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NSE Intra-day chart (17 August 2018)
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Market Commentary 20 August 2018
Markets to make positive start amid firm global cues


Friday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges reversing previous session's losses and settling above their crucial 37,900 (Sensex) and 11,450 (Nifty) levels. After a gap-up opening, market traded with traction in a very tight range and there appeared not even an iota of profit booking in the session, as investors continued hunt for fundamentally strong stocks. Sentiments remained up-beat since beginning as traders took some encouragement from Niti Aayog vice chairman Rajiv Kumar's statement that the falling rupee is not a cause of worry as it is getting back to its natural value. The rupee rose by about 17% during the last three years. Since the beginning of this year, rupee has declined by only 9.8%. So, it has recovered. Some support also came with private report stating that India's economy is expected to grow at a healthy 7.5% in the first quarter (Q1) of 2018-19 (FY19), lower than a seven-quarter high of 7.7% in the fourth quarter (Q4) of 2017-18 (FY18). Traders overlooked a report that a foreign brokerage warned of worsening fiscal position due to poll-related spending spree before next May when the new Parliament has to be instituted. It has projected the consolidated fiscal deficit for FY19 at 6.5% of GDP against a budgeted 5.9%, which is only 10 bps lower than FY18. Also traders shrugged off India Ratings & Research's report which revised down its growth estimate for Indian economy to 7.2% from its earlier projection of 7.4% for 2018-19. The downward revision comes as the rating agency expects Indian economy to face headwinds from high crude oil prices, increase in minimum support prices of kharif crops, rising trade protectionism, depreciating currency. Market participants also paid no heed towards report that investments through participatory notes into Indian capital markets plunged to over nine-year low of Rs 80,341 crore till July-end amid stringent norms put in place by the watchdog Sebi to check misuse of these instruments. Finally, the BSE Sensex surged 284.32 points or 0.75% to 37,947.88, while the CNX Nifty was up by 85.70 points or 0.75% to 11,470.75.


Continuing rally for second straight session, the US markets ended higher on Friday, with the Dow Jones Industrial closing at its highest since February, as investors welcomed signs of progress in resolving the trade dispute between the US and China, offsetting fears about Turkey's currency crisis. Late buying mainly helped markets to settle higher. As per the report, the US and Chinese negotiators are planning talks to resolve their trade row ahead of meetings in November. Additionally, Mexico's economy minister, Ildefonso Guajardo, said he hopes to wrap up outstanding bilateral issues on the North American Free Trade Agreement (NAFTA) by the middle of next week. China's Ministry of Commerce said that a Chinese delegation led by Vice Commerce Minister Wang Shouwen will travel to the US for trade talks to be held with US Under Secretary of Treasury for International Affairs David Malpass. On the economic front, a report from the University of Michigan unexpectedly showed a notable deterioration in US consumer sentiment in the month of August. The preliminary report said the consumer sentiment index dropped to 95.3 in August after edging down to 97.9 in July. Surveys of Consumers chief economist Richard Curtin said the decrease in consumer sentiment was concentrated among households in the bottom third of the income distribution amid less favorable perceptions of market prices. Meanwhile, a separate report from the Conference Board showed a bigger than expected increase by its index of leading US economic indicators in the month of July. The Conference Board said its leading economic index climbed by 0.6% in July following a 0.5% increase in June. Dow Jones Industrial Average jumped 110.59 points or 0.43 percent to 25,669.32, the S&P 500 gained 9.44 points or 0.33 percent to 2,850.13 and Nasdaq was up by 9.81 points or 0.13 percent to 7,816.33.


Crude oil futures extended their gains for the second straight session to settle higher on Friday, amid hopes the trade talks between US and China next week will help diffuse trade tensions and reduce fears about any slowdown in fuel demand. Besides, according to a weekly report from Energy Company Baker Hughes showed that US oil rig count, an early indicator of future output, remained unchanged at 869 rigs in the week to August 17. US energy companies kept the oil rig count unchanged this week amid a steady decline in crude prices, which hit a near two-month low earlier this week. Benchmark crude oil futures for September gained 45 cents or 0.7 percent to settle at $65.91 a barrel on the New York Mercantile Exchange. October Brent crude climbed 40 cents or nearly 0.6 percent at $71.83 a barrel on London's Intercontinental Exchange.


Indian Money market remain closed on Friday on account of Parsi New Year.


The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3942.36 crore against gross selling of Rs 4313.62 crore, while in the debt segment, the gross purchase was of Rs 637.90 crore with gross sales of Rs 741.14 crore. Besides, in the hybrid segment, the gross selling was of Rs 7.91 crore against no buying.


The US markets ended higher on Friday, as optimism that the US and China will eventually resolve their trade standoff offset fears about Turkey's currency crisis. Asian markets were trading mostly in green on Monday following a higher finish on Wall Street last Friday as investors awaited developments on proposed Sino-US trade talks, while keeping a wary eye on the Chinese yuan and Turkish lira. After losses in the previous session, Indian equity markets made an impressive rebound on Friday, with Sensex gaining around 300 points and Nifty ending at an all-time high, on improvement in global cues after China said it would hold talks with the US later this month on their trade dispute. Today, the start of the new week is likely to be on optimistic note amid firm global cues. Traders will be getting some encouragement with former chief economic advisor Arvind Virmani's statement that India's economic growth seems to be back on a recovery path and the country will be on a firm 7.5% plus growth track this fiscal. He also said the US-China tariff war provides an opportunity to increase India's exports to the US. Also, there will be some support with the Central Board of Direct Taxes' (CBDT) statement that income Tax collection in the country stood at a record Rs 10.03 lakh crore during 2017-18. It also said during 2017-18, a record number of 6.92 crore I-T returns were filed, which was 1.31 crore more than 5.61 crore returns filed in 2016-17. Meanwhile, a private report stated that India Inc reported robust earnings for the June quarter helped by a lower base in the form of a muted performance in the year-ago period and higher demand in select consumer segments. However, there will be some cautiousness with a report that Moody's and other experts have said India's current account deficit (CAD) will widen to 2.5% of the GDP in the current fiscal due to higher oil prices that has been accentuated by rupee depreciation. It also said net oil imports accounted for 2.6% of GDP in FY18 and will increase further in fiscal 2019. There will be some buzz in insurance sector stocks with report that public sector general insurance firms are losing market share because of delayed merger plans and appointments. Also, there will be some reaction in aviation related stocks with the Airports Council International in its latest study released this month showed that India led the Asia Pacific region in posting the highest growth in air passenger traffic in May at 13.3%.


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  • Kotak Mahindra Bank is planning to open over 100 branches to take the network to 1,500 from the existing 1,391 by the end of financial year 2018-19.
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