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NSE Intra-day chart (03 September 2018)
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Market Commentary 04 September 2018
Markets to make a cautious start amid weak global cues


Indian equity benchmarks failed to sustain early gains and ended in red terrain on Monday, with Sensex and Nifty 50 index surrendering their crucial 38,400 and 11,600 levels respectively. Investor sentiment was largely battered by weak global cues, along with a weak rupee and heavy selling pressure in FMCG, banking, automobile and oil and gas stocks. Markets started the session on a positive note, as sentiments remain buoyed with  report that India's economy grew at its fastest in over two years, propelled by double-digit growth in manufacturing and robust consumer spending, making for a strong start to the last financial year before the ruling party faces polls in 2019. Gross domestic product (GDP) expanded quicker than even the most optimistic forecast at 8.2% in the First quarter of current financial year (Q1FY19). GDP had grown 5.6% in the year earlier quarter and 7.7% in the March quarter. Traders also took encouragement with Principal Economic Adviser in the Ministry of Finance, Sanjeev Sanyal's statement that the growth rate will be affected in next reading, but India would remain world's fastest-growing major economy, as he countered scepticism over GDP growth rate. However, selling in last leg of trade mainly played spoil sports for the frontline gauges and key bourses took U-turn to end lower with a cut of around a percentage point. Traders turned pessimistic on report that the Controller General of Accounts (CGA) in its latest data has showed that the country's fiscal deficit in the first four months of current financial year (FY19) came in at Rs 5,40,257 crore or 86.5% of the FY19 Budget target. The country's fiscal deficit for FY19 is budgeted at 3.3% of the GDP against the actual of 3.5% in FY18. Sentiments also remain dampened with data showing that India's core sector output grew at a slower pace of 6.6% in July 2018, from 7.6% in June 2018, on the back of sharp decline in crude oil and natural gas production. Markets extended losses in dying hour of trade with report showing that growth in India's manufacturing sector unexpectedly slowed in August as domestic demand softened. Finally, the BSE Sensex declined by 332.55 points or 0.86% to 38,312.52, while the CNX Nifty was down by 98.15 points or 0.84% to 11,582.35.


The US markets were closed on Monday on account of Labor Day holiday.


Crude oil futures were closed on Monday on account of Labor Day holiday.


Continuing its record closing low for the fourth straight day, Indian rupee ended weaker against the Greenback on Monday, hurt by fresh demand for the American currency from importers. The rupee sentiments were hit as business activity in Indian manufacturing sector eased further in August 2018, for a second straight month amid slower gains in output and new orders. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - fell to 51.7 in August from 52.3 in July. Sentiments also got spooked with former finance minister P Chidambaram expressing scepticism over India's GDP growth prospects, saying it would not be so favourable in third and fourth quarters, despite the GDP growing at 8.2% in the current fiscal's first quarter. He said the country's growth rate might decline in the third and fourth quarters and be the same as that reported in the last fiscal. Besides, a sharp sell-off in the domestic stock market largely led to weaker rupee sentiments. On the global front, dollar was steady on Monday on worries of a prolonged China-US trade war and after the United States and Canada ended contentious trade negotiations without a deal. Finally, the rupee ended at 71.18, 18 paise weaker from its previous close of 71.00 on Friday.


The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 6751.76 crore against gross selling of Rs 9652.26 crore, while in the debt segment, the gross purchase was of Rs 487.46 crore with gross sales of Rs 827.21 crore. Besides, in the hybrid segment, the gross selling was of Rs 0.70 crore against no buying.


The US markets remained closed on Monday unable to give any clue to the other markets. Asian markets were trading in negative territory on Tuesday as markets remained uncertain about the future of the North American Free Trade Agreement (NAFTA) and a possible escalation of the US-China trade war. Erasing all of their early gains, the Indian markets ended lower on Monday, as selling pressure and weak global cues dragged the indices below neutral lines. Moreover, sustained weakness in rupee also dampened the sentiments. Today, the markets are likely to make a cautious start amid weak global cues. There will be some cautiousness with a private report that the Indian stock markets could tumble and the rupee may fall further ahead of the general elections if a contentious KYC circular issued by the stock market regulator is not scrapped soon. Traders will also be reacting to a private report that a sustained weakness in the rupee may push the Reserve Bank of India to further tighten monetary policy, perhaps as early as next month. However, some respite can come with Fitch Ratings' statement that the currency volatility will have only a limited impact on India's sovereign credit profile as the country benefits from strong external finances. In a report on APAC sovereigns, Fitch said the recent sell-offs in Indian and Indonesian currency markets underline their sensitivity to shifts in global sentiment, and suggest further bouts of pressure are likely as global monetary tightening progresses. There will be some buzz in the banking sector stocks with India Ratings' report that showing further traction for asset resolution, bad loans over Rs 4 trillion are expected to be resolved by 2018.


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  • Hero MotoCorp has sold 685,047 units of two-wheeler in the month of August 2018, registering a growth of 1% over the corresponding month of the previous fiscal when it sold 678,797 units. 
  • HPCL will finalise 10 licensors, which the company needs for the upcoming Rs 43,130 crore project Barmer refinery in Rajasthan. 
  • Eicher Motors' motorcycle division has reported 2% rise in sales at 69377 units in August 2018 as compared to 67977 motorcycles sold in August 2017. 
  • Bajaj Auto has registered a rise of 30% in total sales to 437,092 units in August 2018 against 335,031 units in August 2017.
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