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NSE Intra-day chart (20 March 2018)
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Market Commentary 21 March 2018
Markets to make an optimistic start on firm global cues


Snapping four days losing streak, Indian equity benchmarks ended the choppy day of trade with marginal gains, as traders opted to buy beaten-down but fundamentally strong stocks after four days of continuous drubbing. After making a cautious start, markets gained momentum and entered into green terrain, as traders took some encouragement with Reserve Bank of India's (RBI) release stating that the country's manufacturing sector witnessed an improvement in sales growth in the third quarter this fiscal on annual basis, though net profit has remained subdued due to lack of support from other income. The sales of manufacturing companies increased by 14% in the October-December quarter of 2017-18 compared to similar period of the previous fiscal while net profit declined by 2.4% in the third quarter. Some support also came with Former Reserve Bank of India (RBI) Governor Raghuram Rajan's statement that India can achieve a growth rate of 10%. He added that some key reforms are needed to accelerate India's Growth Rate. Some support also came with ICRA's report that the credit to micro, small and medium enterprises (MSMEs) is expected to grow at 12-14% over the next five years, helped by higher lending by non-banking finance companies (NBFC) to the segment. As on March 2017, credit to MSMEs stood at Rs 16 trillion. However, gains remained capped with Bibek Debroy's statement that India's net exports are not doing well even as the global economy is on the recovery path. Debroy further highlighted that India is facing a dilemma from the point of view of pushing exports, as exporters would like exchange rate to depreciate, however exchange rate might not depreciate as much as exporters want because of capital inflows. Besides, investors remained on sidelines looking forward to the latest developments in the parliament following the no-confidence motion moved by Telugu Desam Party (TDP) after it broke away from the BJP-led NDA following the Centre's refusal to grant Special Category status to Andhra Pradesh. Finally, the BSE Sensex surged 73.64 points or 0.22% to 32,996.76, while the CNX Nifty was up by 30.10 points or 0.30% to 10,124.35.


The US markets closed higher on Tuesday, led by strong gains in the energy sector as the overall market reclaimed some lost ground from the previous day, when tech shares fell sharply. Market participants are also anticipating the Federal Reserve's two-day policy meeting, which started in the early afternoon. Investors are watching for signs that the central bank will take a more aggressive path toward normalizing monetary policy. The Fed, meanwhile, is expected to deliver an interest-rate hike on Wednesday, following the Federal Open Market Committee's meeting. A faster pace of rate hikes can dent the attractiveness of assets perceived as riskier, such as stocks. Some investors are expecting the Fed's economic projections, or the dot plot, will show more policy makers leaning toward a more aggressive four rate increases instead of the three forecast going into the year. The meeting will also see Jerome Powell preside over his first press conference of his tenure as Fed Chairman. Meanwhile, US lawmakers neared agreement on a massive government spending bill that Congress hopes to pass by Friday, as congressional leaders worked to narrow their differences on thorny issues such as President Donald Trump's border wall. The Dow Jones Industrial Average added 116.36 points or 0.47 percent to 24,727.27, the Nasdaq gained 20.058 points or 0.27 percent to 7,364.30, while the S&P 500 was up by 4.02 points or 0.15 percent to 2,716.94.


Crude oil futures edged higher on Tuesday, as tensions between Iran and Saudi Arabia threatened supplies from the region. Concerns about Venezuelan output also fueled the rally, as output is expected to continue to decline even further. The country's February output was down by more than half a million barrels compared with a year ago. Meanwhile, U.S. oil inventories data is expected over the next two days. The API's industry report is due this afternoon, followed by the EIA report tomorrow. Stockpiles have been rising over the past three weeks. Traders will be paying attention to gasoline supplies as well. A huge drop in U.S. gas inventories occurred last week, setting the table for refinery demand in the coming weeks. Benchmark crude oil futures for April delivery surged $1.41 or 2.3 percent at $63.54 a barrel on the New York Mercantile Exchange. May Brent crude gained $1.37 or 2.1 percent to settle at $67.42 a barrel on London's Intercontinental Exchange.


Indian rupee ended marginally lower against US dollar on Tuesday, due to fresh demand for the American currency from banks and importers. Traders remained concerned with Bibek Debroy's statement that India's net exports are not doing well even as the global economy is on the recovery path. Debroy further highlighted that India is facing a dilemma from the point of view of pushing exports, as exporters would like exchange rate to depreciate, however exchange rate might not depreciate as much as exporters want because of capital inflows. Moreover, the domestic currency was also weighed down by dollar's strengthen against some other currencies overseas. On the global front, dollar moved firmly higher on Tuesday, shaking off earlier weakness as attention shifted from the positive Brexit developments to the Federal Reserve meeting where rate setters are widely expected to tighten policy. Finally, the rupee ended at 65.19, 2 paise weaker from its previous close of 65.17.


The FIIs as per Tuesday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 4461.14 crore against gross selling of Rs 3947.71 crore, while in the debt segment, the gross purchase was of Rs 1369.70 crore with gross sales of Rs 759.53 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.97 crore against gross selling of Rs 1.93 crore.


The US markets closed higher on Tuesday amid expectations the Federal Reserve and new Chair Jerome Powell will soothe investors' concerns that interest rates will rise too fast. Asian markets were trading mostly in green on Wednesday, following modest rebounds in Europe and the U.S. that partially reversed Monday's global declines. However, gains remained capped as traders remained on sidelines ahead of the outcome of US Federal Reserve policy meeting. Indian markets fluctuated before finishing modestly higher on Tuesday, as traders covered short positions after recent string of losses. Today, the start of the session is likely to be on the positive side tracking firm global cues, as investors look ahead to interest-rate announcements from the Federal Reserve and the Bank of England. There will be some concern with report that a private investment bank has downgraded India's economic forecasts from 8 per cent to 7.6 per cent for Financial Year 2018-19. It, however, retained growth forecast for FY 2019-20 at 8.3 per cent. The investment bank lowered the growth projection in the wake of multi-billion banking scam and warned that it could spark tighter regulation of the banking sector that would constrain credit growth. Some anxiety will also persist with former governor of Reserve Bank of India Raghuram Rajan's statement that India should be thinking of the next 10 to 20 years when it would need a massive push to create jobs. He said, 7.5 percent growth is not enough to employ the 12 million people coming to the labor force every year in good jobs. There will be buzz in sugar stocks after the government scrapped export duty on raw and refined sugar to boost shipments, as the country is all set to produce record 29.5 million tonnes (MT) of the sweetener in the current 2017-18 marketing season. Export duty on sugar was 20%.


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  • Tata Motors would hike prices of its passenger vehicles by up to Rs 60,000 from April 1 to offset rising input costs.
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