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NSE Intra-day chart (04 September 2018)
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Market Commentary 05 September 2018
Markets to make negative start amid weak global cues


Extending previous session's southward journey, Indian equity benchmarks ended the choppy day of trade with a cut of around half a percent, with frontline gauges breaching their crucial 38,200 (Sensex) and 11,550 (Nifty) levels. Local bourses traded lackluster for most part of the day, as traders remained little concerned 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 reacted negatively to a private report highlighting 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, key gauges managed to cap losses till noon deals as some solace came 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. But, selling in last leg of trade played spoil sports for Indian markets and dragged key gauges below their respective psychological levels, as Reserve Bank of India's report stated that export credit provided by banks fell sharply by about 47% to Rs 21,900 crore as of July 20 from a year earlier. This is despite the fact that total lending to the priority sector rose 7.5%. The persistent decline in export credit, especially, to small players in the current year. Adding some woes, ICRA in its latest report stated that India's apparel exports are likely to remain subdued in the near term, even as the worst appears to be over. With the base effect setting in, ICRA expects India's apparel exports to grow at a modest pace of 1%-2% Y-o-Y for the rest of FY2019, vis-a-vis a sharp de-growth of 14% Y-o-Y in first four months of FY2019. Finally, the BSE Sensex declined by 154.60 points or 0.40% to 38,157.92, while the CNX Nifty was down by 62.04 points or 0.54% to 11,520.30.


The US markets ended marginally lower on Tuesday on account of lingering concerns about global trade after US and Canadian officials failed to reach an agreement to reform NAFTA. President Donald Trump said that there is no political necessity to keep Canada in the new NAFTA deal.  Further, there were some cautiousness in the markets on  recent reports have suggested Trump also plans to move ahead with tariffs on $200 billion worth of Chinese imports as early as this week. However, losses remain capped after the release of a report from the Institute for Supply Management showing activity in the US manufacturing sector unexpectedly grew at a faster rate in the month of August. The ISM said its purchasing managers index climbed to 61.3 in August from 58.1 in July, with a reading above 50 indicating growth in the manufacturing sector. Street had expected the index to dip to 57.7. Meanwhile, a separate report released by the Commerce Department showed a modest uptick in construction spending in the US in the month of July. The Commerce Department said construction spending inched up by 0.1% to an annual rate of $1.315 trillion in July after falling by 0.8% to a revised rate of $1.314 trillion in June. Street had expected construction to rise by 0.5% compared to the 1.1% slump originally reported for the previous month. Dow Jones Industrial Average declined 12.34 points or 0.05 percent to 25952.48, the S&P 500 dropped 4.80 points or 0.17 percent to 2896.72 and Nasdaq was down by 18.29 points or 0.23 percent to 8091.25.


Crude oil futures ended few cents higher on Tuesday with the benchmark prices holding below $70, as a storm in the Gulf of Mexico looked set to miss the bulk of the region's energy production platforms. The US Bureau of Safety and Environmental Enforcement reported that 54 production platforms, which represent nearly 7.9% of all manned platforms in the Gulf of Mexico, have been evacuated because of the storm. About 9.2% of oil production in the Gulf has been shut in. Benchmark crude oil futures for October gained 7 cents or 0.1 percent to settle at $69.87 a barrel on the New York Mercantile Exchange. November Brent crude added 2 cents to settle at $78.17 a barrel on London's Intercontinental Exchange.


Continuing its record closing low for the fifth straight day, Indian rupee ended considerably weaker against the Greenback on Tuesday, on fresh bouts of dollar demand from importers. Traders remained cautious with a private report highlighting that a sustained weakness in the rupee may push the Reserve Bank of India (RBI) to further tighten monetary policy, perhaps as early as next month. Traders also took note of NITI Aayog Vice Chairman Rajiv Kumar's statement that the revised mechanism introduced by former RBI governor Raghuram Rajan to identify NPAs stopped banks from issuing fresh credit, resulting in slowdown of the economy in post demonetisation period. On the global front, dollar extended gains across the board on Tuesday, as concerns about a possible escalation in trade conflict between the US and China prompted investors to dump emerging market currencies. Finally, the rupee ended at 71.57, 39 paise weaker from its previous close of 71.18 on Monday.


The FIIs as per Tuesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5844.62 crore against gross selling of Rs 4408.56 crore, while in the debt segment, the gross purchase was of Rs 135.32 crore with gross sales of Rs 866.71 crore. Besides, in the hybrid segment, the gross selling was of Rs 0.42 crore against no buying.


The US markets ended lower on Tuesday as investors were anxious about the trade tensions between Washington and its key trading partners. Asian markets were trading in red on Wednesday following the negative cues overnight from Wall Street amid worries about trade wars and the turbulence in emerging market currencies. Amid volatile trading session, the Indian markets extended their losses in dying hours of trade to end near intraday low levels on Tuesday as a weak rupee along with higher crude oil prices dragged the market down. Today, the start is likely to be in red amid weak global cues. Investors will be eyeing Services PMI data for the month of August to be out later in the day. Traders will be concerned about a report that the National Council of Applied Economic Research's (NCAER) business confidence index (N-BCI) fell by 12.9% in July over April this year on a quarter-on-quarter basis on account of worsening of business sentiments across various segments. NCAER said the decline in the N-BCI on a year-on-year basis works out to be 15.9%. There will be some cautiousness with a private report that India's growth rate is expected to moderate this fiscal despite a strong start in the April-June quarter largely owing to tighter financial conditions, limited fiscal headroom and upcoming elections. Also, there will be negative reaction on the Reserve Bank of India's (RBI) data showing that investment by Indian companies in their overseas ventures fell by more than 36% to $1.39 billion in July this year. However, traders may take note of the Confederation of Indian Industry's (CII) statement that the 8.2% economic growth in the first quarter of 2018-19 is an outcome of key reforms like GST and liberalisation of FDI norms initiated by the government. Meanwhile, finance ministry said that the government will not cut excise duty on petrol and diesel to cushion spiralling prices, which touched fresh highs on Tuesday, as it has limited fiscal space available to take any dent in revenue collections.


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  • NTPC has started its first electric vehicle charging station in Simhadri, Vishakhapatnam in the state of Andhra Pradesh in line with the government's plan to switch to clean mobility. 
  • The USFDA has completed cGMP inspection at Lupin's Tarapur API Manufacturing Facility. 
  • Maruti Suzuki India's parent company -- Suzuki Motor Corporation -- is planning to invest at least Rs 9,000 crore to build a new car plant in the state of Gujarat. 
  • HPCL is planning to build an underground LPG storage facility in Mangaluru, which will be second such facility in India.
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