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NSE Intra-day chart (03 April 2018)
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Market Commentary 04 April 2018
Markets to make flat-to-positive start on Wednesday


Extending previous session's gains, Indian equity benchmarks ended the Tuesday's trade with a gain of one third of a percent. Markets started the session on cautious note and entered into red terrain in morning deals with escalating trade tensions between the US and China. Investors also remained on sidelines ahead to the Reserve Bank of India's (RBI) policy decision on April 5 for directional cues. The central bank is expected to maintain status quo on rates despite increased risks to inflation posed by rising oil prices and a hike in minimum support price (MSP) announced in the Budget 2018. Traders also remained concerned with ICRA's report that more Indian companies are likely to default on their borrowings in the fiscal year that started in April compared with the previous year on higher interest costs and a deterioration in business conditions. Adding to the pessimism, India's manufacturing sector activity expanded at its slowest pace in the month of March to fall at 5-month low. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - slowed down to 51.0 in March from 52.1 in February. However, markets took U-turn and started paring losses to enter into green terrain in last leg of trade with traders taking support from report that the government's revenue collection during fiscal year 2017-18 gone up by 17.1% at Rs 9.95 lakh crore, supported by the addition of one crore new assessees who have started filing income tax returns. Traders also took some solace with report that a steep rise in output of cement and fertilisers pushed up the growth of the core sector to 5.3% in February even as refinery products, electricity, coal, and natural gas production made the output of the infrastructure industries grow slower than 6.1% in January. Finally, the BSE Sensex surged 115.27 points or 0.35% to 33,370.63, while the CNX Nifty was up by 33.20 points or 0.33% to 10,245.00.


The US markets closed higher on Tuesday, following a volatile session that saw major indices fluctuate widely as investors digested a sharp move lower in the previous session and gauged the likelihood of both trade risk and further weakness in technology names. Volatility is expected to remain elevated, and President Donald Trump is a particular focus for the equity market, with investors wary of any trade actions he might announce - particularly after China retaliated to US tariffs with protectionist measures of its own. Fed Governor Lael Brainard said that high asset prices and growing economic pressure from US fiscal stimulus mean financial markets may be particularly vulnerable to an unexpected shock, warning that the central bank could respond with stronger requirements on banks as needed. Lael Brainard added that valuations seem stretched and cyclical pressures are building. On the economy front, US construction spending rose less than expected in February amid a steep decline in investment in public construction projects. The Commerce Department said construction spending edged up 0.1 percent after being unchanged in January. February's marginal increase in construction spending could have implications for first-quarter gross domestic product growth estimates, which are mostly below a 2 percent annualized rate. In February, spending on public construction projects tumbled 2.1 percent, almost reversing January's 2.3 percent rise. The Dow Jones Industrial Average added 389.17 points or 1.65 percent to 24,033.36, the Nasdaq gained 71.163 points or 1.04 percent to 6,941.28, while the S&P 500 was up by 32.57 points or 1.26 percent to 2,614.45.


Crude oil futures edged higher on Tuesday after the American Petroleum Institute (API) reported a surprise draw of 3.28 million barrels of United States crude oil inventories for the week ending March 30. The street had anticipated a modest build in crude oil inventories of 246,000 barrels. Last week, the API reported major build and a surprise one at that of 5.321 million barrels of crude oil. The API reported this week a build for gasoline for week ending March 30 of 1.123 million in gasoline stockpiles, a surprise given the 1.26-million-barrel draw that analysts had expected. Benchmark crude oil futures for May delivery surged 50 cents at $63.51 a barrel on the New York Mercantile Exchange. May Brent crude gained 0.58 percent to settle at $68.03 a barrel on London's Intercontinental Exchange.


Indian rupee gained ground against dollar and ended higher on Tuesday, due to selling of the US currency by exporters and banks. Market participants drew some support with report that a steep rise in output of cement and fertilisers pushed up the growth of the core sector to 5.3% in February even as refinery products, electricity, coal, and natural gas production made the output of the infrastructure industries grow slower than 6.1% in January. Additional support also came with the report that Direct tax collections in 2017-18 at Rs 9.95 lakh crore, exceeded the revised budgetary target of Rs 9.8 lakh crore for FY18. Also, 6.84 crore income tax returns filed in the year against 5.43 crore in the previous year. Besides, last hour recovery in local equity markets also influenced the rupee sentiment. On the global front, dollar rebounded from an early fall on Tuesday, on concerns about US-China trade tensions on Tuesday, as foreign exchange markets appeared to shrug off worries that the dispute could damage global growth. Finally, the rupee ended at 65.02, 16 paise stronger from its previous close of 65.18 on Wednesday.


The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment, equity segment, the gross buying was of Rs 15806.65 crore against gross selling of Rs 16064.77 crore, while in the debt segment, the gross purchase was of Rs 4214.21 crore with gross sales of Rs 2132.68 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.02 crore against gross selling of Rs 0.65 crore.


The US markets ended higher on Tuesday as bargain hunting contributed to the strength on Wall Street, with traders picking up stocks at reduced levels after the sharp decline seen on Monday. Asian markets are trading mixed in early deals as recent concerns over trade tensions persisted amid new China-U.S. trade developments. Indian markets ended a choppy session slightly higher on Tuesday even as global markets succumbed to selloff amid jitters about US - Chinese trade tensions and mounting public scrutiny of technology companies. Today, the markets are likely to open slightly in green on Wednesday. Traders will be taking some encouragement with Finance Minister Arun Jaitley's statement that direct tax collection has grown by 18 per cent to cross Rs 10.02 trillion in the financial year ended on March 31, 2018. He said demonetisation and GST implementation have resulted in higher formalisation of the economy which is evident from additional 10 million IT returns being filed in the previous financial year. However, there will be some concern on report that the Reserve Bank of India (RBI) is unlikely to yield to the India Inc's pressure for a benign monetary policy stance by keeping policy rates unchanged in its first monetary policy review of 2018-19 to be announced on Thursday against the backdrop of hardening global crude oil prices. There will be buzz in sugar related stocks on report that sugar output increased 49 per cent to 28.18 million tonne (MT) so far in 2017-18 marketing year, but mills are unable to make cane payment to growers owing to low prices. Stocks related to tea sector too will be buzzing on a private report that Profit margins for bulk tea producers, particularly in north India, is likely to improve in the just-concluded financial year on firm price trends from August 2017 to January 2018.


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