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NSE Intra-day chart (16 October 2018)
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Market Commentary 17 October 2018
Markets to make positive start on firm global cues


Key Indian benchmarks extended northward journey for the third straight session and ended the Tuesday's trading session in green territory, amid positive earnings optimism among traders. The markets made a firm start to remain bullish throughout the session, aided by the United Nations Conference on Trade and Development's (UNCTAD) latest report indicating that in South Asia, India attracted $22 billion of foreign direct investment (FDI) flows, contributing to the subregion's 13% rise in FDI in the first half of 2018 (H1 2018). Adding some optimism, India's trade deficit declined to a five-month low in September even as exports contracted, providing some respite from the rising gap that has sparked concern about the current account deficit (CAD). Trade deficit declined to $13.98 billion in September from $17.39 billion in August following slower growth in imports. Besides, exports were pegged at $27.95 billion in September, down 2.15% from a year ago, while imports rose 10.45% to $41.9 billion, lowest in five months. Optimism continued on the street, with a private report stating that strong earnings, promising demographics and big ticket deals drove the M&A activity, clocking deals worth $76 billion in January-September from over 350 transactions. Some support also came with reports that India and the UAE deliberated on opportunities for cooperation and investment in both the countries, in order to drive investments in areas including highways, airports and infrastructure. The street took note of Finance Minister Arun Jaitley's statement that India needs a strong and decisive leadership at the Centre to continue its high growth path and take swift decisions. Investors also took some support with a report that Foreign Institutional Investors (FIIs) bought shares worth Rs 67.86 crore on October 15, 2018, as per provisional data from the stock exchanges. Finally, the BSE Sensex surged 297.38 points or 0.85% to 35,162.48, while the CNX Nifty was up by 72.25 points or 0.69% to 10,584.75.


The US markets ended the Tuesday's trade on an optimistic note with all the major indices garnering a gain of over two percentage points. The rally on Wall Street partly reflected a positive reaction to upbeat earnings news from several big-name companies, with financial giants Goldman Sachs (GS) and Morgan Stanley (MS) reporting third quarter results that beat estimates on both the top and bottom lines. Buying interest was generated following the release of positive economic data, including a report from the Federal Reserve showing industrial production increased in line with economist estimates in September. The report said industrial production rose by 0.3 percent in September after climbing by 0.4 percent in August. The continued increase in production matched expectations. The Fed said output growth in September was held down slightly by Hurricane Florence but noted the estimated negative effect was less than 0.1 percentage points. A separate report from the National Association of Home Builders showed an unexpected uptick in homebuilder confidence in the month of October. The report said the NAHB/Wells Fargo Housing Market Index inched up to 68 in October from 67 in September. Street had expected the index to come in unchanged. S&P 500 surged 59.13 points or 2.15 percent to 2,809.92, Dow Jones Industrial Average soared 547.87 points or 2.17 percent to 25,798.42 and Nasdaq was up by 214.74 points or 2.89 percent to 7,645.49.


Crude oil prices edged lower on Tuesday, as traders waited to see if relations between the US and Saudi Arabia sour further following the disappearance of a journalist in Turkey. Worsening tensions between the two nations could result in a curtailment of global crude production from one of the most significant members of the Organization of the Petroleum Exporting Countries. Meanwhile, investors shrugged off reports suggesting that Iranian crude exports have fallen further in the first two weeks of October. The sanctions on Iran's oil sector will go into effect on November 4. Benchmark crude oil futures for November declined 14 cents or 0.2% to settle at $71.92 a barrel on the New York Mercantile Exchange. December Brent crude dropped 63 cents or 0.8 percent to settle at $81.41 a barrel on London's Intercontinental Exchanged.


Indian rupee ended stronger against dollar on Tuesday, due to increased selling of the American currency by exporters. Traders took encouragement with report that India's trade deficit declined to a five-month low in September even as exports contracted, providing some respite from the rising gap that has sparked concern about the current account deficit (CAD). Trade deficit declined to $13.98 billion in September from $17.39 billion in August following slower growth in imports. Besides, exports were pegged at $27.95 billion in September, down 2.15% from a year ago, while imports rose 10.45% to $41.9 billion, lowest in five months. Meanwhile, the rupee derived its strength from strong gains in the local equity markets as well as strength of other Asian currencies against dollar. On the global front, dollar was mired near a three-week low on Tuesday thanks to tepid US data overnight, though broadly firmer US Treasury yields prevented a sell-off. Finally, the rupee ended at 73.48, 35 paise stronger from its previous close of 73.83 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 3795.61 crore against gross selling of Rs 3796.27 crore, while in the debt segment, the gross purchase was of Rs 357.04 crore with gross sales of Rs 530.03 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.04 crore against gross selling of Rs 1.65 crore.


Recovering from previous session's losses, the US markets settled higher on Tuesday as a batch of strong earnings reports pushed aside lingering tensions over trade and geopolitics that have pressured markets. Asian markets were trading in green on Wednesday after upbeat US earnings reports drove a rebound on Wall Street and helped restore a little confidence in emerging market stocks and currencies. Extending gains for third consecutive session, Indian markets ended Tuesday's trade on positive note with Sensex and Nifty settling above 35,100 and 10,550 levels, respectively, on upbeat cues from the global markets coupled with a recovery in the rupee and easing crude oil prices. Today, the markets are likely to make gap-up opening following firm trade in global markets. Traders will be getting some encouragement with report that India has been ranked as the 58th most competitive economy on the World Economic Forum's global competitiveness index for 2018, which was topped by the US. The WEF said India's rank rose by five places from 2017, the largest gain among G20 economies. There will be some support with the Reserve Bank of India's (RBI) forecast that the share of investments in gross domestic product (GDP) will rise to 33% by FY23 from 31.4% recorded in the last fiscal. Meanwhile, NITI Aayog CEO Amitabh Kant said that Gender parity and exports are two critical areas which India must focus on to be able to grow at higher rates of 9-10% per year for the next three decades or more to lift a very young population above poverty line. However, there may be some cautiousness with Commerce and Industry Minister Suresh Prabhu's statement that no country can benefit from the decline in the world trade, and the slowing global economy is a concern for all nations including India. Traders may react to a report that investments in the Indian capital market through participatory notes (P-notes) hit a nearly nine-and-a-half year low of Rs 79,548 crore till September after registering a rise in such fund infusion in the preceding month. There will be lots of earnings reaction based on the performance of the companies to keep markets buzzing.


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  • NTPC has discontinued operations of Badarpur Thermal Power Station in New Delhi having total installed capacity of 705 MW with effect from October 15, 2018. 
  • SBI's digital service platform YONO has launched a six-day shopping festival beginning October 16 in which customers using the app for shopping via online portals can avail discounts. 
  • M&M will launch its luxury SUV, codenamed Y400, on November 19, 2018. 
  • Infosys has reported a rise of 10.31% in its net profit at Rs 4,110 crore for Q2FY19 as compared to Rs 3,726 crore for Q2FY18.
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