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NSE Intra-day chart (08 May 2018)
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Market Commentary 09 May 2018
Markets likely to make negative start on feeble global cues


Indian equity benchmarks ended the volatile day of trade on quiet note on Tuesday, as traders remained on sidelines ahead of Karnataka elections whereby the market participants expect a victory for the BJP in the upcoming elections. Markets started the session on an optimistic and traded firmly for most part of the day as traders took some encouragement from ICRA's report which highlighted that the estimated surge in states' borrowings in the first quarter do not reflect a deterioration of their financial health as it is driven more by the changes in central devolution. The report added that the planned increase in SDL (state development loans) issuance in Q1 of FY19 should not be construed as an indicator of a sharp fiscal deterioration of the states' fiscal health. Some support also came with Reserve Bank of India reportedly intervening in the currency markets to prevent a further slide in the Indian rupee, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Meanwhile, a private report highlighted that India is projected to have a skilled labour surplus of 245 million workers by 2030, mainly on the back of vast supply of working age citizens, even as most of developed and developing economies are expected to grapple with talent crunch at that time. Sentiments remained positive with finance ministry's statement that World Bank will provide a $200 million loan to help the government achieve its goal of reducing stunting in children 0-6 years of age from 38.4 per cent to 25 per cent by the year 2022. However, markets pared almost all of their gains and turned volatile on UN's report that the Goods and Services Tax (GST) as well as protracted issues of corporate and bank balance sheet problems pushed India's economic growth downward in 2017 but a gradual recovery is expected and the country's economy is forecast to grow at 7.2 percent in 2018. Finally, the BSE Sensex rose 8.18 points or 0.02% to 35,216.32, while the CNX Nifty was up by 2.30 points or 0.02% to 10,717.80.


The US markets closed ended mixed on Tuesday after President Donald Trump, as expected, announced the US would pull out of a multilateral nuclear deal with Iran. Trump announced the US was abandoning the 2015 Iran nuclear deal, which was forged by former President Barack Obama three years ago. The president also said he planned to ramp up penalties against Tehran, including the highest level of economic sanctions. Trump suggested that the US may still be open to negotiations with Iran but the abandonment of the nuclear deal puts the Washington at odds with many European allies, including France and Germany. Separately, Federal Reserve Chairman Jerome Powell said that the role of US monetary policy in driving global financial conditions and capital flows is often overstated. On the economy front, the index of small-business optimism from the National Federation of Independent Businesses ticked up fractionally to 104.8 in April. The closely-watched confidence index roared to fresh highs after tax cuts were passed late last year. But it's struggled to hold its momentum since then. The April increase, of 0.1 point, missed economists' forecasts of a 0.2-point gain. Despite the disappointing headline number, the small-business lobby highlighted a surge in the gauge of expected profit trends, which hit the highest in the survey's 45-year history. The Dow Jones Industrial Average added 2.89 points or 0.01 percent to 24,360.21, the Nasdaq gained 1.689 points or 0.02 percent to 7,266.90, while the S&P 500 was down by 0.71 points or 0.03 percent to 2,671.92.


Crude oil futures edged lower on Tuesday as President Donald Trump announced the US would formally withdraw from Iran's nuclear deal. He said, the so-called Iran deal was supposed to protect the United States and our allies from the lunacy of an Iranian nuclear bomb, a weapon that will only endanger the survival of the Iranian regime. Down trend was also supported by report that the U.S. Energy Information Administration (EIA) has raised its 2018 and 2019 forecasts on U.S. crude-oil production. The EIA increased its 2018 domestic crude production forecast by 0.3% to 10.72 million barrels per day. It also lifted its 2019 output forecast by 3.6% to 11.86 million barrels a day. Benchmark crude oil futures for June delivery jumped by $1.67 or 2.4 percent to settle at $69.06 a barrel on the New York Mercantile Exchange. July Brent crude gained $1.32 or 1.70 percent to settle at $74.85 a barrel on London's Intercontinental Exchange.


Halting a two-day fall, Indian rupee ended marginally higher against dollar on Tuesday, due to increased selling of the American currency by exporters and banks. Traders took some support with Reserve Bank of India reportedly intervening in the currency markets to prevent a further slide in the Indian rupee, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some support also came with a private report stating that India is the only major world economy with a potential for talent surplus. The report further said that India may even challenge America's position in technology, media and telecommunications (TMT) sector. However, dollar's strength against major global currencies overseas restricted the further up move. On the global front, dollar was hovering just below four month highs against a currency basket on Tuesday amid indications that the U.S. economy remains on track, while the euro remained below the $1.19 level as concerns over economic headwinds weighed. Finally, the rupee ended at 67.07, 6 paise stronger from its previous close of 67.13 on Monday.


The FIIs as per Tuesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3858.20 crore against gross selling of Rs 4460.60 crore, while in the debt segment, the gross purchase was of Rs 1319.71 crore with gross sales of Rs 2393.13 crore. Besides, in the hybrid segment, the gross buying was of Rs 15.33 crore against gross selling of Rs 17.01 crore.


The US markets ended mixed on Tuesday as investors weighed the Trump administration's decision to withdraw from a 2015 nuclear deal with Iran and reinstate sanctions on the country. Asian stocks were trading lower on Wednesday following President Donald Trump's announcement that the U.S. would pull out of the Iran nuclear deal, with most markets posting slight declines in morning trade. Indian markets ended largely unchanged on Tuesday tracking mixed global cues. Today, the markets are likely to make pessimistic start tracking weak global cues, following U.S. President Donald Trump's decision to withdraw from a landmark nuclear deal with Iran. Sentiments will remain dampen on report that India slipped to the 6th position globally in the business optimism index for the first quarter of this year. Business optimism is however at an all-time high globally with the index at net 61 per cent, the highest figure recorded in 15 years of research. Traders will also weigh private report that India missed out on a synchronized global recovery in 2017 even as the economy recovers from the structural shocks of GST and demonetization. Meanwhile, the government will come out with a Producers Price Index (PPI) next month for 10 services including telecom and railways on experimental basis. The move will help track inflation in these services, which will also include ports, postal, insurance, banking, transportation and air travel. Traders will get some respite later in the day as Commerce and Industry Minister Suresh Prabhu asked various departments and ministries to submit in a fortnight their respective action plans to boost exports. There will be some important earnings announcements too, to keep the markets buzzing.


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