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NSE Intra-day chart (20 December 2018)
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Market Commentary 21 December 2018
Markets likely to open in red amid weak global cues


A seven-day rally on the equity Indian markets faded on Thursday, as the larger peers ended their trading session in red terrain, tracking weak global markets. The start of the day was weak, affected by the US think-tank National Bureau of Economic Research's (NBER) report that the November 2016 demonetisation impacted economic activity in the country in the immediate aftermath, affecting the Gross Domestic Product (GDP) numbers for that fiscal, while the measure's impact had dissipated by the summer of the following year. Domestic sentiments also got hit with the World Bank's latest report stating that India lost a staggering $86.1 billion, equivalent to over 4% of its GDP, owing to distortions in the power sector in 2016. It added that although India has achieved 100% village electrification earlier this year, 178 million Indians still remain unconnected to the grid as per figures for 2017. Some concerns also came after Crisil expressed concerns on an over 5% dip in sowing for winter crops, which account for the bulk 40% of the nation's annual agricultural output, amid reports of rising rural distress. Crisil also warned that unless the sowing improves from now on, there will be adverse impact on various aspects, including rural consumption. The trade remained lackluster throughout the day, on the back of continuous selling done by the traders. The street was worried with the government think-tank NITI Aayog's statement that lack of financial literacy, high cost of banking services and excessive regulatory requirements are the key constraints in the financial inclusion goal for India. Adding some concerns, markets regulator Sebi banned Kolkata-based stock broker Guiness Securities (GSL) and 35 entities from securities market till further directions in a case related to non-settlement of client funds and misappropriation of securities. These 35 entities also include GSL's present and former directors. However, traders shrugged off Finance Minister Arun Jaitley's statement that it will be sound policy measures, which will help alleviate millions from poverty and fulfill the aspirations of the electorate. He said that sound policy will always put economy on track, bringing people out of poverty and give them better quality of life. Finally, the BSE Sensex lost 52.66 points or 0.14% to 36,431.67, while the CNX Nifty was down by 15.60 points or 0.14% to 10,951.70.


The US markets ended lower on Thursday, with the Nasdaq Composite Index teetering on the edge of a bear market, as worries mounted about a possible government shutdown and the Federal Reserve's latest guidance on interest rates. President Donald Trump told House Republicans he is unwilling to sign a short-term spending bill approved by the Senate due to a lack of funding for his controversial border wall. The Senate bill passed by a voice vote Wednesday night would fund key government agencies through February 8, but pushes a debate over funding for the border wall into the next Congress. Further, renewed concerns about US-China trade talks also weighed on the markets after the Justice Department announced the criminal indictment of two computer hackers associated with the Chinese government. The unsealed indictment charges the two Chinese nationals with conspiracy to commit computer intrusions, conspiracy to commit wire fraud, and aggravated identity theft. On the economic front, after reporting a notable decrease in first-time claims for US unemployment benefits in the previous week, the Labor Department released a report showing initial jobless claims rebounded in the week ended December 15. The report said initial jobless claims rose to 214,000, an increase of 8,000 from the previous week's unrevised level of 206,000. Street had expected jobless claims to climb to 216,000. The slightly smaller-than-expected rebound came after jobless claims fell to their lowest level in nearly three months in the previous week. Meanwhile, a report released by the Conference Board showed a modest increase by leading US economic indicators in the month of November. The Conference Board said its leading economic index rose by 0.2 percent in November after falling by a revised 0.3 percent in October. Dow Jones Industrial Average dropped 464.06 points or 1.99 percent to 22859.60, Nasdaq plunged 108.42 points or 1.63 percent to 6528.41 and S&P 500 was down by 39.54 points or 1.58 percent to 2467.42.


Crude oil futures ended lower with cut of over two percent on Thursday, sending US benchmark prices to their lowest finish in 17 months after the Federal Reserve hiked US interest rates, and as fir issues returned to haunt the market. Prices for the US benchmark logged their lowest finish since July 21, 2017. The Organization of the Petroleum Exporting Countries is reportedly planning to release a table detailing voluntary supply cut quotas among its members and allies as its tries put a halt to one of the biggest oil price falls in years. Benchmark crude oil futures for February plunged $2.29 or 4.8 percent to settle $45.88 a barrel on the New York Mercantile Exchange. February Brent crude dropped 2.89 or 5.1 percent to settle at $54.35 a barrel on London's Intercontinental Exchange.


Extending gains for the fourth straight session, Indian rupee ended considerably higher against dollar on Thursday, on persistent selling of the American currency by banks and exporters. Sharp recovery in domestic equity markets coupled with softening crude oil prices aided to the rupee's rebound. Traders took a note of Finance Minister Arun Jaitley's statement that it will be sound policy measures, which will help alleviate millions from poverty and fulfill the aspirations of the electorate. He said that sound policy will always put economy on track, bringing people out of poverty and give them better quality of life. On the global front, dollar fell to a one-month low on Thursday on growing concerns that US policymakers may be raising interest rates just as the world's biggest economy faces a slowdown. Finally, the rupee ended at 69.70, 69 paise stronger from its previous close of 70.39 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5999.51 crore against gross selling of Rs 4983.91 crore, while in the debt segment, the gross purchase was of Rs 1933.06 crore with gross sales of Rs 722.58 crore. Besides, in the hybrid segment, the gross selling was of Rs 2.20 crore against no buying.


The US markets settled in red territory on Thursday as worries mounted about a possible government shutdown and the Federal Reserve's latest guidance on interest rates. Asian markets were trading lower on Friday following the overnight market rout on Wall Street. The US Department of Justice also charged two Chinese nationals on Thursday for participating in a global hacking campaign. Indian markets failed to hold seven-day gaining momentum and ended tad lower on Thursday amid weakness in Asian peers, after the US central bank dashed investor hopes for a more dovish policy outlook. Today, the markets are likely to make pessimistic start following weak global cues as the markets were affected by the US top bank's plan to continue its balance sheet reduction and the threat of a partial government shutdown. There will be some cautiousness with the central bank's statement that the total external commercial borrowings (ECB) will now be rule-based and will be capped at 6.5% of the gross domestic product. The limit now works out to be about $160 billion for the current fiscal year, against the actual outstanding of $126.29 billion as on September 30. The central bank already has a rule-based exposure for foreign investors' exposure in bonds. Foreigners are allowed to invest up to 6% of the outstanding debt. However, some support may come later in the day with report that the Lok Sabha passed the Consumer Protection Bill, and the government introduced a Bill to amend the Companies Act to further improve the ease of doing business and ensure better compliance levels. The Consumer Protection Bill seeks to strengthen the rights of consumers and provide a mechanism for redressing complaints regarding defects in goods and deficiency in services. Traders may take note of a report that the government will infuse Rs 830 billion into public sector banks in the remaining months of 2018-19, taking capital injection into lenders to Rs 1.06 trillion in the year. Of this, it has sought Parliament's approval for Rs 410 billion through the second batch of the supplementary demand for grants. The Budget had announced a capital infusion of Rs 650 billion. Meanwhile, the coming Goods and Services Tax (GST) Council meeting will primarily delve into issues that will ease the filing of returns and the refund processes for small and mid-size businesses. Moreover, the government is taking steps for implementing methanol economy in India and has constituted five task forces including its production from high ash coal. There will be some buzz in the banking sector stocks with the Reserve Bank of India's (RBI) data showing that bank credit rose at a healthy 15.07% to Rs 92.03 trillion in the fortnight to December 7, while deposits grew 9.66% to Rs 118.84 trillion. In the previous fortnight ended November 23, credit has risen by 15.09% to Rs 91.32 trillion, while deposits surged 9.43% to Rs 118.13 trillion.


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