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NSE Intra-day chart (07 May 2019)
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Market Commentary 08 May 2019
Benchmarks to make weak start amid global sell-off


Indian equity benchmarks witnessed sharp fall on Tuesday, with both the larger peers, the Sensex and Nifty, closing below their crucial psychological levels of 38,300 and 11,500, respectively. After a firm start, key indices remained positive for the most part of the session, aided by a private report stating that if the BJP-led National Democratic Alliance (NDA) gets a second term, it will provide liquidity support to non-banking financial companies (NBFCs) that are facing cash crunch for a year now. Traders were optimistic, as the government said that India and the United States will engage regularly to resolve outstanding trade issues. Both sides agreed to deepen economic cooperation and bilateral trade by ensuring greater cooperation amongst stakeholders, including Government, businesses and entrepreneurs. However, the markets erased all of their gains in the last leg of the trade to end in red terrain, impacted by S&P Global Ratings' latest report stating that goods and Services Tax (GST) regime in India is not likely to reduce the deficits of state governments significantly, amid large and growing expenditure mandates for the social sector as well as capital spending. Some concerns also came with a private report stating that the weak volume growth reported by consumer staple companies in Q4, FY19 underlines the slowdown seen in housing over the past five to six years and automobiles over the past year. The next government may have its task cut out to revive flagging economic growth. Adding more worries among traders, the head of the International Monetary Fund said that fresh trade tensions between the United States and China were the main threat to the world economy. Finally, the BSE Sensex slipped 323.71 points or 0.84% to 38,276.63, while the CNX Nifty was down by 100.35 points or 0.87% to 11,497.90.


The US markets ended lower with cut of over one and half percent on Tuesday after US Trade Representative Robert Lighthizer confirmed the US plans to raise tariffs on $200 billion worth of Chinese goods to 25 percent on Friday. President Donald Trump threatened to implement the tariff increase, claiming trade talks between the US and China are moving too slowly. The confirmation of the Friday deadline may have shattered the belief that the threat from Trump was just a negotiating tactic. Lighthizer attributed the potential tariff increase to an erosion in commitments by China over the last week, with the trade representative calling substantive changes to the text of a deal unacceptable. Treasury Secretary Steven Mnuchin noted the US would reconsider raising the tariffs if negotiations get back on track during the next round of talks later this week. Traders have largely shrugged off reports that Chinese Vice Premier Liu He is expected to join this week's talks. On the economic front, with a modest drop in revolving credit partly offsetting an increase in non-revolving credit, the Federal Reserve released a report showing US consumer credit rose by less than expected in the month of March. The Fed said consumer credit rose by $10.3 billion in March after climbing by an upwardly revised $15.4 billion in February. Street had expected consumer credit to increase by $16.0 billion. Dow Jones Industrial Average dropped 473.39 points or 1.79 percent to 25965.09, Nasdaq declined 159.53 points or 1.96 percent to 7963.76 and S&P 500 was down by 48.42 points or 1.65 percent to 2884.05.

Crude oil futures ended lower on Tuesday on US-China trade spat. Meanwhile, the Energy Information Administration (EIA), in its monthly Short-term Energy Outlook report, raised its forecasts for oil prices and US crude production for this year and next. For 2020, it forecasted domestic crude output of 13.38 million barrels a day. That's up 2.2% from the forecast released in April.  However, oil prices settled off the session's worst levels as increasing tensions between the US and Iran and the threat of disruptions to supplies in the Middle East helped to offset worries that a protracted trade conflict between the US and China will hurt energy demand. Benchmark crude oil futures for June dropped 85 cents or 1.4 percent to settle at $61.40 a barrel on the New York Mercantile Exchange. July Brent crude declined $1.36 or 1.9 percent to settle at $69.88 a barrel on London's Intercontinental Exchange.


Rupee resumed its gaining streak after a day of fall and ended marginally higher against US dollar on Tuesday, on account of selling of American currency by banks and exporters. Sentiments remained optimistic with reports that commerce Minister Suresh Prabhu and US Commerce Secretary Wilbur Ross have agreed to engage regularly at various level. Both sides agreed to deepen economic cooperation and bilateral trade by ensuring greater cooperation amongst stakeholders, including Government, businesses and entrepreneurs. Some support also came with report that Central Board of Direct Taxes (CBDT) has refuted media reports pertaining to reduction in numbers of Income Tax Returns (ITR) e-filed during Financial Year (FY) 2018-19 as compared to FY 2017-18. However, gains remained capped impacted by S&P Global Ratings' latest report stating that goods and Services Tax (GST) regime in India is not likely to reduce the deficits of state governments significantly, amid large and growing expenditure mandates for the social sector as well as capital spending. Finally, the rupee ended at 69.43, 0.03 paise strong from its previous close of 69.40 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 5256.66 crore against gross selling of Rs 4948.42 crore, while in the debt segment, the gross purchase was of Rs 556.30 crore with gross sales of Rs 558.20 crore. Besides, in the hybrid segment, the gross buying was of Rs 25.42 crore against gross selling of Rs 29.07 crore.


The US markets settled lower on Tuesday after the US confirmed that tariffs on imported goods from China could be raised by the end of the week. Asian markets traded lower in early deals on Wednesday as the global growth concerns grew. Investors on Tuesday went on a last-hour selling spree to bring down the markets which ended with substantial losses. Today, the start of the session is likely to be on negative side amid global sell-off on worries of US-China trade conflict. Traders will remain concern on report that US Commerce Secretary Wilbur Ross warned any retaliatory tariff by India in response to the United States' planned withdrawal of trade privileges will not be appropriate under WTO rules. India has raised the prospect of higher import duties on more than 20 US goods if US President Donald Trump presses ahead with a plan announced in March to end the Generalized System of Preferences (GSP) for India. India is the biggest beneficiary of the Generalized System of Preferences (GSP), which allows preferential duty-free imports of up to $5.6 billion from the South Asian nation. However, some respite can come later in the day on report that Commerce and Industry Minister Suresh Prabhu has made a case for a government-to-government agreement between India and the US to facilitate private companies in both the countries.  He also expressed hope that issues being faced by businesses in India and the US can be sorted out in a way that benefits both the countries. Beside, traders will be getting some encouragement with private report that the number of business-to-business (B2B) startups has jumped four times to 3,200 in 2018 from 800 in 2014, enabling faster growth of the ecosystem, attracting investments worth USD 3.7 billion from USD 797 million, during the period. There will be buzz in the IT stocks with report that India's IT and business services market May grow by over eight per cent to reach $ 13.1 billion by the year-end and expand further to $ 14.3 billion by 2020. The IT services market is slated to reach $ 10 billion by December 2019, growing at 9.1 per cent annually. There will also be some buzz in solar stocks on report that India needs faster implementation of roof-top solar projects to meet the 175 gigawatts of renewable energy target by 2022. There will be lots of earnings reaction based on the performance of the companies to keep the markets buzzing.


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  • Eicher Motors' motorcycle arm -- Royal Enfield has initiated recall of nearly 7,000 units of its Bullet and Bullet Electra models to rectify faulty brake caliper bolt.
  • Tata Motors' wholly owned subsidiary -- Jaguar Land Rover has initiated sales of locally manufactured Range Rover Velar in the country with prices starting from Rs 72.47 lakh.
  • Mahindra & Mahindra's stylish & thrilling new SUV, the XUV300 has crossed 26,000 bookings, since its launch in February this year.
  • Larsen & Toubro has bought shares worth about Rs 113 crore of Mindtree through open market transactions.
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