institute for Supply Management said its manufacturing index in January slipped to 59.1% from 59.3% in December. The IHS Markit manufacturing reading showed that final US PMI steady at 55.5 in January from flash estimates. On the other hand, the number of people who applied for unemployment benefits in late January fell by 1,000 to 230,000, keeping initial US jobless claims near a 45-year low. The more stable monthly average of claims fell by 5,000 to 234,500. The number of people already collecting unemployment benefits, known as continuing claims, rose by 13,000 to 1.95 million. The Nasdaq lost 25.619 points or 0.35 percent to 7,385.86, the S&P 500 edged lower by 1.83 points or 0.06 percent to 2,821.98, while the Dow Jones Industrial Average added 37.32 points or 0.14 percent to 26,186.71.


Crude oil prices edged higher on Thursday amid signs that Organization of the Petroleum Exporting Countries (OPEC) is complying with supply quotas. The cartel is trying to re-balance oil markets by curbing production. However, U.S. crude production topped 10 million barrels per day (bpd) for the first time since 1970. Rise in crude oil prices was also supported by a note from Goldman Sachs boosting their oil price target. Goldman Sachs raised its three-month forecast for Brent to $75 from $62 and its six-month forecast to $82.50 from $75. Meanwhile, a report said Venezuela has struggled to maintain output due to political and economic upheaval. Benchmark crude oil futures for March delivery increased 92 cents at $65.62 a barrel on the New York Mercantile Exchange. Brent crude for April delivery gained by 76 cents or 1.1% to $69.65 a barrel on the ICE.


Indian rupee ended considerably weaker against the US dollar on Thursday due to dollar demand from banks and importers. Sentiments remained down-beat after finance minister Arun Jaitley revised the fiscal deficit target for FY18 to 3.5% from 3.2% targeted earlier. Traders failed to get relief with report that the Central Statistics Office has revised the Gross Domestic Product (GDP) growth rate for 2015-16 to 8.2% from the earlier estimates of 8% and kept the 2016-17 growth unchanged at 7.1%. Besides, lackluster trade in the equity markets also weighed negatively on the local unit. On the global front, dollar dropped on Thursday, extending losses into a third straight day as the hawkish noises from the US Federal Reserve did little to prop up the struggling buck. Finally, the rupee ended at 64.02, 44 paise weaker from its previous close of 63.58 on Wednesday.


The FIIs as per Thursday'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 7080.10 crore against gross selling of Rs 7344.98 crore, while in the debt segment, the gross purchase was of Rs 1915.27 crore with gross sales of Rs 1143.25 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.09 crore against gross selling of Rs 1.07 crore.


The US markets ended the choppy trade slightly in red, as traders seemed reluctant to make significant moves ahead of the release of the closely watched monthly jobs report on Friday. Employment is expected to increase by 180,000 jobs in January after climbing by 148,000 jobs in December. Asian indices were trading mostly in red after the Wall Street closed mixed and yields on US government debt rose in the last session. Japanese markets were trading lower on a stronger yen. Rising U.S. bond yields also dented investor sentiment. Indian shares fluctuated before closing modestly lower yesterday, as investors digested the government's last full budget before the 2019 general election as well as disappointing manufacturing data after December's stellar performance. Today, the start is likely to be mildly soft-to-cautious amid weak global cues. Traders will be taking bet after analyzing the budget fine prints. Finance Minister Arun Jaitley has reduced tax rate to 25% for companies that have a reported turnover of up to Rs 250 crore. This will benefit the entire MSME sector, which accounts for 99% of the companies' filing their tax returns. However, traders may continue to remain concern with finance minister Arun Jaitley stating long-term capital gains from sale of equity shares and equity mutual fund schemes will now be taxed at 10%, if your total capital gains in a year cross Rs 1 lakh. Below Rs1 lakh, gains won't be taxed. Some concern also crept with India's fiscal deficit, for nine months of Financial Year 2018, stands at Rs 6,20,949 crore, overshooting the budgeted estimate (BE) target by 113.6%. The government has estimated Rs 5,46,532 crore of fiscal deficit for FY18 which during the same period of the last year stood negative at 93.9%. Traders will also remain on sidelines ahead of Service Purchasing Managers' Index (PMI) data scheduled to be released on February 5. There will be lots of important earnings announcements too, to keep the markets buzzing.


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



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Yes Bank






  • Bharti Airtel, through its subsidiaries, has concluded the deal with Millicom with respect to acquisition of 100% equity interest in Tigo Rwanda. 
  • Reliance Industries' telecom arm -- Jio has denied the launch of JioCoin App.
  • M&M's Auto Sector has sold 52,048 vehicles in January 2018, as against 39,386 vehicles during January 2017, to register a growth of around 32%.
  • Eicher Motors' motorcycle division has reported 31% rise in sales at 77,878 units in January 2018 as compared to 59,676 motorcycles sold in January 2017.
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