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NSE Intra-day chart (04 October 2017)
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Market Commentary 05 October 2017
Markets to make a mildly somber start on sluggish regional cues

Extending northward journey for fourth straight session, Indian equity benchmarks ended the session with a gain of over half a percent on Wednesday, reclaiming their crucial 9,900 (Nifty) and 31,600 (Sensex) levels, as the Reserve Bank of India's (RBI's) decision to keep repo rate unchanged at 6.0 percent was in line with investors' expectation in view of upward trend in inflation. The central bank, however, has slashed the statutory liquidity ratio or the percentage of deposits that banks have to park in government securities, by 0.50 percent to 19.50 percent. The move is expected to raise buoyancy in the loans market as banks will have slightly higher funds for lending. Soon after a cautious start markets gained momentum and traded with traction through the session, as traders took encouragement with the growth of eight core infrastructure industries which surged to five-month high by 4.9 percent in August 2017, as compared to 2.4 percent in July 2017, on the back of a double-digit jump in coal production and subsequent rise in electricity generation. According to the data released by the ministry of Commerce and Industry showed the combined Index of eight core industries stood at 123.6 in August, 2017, which was 4.9 percent higher compared to the index of August, 2016. Sentiments also remained buoyed with foreign brokerage report highlighting that a majority 77 percent of the mid market enterprises (MMEs) in the country are confident about the domestic economy and expect higher revenue growth compared to their global peers. Separately, the government sees the decline in growth as a hiccup and expects the economy to pick up pace in the fiscal second quarter as teething troubles with GST get resolved and the effect of demonetization wanes. The latest high-frequency indicators such as commercial vehicles sales, core sector growth and manufacturing PMI bolster this contention. Finally, the BSE Sensex surged 174.33 points or 0.55% to 31,671.71, while the CNX Nifty was up by 55.40 points or 0.56% to 9,914.90.


The US markets closed higher on Wednesday, extending their recent streak of advances that's taken all major benchmarks to record levels. The US budget deficit is proving to be a major obstacle to the tax reform plan being offered by President Donald Trump and top congressional Republicans, with one leading Senate hawk saying a week after the plan was introduced that any enlarging of the fiscal gap could kill his support. From proposed infrastructure enhancements to a military build-up, the deficit long ago put the brakes on major new federal spending programs; now Trump's tax-cut proposal is threatened. The Republican tax plan unveiled last week calls for as much as $6 trillion in tax cuts that would sharply reduce federal revenues. On the economy front, private-sector employment slowed in September as firms added 135,000 jobs. ADP revised August's gain to 228,000. The small-business sector lost jobs in September, while medium and large firms reported payroll gains. The Dow Jones Industrial Average added 19.97 points or 0.09 percent to 22,661.64, the Nasdaq gained 2.92 points or 0.04 percent to 6,534.63, and the S&P 500 edged higher by 3.16 points or 0.12 percent to 2,537.74. 


Crude oil futures continued their bearish trend on Wednesday despite the report U.S. crude oil stockpiles fell for the second straight week. Traders were concerned with sharp uptick in exports which could dampen Opec's efforts to reduce supply. Meanwhile The Energy Information Administration (EIA) reported that U.S. crude inventories dropped by 6 million barrels last week. However, total motor gasoline inventories increased 1.6 million barrels last week, and are in the upper half of the average range, while distillate stockpiles fell by 2.6 barrels, topping expectations of a decline of 1.8m barrels. Benchmark crude oil futures for November delivery ended lower by $0.44 or 0.9 percent at $49.98 a barrel on the New York Mercantile Exchange. Brent crude for November delivery lost 0.19 cents to $55.81 a barrel on the ICE.


Indian rupee strengthened considerably on Wednesday, on fresh selling of the US currency by banks and exporters. Rupee throughout the day remained positive, taking support with report that the growth of eight core infrastructure industries surged to five-month high by 4.9% in August 2017, as compared to 2.4% in July 2017, on the back of a double-digit jump in coal production and subsequent rise in electricity generation. Rupee sentiments improved further after the RBI decided to maintain status quo and keep its key interest rate, the repo rate, unchanged at 6%. The pause was on expected lines as market consensus had predicted a pause in its cutting cycle. The rupee sentiment was also buoyed as the dollar retreated globally as attention shifted to the likely composition of the new Federal Reserve board after the incumbent Chair Janet Yellen's term ends. Finally, the rupee ended at 65.05, 45 paise stronger from its previous close of 65.50 on Tuesday.


The FIIs as per Wednesday'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 5959.89 crore against gross selling of Rs 6397.40 crore, while in the debt segment, the gross purchase was of Rs 3490.64 crore with gross sales of Rs 771.85 crore.


The US markets moved further high in the last session and the major averages climbed to new record closing highs. Though, the buying interest remained somewhat subdued, with traders reluctant to make more significant moves ahead of the release of the closely watched monthly jobs report on Friday. The Asian markets have made a mixed start and some of the indices in the region are mildly in red, amid holiday-induced closures in Hong Kong, China, and South Korea. The Indian markets despite paring some gains, managed a decent close in the last session after RBI maintained a status quo in its policy review. Although it was on expected lines but the traders turned cautious with the central bank slashing its current fiscal growth forecast to 6.7 percent on gross value-added basis, saying GST rollout glitches have hurt manufacturing in the first half but also said that an uptick is expected in the second half. The RBI had estimated the economy to clip at 7.3 percent on a GVA basis earlier. Today, the start is likely to be a bit cautious to soft, reacting to RBI's policy stance, the finance ministry though said it has taken note of the RBI decision to maintain status quo on interest rate and the downward revision of growth forecast for the current fiscal and welcomed the initiative with regard to Peer to Peer (P2P) NBFC financing regulation, saying it would benefit smaller firm. There will be some buzz in the market with RBI stating that it will review the foreign portfolio investment norms and come out with a new set of regulations, to be effective next April. Traders will be getting some support with NITI Aayog CEO Amitabh Kant's statement that while there has been a 'little bit of dip' in the Indian economy, it is now bouncing back. Prime Minister Narendra Modi too has asserted that the economy is much better than critics make it out to be and that his government is "totally committed" to reverse the slowdown in GDP growth in recent quarters. Banking stocks will continue to remain in action with RBI's 50 basis points cut in SLR, which will further ease liquidity in the banking system. There will be some buzz from the primary market too, as the Prataap Snacks will list its shares on bourses today. The Rs 482 crore IPO was oversubscribed 47.39 times.


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



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Tata Motors





  • Power Grid Corporation of India has received shareholders' approval to raise up to Rs 20,000 crore through issuance of non-convertible bonds on private placement basis in the next fiscal.
  • Yes Bank has successfully raised Rs 1,500 crore of Basel III Compliant Tier-II Bonds through private placement against the base issue size of Rs 1,500 crore.
  • Ambuja Cements has secured Limestone Block at Nagaur district in state of Rajasthan.
  • Hero MotoCorp has set a new global benchmark in the two-wheeler industry, surpassing the 'seven lakh sales mark' in any month.
News Analysis