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NSE Intra-day chart (20 November 2018)
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Market Commentary 21 November 2018
Markets to start on a negative note on sluggish global cues


Tuesday turned out to be a lackluster day for the Indian markets, with the Sensex and the Nifty breaching their crucial psychological levels of 35,500 and 10,700, respectively. The key equity indices made a weak opening of day, as SEBI's data report indicated that the share of foreign portfolio investments (FPI) through participatory notes (P-notes) in domestic capital markets has declined to nine-and-a-half year low of Rs 66,587 crore at the end of October. Domestic sentiments got cautious as SEBI asked listed companies to disclose detailed reasons for delay in submission of financial results to the stock exchanges within one working day of the stipulated deadline. The trade also got affected after a survey by the UK India Business Council (UKIBC) showed that Quality of bureaucracy is rated as the weakest component of India's business environment for the fourth year running. Traders overlooked a report stating that Prime Minister Narendra Modi has set an ambitious deadline of December-end to implement as many business reforms as possible on the ground so that India could break into the top 50 of the World Bank Ease of Doing Business next year. In the second half of the session, the markets didn't looked back and continued southward journey to end near their intraday low points, following weak global markets. The street remained pessimistic, on reports that India has slipped two places to rank 53rd on a global annual talent ranking released by IMD Business School Switzerland. The top slot has been retained by the Alpine nation itself. Investors took note of a report which signaled only a temporary truce, stated the Reserve Bank of India (RBI) and the government on Monday agreed to refer to an expert committee the contentious issue of appropriate size of reserves that the RBI must hold, while restructuring of stressed loans of small businesses would be considered by the central bank. Meanwhile, Commerce and Industry Minister Suresh Prabhu has said that development of industrial park rating system would help increase competitiveness of industries and promotion of the manufacturing sector. Finally, the BSE Sensex plunged 300.37 points or 0.84% to 35474.51, while the CNX Nifty was down by 107.20 points or 1.00% to 10656.20.


After the sell-off seen in the previous session, the US markets once again closed in red on Tuesday. With the continued drop, the tech-heavy Nasdaq fell to its lowest closing level in over seven months. The continued weakness on markets partly reflected a negative reaction to the latest batch of earnings news from companies such as Target (TGT).  Shares of Target plummeted by 10.5 percent after the retail giant reported third quarter earnings that missed street estimates on slightly weaker than expected comparable store sales growth. Department store operator Kohl's (KSS) and Victoria's Secret parent L Brands (LB) also posted steep losses after reporting their quarterly results. A continued decline by Apple (AAPL) also weighed on the markets.  Besides, the drop erased year-to-date gains for both the Dow and S&P 500, while the Nasdaq now clings to a 0.1% gain on the year. Month-to-date, the Nasdaq has fallen 5.4%, the S&P and Dow have retreated 2.6% in November. On the economic front, a report from the Commerce Department showed housing starts rebounded in the month of October, although the report also showed a decrease in building permits. The Commerce Department said housing starts jumped by 1.5 percent to an annual rate of 1.228 million in October after plunging by 5.5 percent to a revised rate of 1.210 million in September. Street had expected housing starts to climb to a rate of 1.225 million from the 1.201 million originally reported for the previous month. Meanwhile, the report said building permits fell by 0.6 percent to an annual rate of 1.263 million in October after surging up by 1.7 percent to an upwardly revised 1.270 million in September. Building permits, an indicator of future housing demand, had been expected to increase to 1.267 million from the 1.241 million originally reported for the previous month. Dow Jones Industrial Average dropped 551.80 points or 2.21 percent to 24465.64, S&P 500 plunged 48.84 points or 1.82 percent to 2641.89 and Nasdaq was down by 119.65 points or 1.70 percent to 6908.82.


Crude oil futures ended lower on Tuesday with benchmark finishing at its lowest in over a year, as investor attention remained fixed on supply ahead of a key meeting of major oil producers early next month. Meanwhile, October US petroleum inventory stands above the five-year average and the decline in Iranian oil exports has been less than anticipated. Both the US contract and the global benchmark Brent oil are in bear market, usually characterized as a decline of at least 20% from a recent peak. In fact, US oil is down 31% from its October 3 peak at $76.41 a barrel. Benchmark crude oil futures for January dropped $3.77 or 6.6 percent to settle $53.43 a barrel on the New York Mercantile Exchange. January Brent crude declined $4.26 or 6.4% percent to settle at $62.53 a barrel on London's Intercontinental Exchange.


Extending its rising streak for the sixth straight day, Indian rupee ended higher against dollar on Tuesday, on persistent selling of the American currency by banks and exporters. Sentiments remained up-beat with Prime Minister Narendra Modi setting an ambitious deadline of December-end to implement as many business reforms as possible on the ground so that India could break into the top 50 of the World Bank Ease of Doing Business next year. Traders also took note of RBI's statement that it will inject Rs 8,000 crore into the system through purchase of government securities on November 22. The OMO operation will help ease tight liquidity situation triggered by series of default by group companies of IL&FS. Moreover, dollar's weakness against currencies overseas supported the rupee. On the global front, dollar hit a near two-week low against its peers on Tuesday with sentiment soured by Federal Reserve caution on the global outlook and weak data at home, pointing to slower rate hikes. Finally, the rupee ended at 71.46, 21 paise stronger from its previous close of 71.67 on Monday.


The FIIs as per Tuesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 4763.10 crore against gross selling of Rs 3708.68 crore, while in the debt segment, the gross purchase was of Rs 533.64 crore with gross sales of Rs 599.21 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.89 crore against gross selling of Rs 2.25 crore.


The US markets ended sharply lower on Tuesday as US investors continued to be plagued by doubts surrounding slowing global growth, US-China trade relations, and the steady rise in interest rates that can be expected to continue into next year. The Nasdaq remains in correction territory, down more than 14% from August peak, while the S&P closed just 4 points shy of a correction, defined as a 10% decline from an index's most recent highs. Asian markets are trading in red on Wednesday after another dive on Wall Street, where concerns have spread to the corporate-bond market. Snapping three-day gaining streak, Indian equity markets ended lower with losses of around one percent on Tuesday, on heavy selling by market participants, in line with a global selloff. Weakness in the markets came in a day after the outcome of a key meeting of the Reserve Bank of India (RBI) board. The measures, announced to boost lending, failed to impress investors, amid expectations that their implementation will take time. Today, the start is likely to be mildly negative on sluggish global cues. Traders may remain concern with domestic rating agency Icra in its latest report stating that after the strong upswing in April-June quarter of current financial year (FY19), GDP growth for July-September quarter is expected to dip to 7.2 percent on account of sluggishness in agriculture and industry. The GDP had grown by a higher than expected 8.2 per cent in the first quarter of FY19 as compared to the year-ago period.  There will be some cautiousness too on report that India's crude oil imports in October rose to their highest level in at least more than seven years. Crude imports in October climbed 10.5 per cent from a year earlier to 21.02 million tonnes. However, some respite can come in latter part of day on report that the committee proposed by the RBI Board for examining the Economic Capital Framework (ECF) to determine the appropriate levels of reserve the central bank ought to hold will be constituted soon. The Central Board of the RBI had decided on an expert committee to look into the ECF. Currently, the capital base of the RBI is Rs 9.69 lakh crore. Meanwhile, Job creation more than doubled to 9.73 lakh in September 2018, the highest monthly addition since September 2017, compared to 4.11 lakh in the same month last year, according to the Employees' Provident Fund Organisation (EPFO) payroll data.  The data showed that around 79.48 lakh new subscribers were added to social security schemes of the EPFO from September 2017 to September 2018. This indicates that these many jobs were created in the last 13 months. The banking sector stocks will be in action on report that the Reserve Bank of India (RBI) estimates that Indian banks will have the capacity to lend an extra 2.5 trillion rupees to 3.0 trillion rupees ($35 billion to $42 billion) over the next year after it decided to relax a deadline for lenders to boost capital ratios.  Meanwhile, A rating agency CRISIL has said that the RBI's Board decision to extend the timeline for implementation of the last tranche of capital conservation buffer (CCB) under Basel III capital regulations could reduce the burden of public sector banks by Rs 35,000 crore this fiscal. This will provide some breathing space to capital-starved PSBs.


Support and Resistance: NSE (Nifty) and BSE (Sensex)


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Hindalco Industries





Tata Motors






  • HDFC has issued masala bonds under its medium-term note (MTN) programme and raised Rs 500 crore.
  •  IOC is planning to infuse Rs 1,200 crore over the next 6-7 years to create infrastructure of laying LPG pipeline and installing CNG stations in the two Burdwan districts of West Bengal.
  •  Maruti Suzuki India has increased production of its blockbuster model Vitara Brezza.
  • Bajaj Finance has raised funds aggregating to Rs 200 crore via private placement.


News Analysis