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NSE Intra-day chart (05 October 2017)
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Market Commentary 06 October 2017
Markets to bounce back on sanguine global cues

Snapping four days winning streak, Indian equity benchmarks ended the Thursday's trade in red with marginal losses, after the Reserve Bank of India (RBI) cut its growth estimate for the current fiscal on Wednesday and warned that any economic stimulus and farm debt waivers could push up fiscal deficit by 1 percentage point, potentially stoking inflation. Markets started off on optimistic note, but soon gave up all of their gains to turn red and traded flat-to-negative. Fresh selling in the last leg of trade mainly dragged the frontline indices below their crucial 9,900 (Nifty) and 31,600 (Sensex). Investors remained cautious on foreign brokerage report that the sentiment of foreign portfolio investors towards India is likely to remain weak until corporate earnings recovery sets in.  This, coupled with high equity supply, would mean that the market performance will remain subdued until the end of the year. FPIs have pulled out over Rs 24,000 crore from Indian equities since August due to disappointment over economic growth, delay in earnings recovery, expensive valuation and geopolitical tensions. However, losses remained capped on report that Nikkei India Services Purchasing Managers' Index rose to 50.7 in September from 47.5 in August. India's service sector PMI marked below the 50.0 neutral level in the previous two months due to the goods and services tax (GST) introduced in July. According to the PMI survey, greater workloads supported job creation in September, with the rate of employment growth the strongest since June 2011. Traders also took some solace 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. Finally, the BSE Sensex lost 79.68 points or 0.25% to 31,592.03, while the CNX Nifty was down by 26.20 points or 0.26% to 9,888.70.


The US markets closed at all-time highs on Thursday, after Congress passed a budget resolution - a step seen as setting the stage for an overhaul of the tax code. After a House vote, the Senate approved a budget bill. Republicans passed tax cuts through what is known as budget reconciliation, which requires just a simple majority in the Senate. On the economy front, the US trade deficit dropped 2.7% in August to $42.4 billion from $43.6 billion in July. Imports slipped 0.1% to $237.7 billion. Exports rose 0.4% to $195.3 billion. The trade deficit shrank mainly because of higher US exports of drugs, semiconductors and equipment for phone networks. Imports were essentially unchanged. Imports of goods from China set a fresh record at $45.8 billion. Meanwhile, factory orders rebounded 1.2% in August after a sharp decline in the prior month. Orders for durable goods, about half of all orders, rose a revised 2% in August compared with the prior estimate of a 1.7% gain. The Dow Jones Industrial Average added 113.75 points or 0.50 percent to 22,775.39, the Nasdaq gained 50.73 points or 0.78 percent to 6,585.36, and the S&P 500 edged higher by 14.33 points or 0.56 percent to 2,552.07.


Crude oil futures bounced back and ended higher on Thursday, as concerns over an uptick in U.S. and Libyan production were offset by talks of an extension to the Opec-led deal to curb output. The prices were supported by Saudi King Salman's visit to Moscow that fuelled expectations that the two nations would discuss a possible extension to the global pact to curb output. Investors weighed the possibility of an extension to the Opec-led deal against expectations that growing output in the US and Libya could weigh on oil prices. Though, traders continued weighing this week's U.S. inventories data that capped the gains. Benchmark crude oil futures for November delivery ended higher by $0.81 or 1.6 percent at $50.79 a barrel on the New York Mercantile Exchange. Brent crude for November delivery gained 2.00 percent to $56.94 a barrel on the ICE.


Indian rupee depreciated marginally against dollar on Thursday, due to fresh dollar demand from banks and importers amid foreign fund outflows. Sentiments remained subdued as the RBI cut the economic growth forecast for the current fiscal to 6.7% from its August forecast of 7.3% in view of issues with GST implementation and lower Kharif output estimates. Besides, dollar's renewed strength against other currencies overseas and weak trade in the local equity market also hit the sentiment of rupee. On the global front, pound took a tumble on Thursday amid a cocktail of bad news including weak car sales data and S&P comments questioning whether the UK economy could handle an interest rate hike. Finally, the rupee ended at 65.15, 10 paise weaker from its previous close of 65.05 on Wednesday.


The FIIs as per Thursday'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 3978.38 crore against gross selling of Rs 4488.97 crore, while in the debt segment, the gross purchase was of Rs 2172.46 crore with gross sales of Rs 514.23 crore.


The US markets continued their northbound move and the major averages extended a recent upward trend, once again reaching new record closing highs on batch of largely upbeat U.S. economic data as well as optimism about the outlook for tax reform. The Asian markets have made a green start taking cues from the US markets after comments from Federal Reserve officials helped ratchet up bets that the U.S. economy is strong enough to withstand higher interest rates. The Indian markets gave up their hard accumulated gains in the final hours to make a close in negative territory in last session, snapping a four-day winning streak. Today, the start is likely to see some recovery tailing the positive global cues, though all eyes will be on GST Council meeting, which is expected to push through a raft of relief measures for small and medium enterprises. Traders will also be getting some support with Commerce and Industry Minister Suresh Prabhu's statement that he is working closely with the finance ministry and other departments to firm up policy initiatives along with fiscal incentives to give a fillip to industrial growth and job creation. Meanwhile, Minister of Railways and Coal Piyush Goyal has said that India is undergoing a change in the economic narrative and rebranding itself with technology driving growth. The aviation stocks will be in action on report that India`s domestic passenger traffic grew by 16 percent in August. India`s domestic demand -- revenue passenger kilometres (RPK) -- was highest amongst major aviation markets like Australia, Brazil, China, Japan, Russia and the US. There will be some buzz in the garment sector stocks, as the government has slashed duty drawback to two per cent from 7.5 per cent with effect from October 1.


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  • Wipro Digital, digital business unit of Wipro, has signed a definitive agreement to acquire Cooper, an award-winning design and business strategy consultancy.
  • Tata Motors has signed a MoU with Srei Equipment Finance, a wholly owned subsidiary of Srei Infrastructure Finance.
  • M&M has launched the W9 variant of its flagship SUV XUV500, priced at Rs 15.45 lakh.
  • Reliance Industries' telecom arm - Reliance Jio Infocomm has introduced an offer for brand of entry-level smartphones.
News Analysis