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NSE Intra-day chart (11 May 2018)
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Market Commentary 14 May 2018
Markets likely to start slightly in green on Monday


Bulls tightened their grip on Dalal Street on Friday with frontline gauges surpassed their crucial 10,800 (Nifty) and 35,500 (Sensex) levels, ahead of the Karnataka Assembly elections. The southern state will vote on Saturday and the poll outcome will be known on May 15. Markets started the session on positive note with traders taking support from External Affairs Ministry Spokesperson Raveesh Kumar's statement that India was closely monitoring the situation arising out of Trump's announcement to pull the US out of the Iran deal. India will take necessary measures to offset any adverse impact on its interests due to US President Donald Trump's decision to dump the Iran nuclear deal. Traders shrugged off report highlighting that continuing fall in the rupee will push trade deficit up to a four-year high of $178.1 billion or 6.4 per cent of GDP this fiscal year. The estimate comes amid a depreciation in the rupee against the dollar, wherein it has shed over 5 per cent to breach the Rs 67-mark to the dollar. Markets extended rally in last leg as traders took some support from a private report which highlighting that India Inc's mergers and acquisitions (M&As) tally rose eight-fold to $19.1 billion with 40 transactions in April, making it the highest monthly deal value recorded after March 2017. The report added that relative easing of regulatory ecosystem and consolidation across sectors has significantly driven the deal activity in April this year, sealing deals (M&A and PE) worth $21 billion across 119 deals. Adding to the optimism, the MSME ministry is in talks with the Reserve Bank of India (RBI) to explore ways to improve credit flow to micro, small and medium enterprises across the country. The ministry is looking at measures to address issues pertaining to decline in exports. Additionally, a parliamentary panel headed by veteran BJP leader Murali Manohar Joshi has decided to study the recovery of black money and performance of public sector banks among a host of subjects. Finally, the BSE Sensex surged 289.52 points or 0.82% to 35,535.79, while the CNX Nifty was up by 89.95 points or 0.84% to 10,806.50.


The US markets settled mostly higher on Friday, as traders digested President Donald Trump's outline of his plan to reduce high drug prices, which he has previously described as a top priority for his administration. In remarks from the White House rose garden, Trump suggested the government was partly to blame for high drug prices but also criticized drug lobbyists and so-called middle men. Trump announced several steps his administration will take to reduce drug prices, including giving Medicare Part D plans better tools to negotiate discounts. Reports earlier in the day indicated Trump's reforms of Medicare will stop short of allowing the government to negotiate directly with drug makers. The president also indicated he would seek to increase competition in drug markets, develop new incentives for drug makers to lower list prices and develop options to lower patients' out-of-pocket spending. On the economic front, the Labor Department released a report showing import prices increased by less than expected in the month of April. The Labor Department said import prices rose by 0.3 percent in April after edging down by a revised 0.2 percent in March. The street had expected import prices to climb by 0.5 percent. Meanwhile, the report said export prices increased by 0.6 percent in April after rising by 0.3 percent in March. Export prices had been expected to rise by another 0.3 percent. The Dow Jones Industrial Average added 91.64 points or 0.37 percent to 24,831.17 and the S&P 500 was up by 4.65 points or 0.17 percent to 2,727.72, while the Nasdaq was down by 2.09 points or 0.03 percent to 7402.88.


Crude oil futures pulled back from three and a half year highs and ended lower on Friday amid signs that U.S. production will remain robust. Baker Hughes reported that the number of active U.S. rigs drilling for oil rose by 10 to 844 this week, the sixth consecutive weekly increase. However, the prices marked a second weekly climb in a row, driven by uncertainty over how much oil the global market will lose following the U.S. decision to re-impose sanctions on OPEC member Iran. Benchmark crude oil futures for June delivery fell 66 cents or 0.9 percent to settle at $70.70 a barrel on the New York Mercantile Exchange. July Brent crude shed 35 cents or 0.5 percent to settle at $77.12 a barrel on London's Intercontinental Exchange.


Indian rupee extended its losses for the third straight session and ended marginally lower against dollar on Friday, due to fresh demand for the American currency from banks and importers. Trading sentiments remained subdued with India Ratings and Research's report highlighting that India's trade deficit will widen to a four-year high of $178.1 billion or 6.4% of Gross Domestic Product (GDP) in 2018-19 (FY19), due to rupee depreciation coupled with higher crude and gold imports. Besides, investors have maintained cautious approach ahead of Index of Industrial Production (IIP) data for March scheduled to be released today. However, dollar losing sheen against some other currencies overseas coupled with strong rally in local equity markets restricted the local unit's further down move. On the global front, dollar fell against yen on Friday on weak US inflation data as well as tensions in the Middle East. Finally, the rupee ended at 67.33, 2 paise weaker from its previous close of 67.31 on Thursday.


The FIIs as per Friday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4810.97 crore against gross selling of Rs 4,982.12 crore, while in the debt segment, the gross purchase was of Rs 580.79 crore with gross sales of Rs 1949.66 crore. Besides, in the hybrid segment, the gross buying was of Rs 15.59 crore against gross selling of Rs 20.14 crore.


The US markets ended mostly higher on Friday benefited from the upward momentum seen in the two previous sessions, but gains remained capped as buying interest waned as traders seemed wary of continuing to pick up stocks. Asian shares were trading mostly in green to near two-month highs on Monday on signs the United States and China were toning down their trade war rhetoric, while Malaysian Ringgit hit a four-month trough in the first onshore trade since a shock election result last week. Indian markets ended on strong note on Friday ahead of Karnataka assembly election, quarterly earnings and positive global cues. Today, the markets are likely to make a flat-to-positive start amid steady global cues. Traders will get some support with Fitch's report that India's economic growth will accelerate to 7.3 per cent in the current fiscal and 7.5 per cent in the next as money supply has recovered to its pre-demonetisation level and disruptions related to the rollout of GST have diminished. Some support will come from report that the Finance Ministry has cleared an FDI proposal last month which will bring total foreign investment worth Rs 3,250 crore. However, traders may react negatively on report that Industrial output grew by 4.4 per cent in March, the slowest in five months, due to a fall in capital goods production and deceleration in mining activity. Industrial growth measured by the Index of Industrial Production (IIP) in 2017-18 too decelerated to 4.3 per cent from 4.6 per cent in the previous fiscal. Meanwhile, continuing downward trend, the country's foreign exchange reserves fell by $1.426 billion to $418.940 billion in the week to May 4, due to decrease in foreign currency assets. In the previous week, the reserves had fallen by $3.216 billion to $420.366 billion. There will be some important earnings announcements too, to keep the markets buzzing.


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