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NSE Intra-day chart (08 October 2018)
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Market Commentary 09 October 2018
Markets to make cautious start amid mixed global cues


Key equity benchmarks made a smart recovery to close Monday's session in green terrain, with Sensex and Nifty logging gains of 97.39 and 31.60 points, respectively. After a negative start, the markets remained volatile throughout the day, as exporters' body Federation of Indian Export Organisations' (FIEO) said the rupee depreciation is increasing the cost of imported capital goods, inputs and various services used by exporters paid in foreign currency, particularly the freight charges. Domestic sentiments also got hurt with a private report that foreign investors have pulled out over Rs 9,300 crore ($1.3 billion) from the Indian capital markets in the last four trading sessions on unabated fall in rupee and rise in crude oil price. The domestic sentiments remained downbeat even if the Reserve Bank of India (RBI) retained the GDP growth projection for FY19 at 7.4%, with risks broadly balanced, in the fourth Bi-monthly Monetary Policy Statement and revised the inflation projection to 3.9-4.5% for the second half of FY19, down from 4.8% earlier. In afternoon deals, the indices witnessed sharp selling, tracking weak global markets. Anxiety also spread among the investors with reports that Indian companies raised Rs 12,470 crore through initial public offerings (IPOs) in April-September this fiscal, a plunge of 53% from the year-ago period, mainly due to volatile equity markets and uncertainties in macro environment. The market participants took note of a private report that the RBI is expected to increase policy rates by 25 basis points in the first quarter of the next year, primarily led by inflationary pressures and depreciation of the rupee. However, the markets managed to erase all of their losses in the last hour of the trade, supported by the World Bank's latest report stating that growth in India is firming up and projected to accelerate to 7.3% in the 2018-19 fiscal and 7.5% in the next two years. Some support also came with a report that investments in the Indian capital market through participatory notes climbed to Rs 84,647 crore till August-end, making it the first rise in such fund infusion in 10 months. Finally, the BSE Sensex gained 97.39 points or 0.28% to 34,474.38, while the CNX Nifty was up by 31.60 points or 0.31% to 10,348.05.


The US markets ended mostly lower on Monday as fears over rapidly rising rates continued to weigh on sentiment. A sell-off seen in the overseas markets, with Chinese stocks showing a particularly steep drop following a week-long holiday also weighed on market sentiments. A jump in government bond yields over the past several sessions has perhaps signaled a new phase in post crisis markets that have enjoyed a protracted period of ultra-low yields. However, climbing rates have come against a solid backdrop for the domestic economy, with a number of economic indicators supporting the notion that the US expansion continues apace. Investors were also watching developments in Europe, with the EU signaling in a letter Friday to Italy's economic minister, Giovanni Tria that Italy's budget targets are a source of concern for the trading bloc, setting up a potential market-disrupting clash. Besides, traders seemed reluctant to make significant moves on Monday, as the bond markets were closed along with banks and federal offices for the Columbus Day holiday. The holiday also led to a lack of US economic data. Nasdaq declined 52.50 points or 0.67 percent to 7,735.95 and the S&P 500 was down by 1.14 points or 0.04 percent to 2,884.43, while Dow Jones Industrial Average gained 39.73 points or 0.15 percent to 26,486.78.


Crude oil futures ended lower on Monday after the United States said it is considering waivers on sanctions against Iran that will take effect on November 4. It is widely expected that Saudi Arabia will steadily increase production to compensate for the loss of Iranian oil from early November. However, losses remained capped amid reports about disruptions in oil production in the Gulf of Mexico due to hurricane Michael and news about explosion at a key oil refinery in Canada. Besides, traders were looking ahead to crude inventories data from American Petroleum Institute and Energy Information Administration. Benchmark crude oil futures for November slipped 5 cents or less than 0.1% to settle at $74.29 a barrel on the New York Mercantile Exchange. December Brent crude declined 25 cents or 0.3 percent to settle at $83.91 a barrel on London's Intercontinental Exchanged.


Breaching the psychological 74 per dollar mark, Indian rupee ended at record low closing level against dollar on Monday, as the US currency gained in global markets amid unabated foreign fund outflow. The rupee sentiments were hit with the Reserve Bank of India's (RBI) statement that the Centre and states should stick to the fiscal deficit target as any slippage will have an adverse bearing on inflation and increase market volatility. Sentiments also got hurt with a private report that the RBI is expected to increase policy rates by 25 basis points in the first quarter of the next year, primarily led by inflationary pressures and depreciation of the rupee. Traders ignored World Bank's report that growth in India is firming up and projected to accelerate to 7.3% in the 2018-19 fiscal and 7.5% in the next two years. On the global front, euro fell across the board on Monday, posting its biggest drop against the Swiss franc since early September as a spat between Rome and the European Union over Italy's budget plans forced a spike in Italian bond yields. Finally, the rupee ended at 74.06, 30 paise weaker from its previous close of 73.76 on Friday.


The FIIs as per Monday'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 3414.52 crore against gross selling of Rs 8424.12 crore, while in the debt segment, the gross purchase was of Rs 2039.25 crore with gross sales of Rs 1448.44 crore. Besides, in the hybrid segment, the gross selling was of Rs 2.14 crore against no buying.


The US markets ended mostly lower on Monday, tracking global stocks, in the backdrop of growing unease over effects of the Sino-US trade war on global growth and with Treasury yields at multi-year highs. Asian markets hit 17-month lows on Tuesday as investors fretted about everything from the Chinese economy, to trade wars, higher US bond yields and political dysfunction in Europe. The Indian markets ended volatile day of trade in green on Monday as oil prices fell sharply. Also, value-buying by investors in recently-battered banking, oil & gas and auto stocks supported the market sentiments. Today, the markets are likely to make cautious start amid mixed global cues. There will be some cautiousness with report that the International Monetary Fund (IMF), in its World Economic Outlook (WEO), retained economic growth projection for India at 7.3% for 2018-19 (FY19), lower than the government's and the Reserve Bank of India's (RBI) forecasts. However, this is noteworthy as the IMF cut global growth projections by 0.2 percentage points. The IMF wants the RBI to tighten monetary conditions, something which it did not do in the October policy review. Besides, Oil Minister Dharmendra Pradhan said there was no question of going back on deregulation of fuel pricing despite the government asking state owned firms to subsidise petrol and diesel by Re 1 per litre. Meanwhile, the government on Monday extended the deadline till October 31 for filing Income Tax return (ITR) and audit report for financial year 2017-18. This is the second extension granted by the Central Board of Direct Taxes (CBDT) for return filing by those assessees whose books of accounts have to be audited. There will be some reaction in gems and jewellery stocks with the Gems and Jewellery Export Promotion Council (GJEPC) data showing that the country's gems and jewellery exports contracted by 0.75% to $13.18 billion in April-August this fiscal as demand slowed down in major developed markets.


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  • Eicher Motors' unlisted subsidiary -- VE Commercial Vehicles has decided to set up a new manufacturing facility at Bhopal. 
  • L&T's construction arm -- L&T Construction's Power Transmission & Distribution Business has received EPC orders worth Rs 1,881 crore. 
  • HCL Technologies is going to invest Rs 750 crore to set up two facilities in Andhra Pradesh. 
  • Maruti Suzuki India has reported 5.9% rise in its production to 160,219 units in September 2018, as compared to 151,239 units in September 2017.
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