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NSE Intra-day chart (02 May 2018)
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Market Commentary 03 May 2018
Markets likely to make negative start on somber global cues


Wednesday turned-out to be a quiet day of trade for Indian equity benchmarks with frontline gauges ending almost flat, as traders remained anxious eyeing ongoing result season and ahead of Federal Reserve meeting outcome tonight. Markets altered between green and red throughout the session and traded mostly near neutral lines, as traders remained cautious on report that the eight core industries' output growth slowed to three-month low of 4.1 per cent in March, largely due to some base effect and contraction in crude oil production. The latest print was lower than the revised 5.4 per cent growth in February and 6.1 per cent in January. Also, the December 2017 print for core eight industries has been revised downwards to 3.8 per cent from 4.2 per cent projected earlier. Traders also remained cautious with Moody's Investors Service's latest report stating that the Reserve Bank of India's (RBI) push to banks to recognize problem assets more accurately will reduce profitability of banks in the near term. It said that increased provisioning will hurt the banks' profitability, and weaker public sector banks (PSBs) in particular will continue to report losses in the next fiscal year (FY19), adding pressure on their capital ratios. However, market participants got some respite with a report highlighting that the Indian manufacturing activity expanded further in April, on the back of faster expansions in output and new orders, signaling a faster improvement in business conditions across the country's goods-producing sector compared to the previous March month. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 51.6 in April from 51.0 in March. Some solace also came with report stating that the government mopped up over Rs 1 trillion in GST collection in April, indicating stabilisation of the new indirect tax regime which was rolled out on July 1 last year. While Goods and Services Tax (GST) collection in entire 2017-18 stood Rs 7.41 trillion, in March the figure was Rs 892.6 billion. Finally, the BSE Sensex rose 16.06 points or 0.05% to 35,176.42, while the CNX Nifty was down by 21.30 points or 0.20% to 10718.05.


The US markets closed lower on Wednesday, as the Federal Reserve acknowledged rising prices and said it now expects inflation to run near its 2% target over the medium term, in its most recent policy statement. The Federal Reserve held interest rates steady and expressed confidence that a recent rise in inflation to near the US central bank's target would be sustained, leaving it on track to raise borrowing costs in June. The upgrading of the Fed's inflation outlook represented a milestone after roughly six years of price gains falling short of its 2 percent goal, even as key aspects of the economy saw a healthy recovery from the 2007-2009 recession. The Fed's rate-setting committee also downplayed a recent slowdown in economic and job growth, saying activity had been expanding at a moderate rate and job gains, on average, had been strong in recent months. On the economy front, private-sector employment remained strong in April, as employers added 204,000 jobs, Automatic Data Processing Inc. reported. March's gain was cut to show 228,000 growth instead of a previously estimated 241,000. This is the sixth month in a row of job growth above 200,000. Details of ADP's report showed that small firms added 62,000 jobs in April, medium-sized businesses added 88,000 and large companies added 54,000. The Dow Jones Industrial Average lost 174.07 points or 0.72 percent to 23,924.98, the Nasdaq dropped 29.807 points or 0.42 percent to 7,100.90, and the S&P 500 was down by 19.13 points or 0.72 percent to 2,635.67. 


Crude oil futures edged higher on Wednesday after the IMF threatened to expel Venezuela over lack of transparency with its financials. The IMF said it has issued a declaration of censure against Venezuela for its failure to implement certain remedial measures and failure to comply with specific obligations. The IMF said it called on Venezuela to adopt specific remedial measures and will meet again within 6 months to consider Venezuela's progress in implementation. Meanwhile, U.S. crude oil inventories surged by much more than anticipated last week. The Energy Information Administration said U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels from the previous week. Benchmark crude oil futures for June delivery jumped by 68 cents or 1 percent to settle at $ 67.93 a barrel on the New York Mercantile Exchange. July Brent crude gained 23 cents or 0.30 percent to settle at $73.36 a barrel on London's Intercontinental Exchange.


Indian rupee ended unchanged compared to its previous close as investors awaited the Federal Reserve's upcoming policy statement for clues on the future pace of US monetary tightening. Traders also remained pessimistic with report that the eight core industries' output growth slowed to three-month low of 4.1 per cent in March, largely due to some base effect and contraction in crude oil production. However, domestic currency got some support from report that India's manufacturing sector activity improved marginally in April, driven by rise in new business orders amid favourable demand conditions, amid easing inflationary pressures. The Nikkei India Manufacturing Purchasing Managers Index (PMI), rose from 51.0 in March to 51.6 in April, indicating faster improvement in the health of the country's manufacturing economy than in the prior month. On the global front, pound inched higher against dollar on Wednesday, following the news that the UK's construction sector has bounced back. Finally, the rupee ended unchanged from its previous close of 66.65 on Friday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 8566.71 crore against gross selling of Rs 9482.40 crore, while in the debt segment, the gross purchase was of Rs 1485.67 crore with gross sales of Rs 3318.20 crore. Besides, in the hybrid segment, gross buying was of Rs 0.32 crore against gross selling of Rs 6.07 crore.


The US markets ended lower on Wednesday after the Fed's comments about inflation, which signaled that an interest rate hike is likely in June. All the Asian markets are trading in red in early deals on Thursday, ahead of anxiously-awaited U.S.-China trade talks. The talks between US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are due to kick off later on Thursday, but a breakthrough deal is viewed as highly unlikely. Indian markets ended flat on Tuesday on account of disappointing economic report that showed the pace of growth in eight core sectors to have slowed to a 3-month low in March. Today, the markets are likely to make pessimistic start, mirroring mixed cues from global markets after the U.S. Federal Reserve sprang no surprises with its latest policy statement. Sentiments will remain dampen on report that India has slipped by three spots to eleventh position in the FDI Confidence Index 2018 released by American global management consulting firm AT Kearney. India falls by three spots, reversing its two-year streak of rising in the rankings. The report also said that India fell out of the top 10 for the first time since 2015. Traders will get some support later in the day with report that Economic growth in India is expected to strengthen to 7.3 percent in financial year 2018-19 on the back of robust activity from construction, manufacturing, and services sectors. Telecom stocks will remain in focus after the government unveiled a new draft policy for the telecom sector branded as National Digital Communications Policy 2018 that proposes broadband access for all with 50 mbps speed, 5G services and 40 lakh new jobs in the sector by 2022. There will be some important earnings announcements too, to keep the markets buzzing.


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  • Tata Motors has registered an impressive growth of 86% at 53,511 units in April 2018, as against 28,844 units over last year. 
  • M&M is planning to set-up a Mahindra Ag Tech Center in the United States at Virginia Tech Corporate Research Center. 
  • Bharti Airtel has launched a first-of-its-kind carrier digital platform which will enable global carriers to do wholesale voice business with Airtel at the click of a button. 
  • Bajaj Auto has registered a rise of 26% in total sales to 4,15,168 units in April 2018 against 3,29,800 units in April 2017.
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