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NSE Intra-day chart (17 May 2018)
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Market Commentary 18 May 2018
Markets likely to make flat-to-positive start


Extending losing streak for third straight day, Indian equity benchmarks ended the Thursday's trade in red terrain with a cut of over half a percent, with frontline gauges breaching their crucial 10,700 (Nifty) and 35,200 (Sensex) levels, as doubts whether the Bharatiya Janata Party (BJP) could prove its majority in the southern state of Karnataka weighed on investor sentiment. State BJP president B S Yeddyurappa was sworn in as chief minister on Thursday morning even though his party fell short of an outright majority. He has now 15 days to prove his majority in the state legislative assembly. Markets started the session slightly in green terrain on report that the Centre has contained its fiscal deficit for FY18 at 3.42% of gross domestic product (GDP), down from 3.5% estimated (RE) when Budget FY19 was presented on February 1. An Rs 85,000 crore (3.8%) reduction in expenditure from the RE level of Rs 22.18 lakh crore and a marginal upward revision in nominal GDP in the second advance estimate (the Budget relied on the first advance estimate) allowed the government to curb the deficit. Key gauges pared all of their initial gains and entered into red terrain on report that total investments via participatory notes (P-notes) into Indian capital markets plunged to a 9-year low of Rs 1 lakh crore in April amid stringent norms put in place by the Securities and Exchange Board of India to check the misuse of these instruments. Investors shrugged off private report that there was a 23% jump in venture investments in April at $2.4 billion, led by e-commerce, infrastructure and realty plays by funds. The report added that the increase in activity was driven largely by a jump in deal sizes, it said, pointing out that going by the number of deals, there were 69 transactions this April as against 66 in the year-ago period. Selling got intensified in last leg of trade to drag benchmarks below their respective crucial levels. Finally, the BSE Sensex declined 238.76 points or 0.67% to 35,149.12, while the CNX Nifty was down by 58.40 points or 0.54% to 10,682.70.


The US markets closed lower on Thursday, as selling in technology shares offset an advance in the energy sector. A second round of US-China trade talks in Washington was in the foreground, kicking off on Thursday. However, President Donald Trump cast some doubt on a positive outcome for the pair of superpowers attempting to resolve their trade differences after he said Beijing had become too spoiled and that his expectations for the negotiations were low. Dallas Fed President Robert Kaplan said that the US economy has reached the threshold for maximum employment and it may already be lower than is sustainable. Kaplan is currently in favor of two more interest rate rises this year, in line with Fed policymakers' median estimate. On the economy front, the rate of layoffs in the US rose in early May to the highest level in a month, but so-called initial jobless claims are still near the lowest levels in half a century. Initial jobless claims rose by 11,000 to 222,000 in the week ended May 12. The more stable monthly average of claims, meanwhile, fell by 2,750 to 213,250. For the second week in a row these claims were at the lowest level since 1969. The number of people already collecting unemployment benefits, known as continuing claims, fell by 87,000 to 1.71 million. The last time fewer people were receiving jobless benefits was in 1973. Job openings are at a record high, unemployment is unusually low at 3.9% and most companies are still hiring nine years after an economic recovery got under way. The Dow Jones Industrial Average lost 54.95 points or 0.22 percent to 24,713.98, the Nasdaq dropped 15.822 points or 0.21 percent to 7,382.47, and the S&P 500 was down by 2.33 points or 0.09 percent to 2,720.13.


Crude oil futures ended almost flat on Thursday amid expectations that the US sanctions on Iran would cut global crude supplies, extending a rally in oil prices. Ahead of the re-imposition of US sanctions on Iran - expected to take place in two separate waves - on August 06 and November 05, market participants continued to expect the sanctions would cut Iran's oil exports enough to suppress global crude supplies despite a lack of support from the EU and China. Besides, there are reports that the European Commission is working on a law that bans European companies and courts from complying with US sanctions against Iran. Benchmark crude oil futures for June delivery settled unchanged at $71.49 a barrel on the New York Mercantile Exchange. July Brent crude inched up 2 cents or 0.37 percent to settle at $79.30 a barrel on London's Intercontinental Exchange.


Indian rupee ended stronger against dollar on Thursday, owing to dollar sale by exporters and banks. This was the second day of consecutive gains for the domestic currency. Traders took some support with report that the Centre has contained its fiscal deficit for FY18 at 3.42% of gross domestic product (GDP), down from 3.5% estimated (RE) when Budget FY19 was presented on February 1. An Rs 85,000 crore (3.8%) reduction in expenditure from the RE level of Rs 22.18 lakh crore and a marginal upward revision in nominal GDP in the second advance estimate (the Budget relied on the first advance estimate) allowed the government to curb the deficit. However, dollar's strength against major global currencies overseas along with heavy losses in the domestic equity market restricted the further up move. On the global front, euro hovered near five-month lows on Thursday, as investors fretted about the demands of Italian populist parties and as a fresh rise in US government bond yields underpinned demand for the dollar. Finally, the rupee ended at 67.68, 10 paise stronger from its previous close of 67.78 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity and debt segments both. In the equity segment, the gross buying was of Rs 4917.84 crore against gross selling of Rs 5637.84 crore, while in the debt segment, the gross purchase was of Rs 771.33 crore with gross sales of Rs 1807.59 crore. Besides, in the hybrid segment, there was no buying and selling.


The US markets ended lower on Thursday, as traders expressed some uncertainty about the second round of trade talks between the U.S. and China. Asian markets are exhibiting mixed trend in early deals on Friday, as investors appeared to be readjusting their expectations about trade negotiations between the U.S. and China. Indian equity benchmarks ended lower on Thursday after BJP's Yeddyurappa has been given 15 days to prove the party has a legislative majority in Karnataka. Today, the markets are likely to make flat-to-positive start as traders will get some support with UN's report that India's economy is projected to grow 7.6% in fiscal year 2018-19, remaining the fastest growing economy in the world, as robust private consumption and benefits from past reforms help the country's GDP gain momentum but sustained recovery in private investment remains a crucial challenge. Some support will also come with Niti Aayog CEO Amitabh Kant's statement that crony capitalism in India will come to an end with the new bankruptcy code though it was facing some teething troubles. However, there will be some concern on private report stating that Reserve Bank of India is likely to keep policy rates unchanged in the forthcoming monetary policy review, but will have a hawkish tone on concerns over inflation and as crude oil prices remain elevated. The Reserve Bank will announce its second bi-monthly monetary policy on June 6. There will be buzz in Aviation related stocks on reports that the Civil Aviation Ministry is likely to approach the GST Council soon for bringing aviation turbine fuel (ATF) under the tax regime. Currently, jet fuel or ATF is not under the GST ambit and the levy on it varies from state to state. There will be some important earnings announcements too, to keep the markets buzzing.


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Tata Steel





















  • L&T's construction arm -- L&T Construction -- has bagged EPC orders worth Rs 2,440 crore through Power Transmission & Distribution business unit.  
  • Tata Steel has reported a net profit of Rs 14688.02 crore for Q4FY18 as compared to net loss of Rs 1168.02 crore for Q4FY17. 
  • HDFC Bank's subsidiary HDB Financial Services is all set to raise $150 million from IFC through senior debt investment. 
  • Kotak Mahindra Bank is planning to raise funds.
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