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NSE Intra-day chart (22 February 2019)
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Market Commentary 25 February 2019
Benchmarks to make a cautious start on Monday


The last trading day of the week turned out to be a choppy session for key Indian equity benchmarks, with the both the larger peers, Sensex and Nifty, closing the trading session on flat note. The equity markets made a negative start of the day, with Moody's statement that the fresh round recapitalisation of 12 state-run banks is positive as it will help them improve their core capital but a complete turnaround is still away due to the large quantum of legacy bad loans. It said these banks are far from a complete turnaround as large volumes of problem-loans will still continue to cap improvements in profitability and capitalisation, constraining their credit profiles. Domestic sentiments remained subdued after the release of the minutes of Reserve Bank of India (RBI) last policy meet, in which governor Shaktikanta Das argued the need to look at growth concerns. However, further fall in markets remained capped, amid Niti Aayog's note stating that the host of reforms undertaken by the government has transformed India into the fastest-growing major economy along with the macroeconomic stability not witnessed in the past. The street got some relief with the CriSidEx survey stating that micro and small enterprises (MSEs) are becoming more optimistic about their business prospects. The CriSidEx index rose to 128 in Q3FY19, the highest score since its inception. In comparison, the index was at 107 in Q3FY18. Adding some support, Commerce and Industry Minister Suresh Prabhu said that India and Russia are working to address and resolve trade and investment issues to facilitate and increase private sector cooperation between the countries. Meanwhile, Retirement fund body Employees' Provident Fund Organisation (EPFO) has announced an increase in interest rate to 8.65 percent from 8.55 percent on PF deposits for 2018-19, to its 6 crore subscribers. Finally, the BSE Sensex fell 26.87 points or 0.07% to 35,871.48, while the CNX Nifty was up by 1.80 points or 0.02% to 10,791.65.


The US markets settled higher on Friday amid continuing hopes for a trade deal between the US and China. Treasury Secretary Steve Mnuchin said that Chinese negotiators will extend their visit to Washington in an effort to build on the progress made during this week's talks. Mnuchin said a meeting between President Donald Trump and Chinese President Xi Jinping reportedly under discussion for next month may depend on the outcome of the next few days of negotiations. Meanwhile, Trump said during a meeting with Chinese Vice Premier Liu that US and Chinese are making a lot of progress in the trade talks. Trump said there was a very good chance the US and China could reach a long-term trade deal but at the same time said who knows whether a final agreement will be struck. According to private report which stated that China has committed to buying up to $1.2 trillion worth US goods, although the two sides remain far apart on issues concerning the forced transfer of intellectual property. Trump had recently suggested he could postpone an increase in tariffs set to take effect in early March if the trade talks continue to show signs of progress. Dow Jones Industrial Average surged 181.18 points or 0.70 percent to 26031.81, Nasdaq gained 67.84 points or 0.91 percent to 7527.54 and S&P 500 was up by 17.79 points or 0.64 percent to 2792.67.


Crude oil futures ended higher on Friday as US equities and other assets found traction against the backdrop of upbeat US-China trade talks. The US and Chinese trade representatives reportedly met for more than nine hours Thursday. Trump met with China's top trade negotiator, Vice Premier Liu He on Friday. Still, deep divisions remain over fundamental issues, with US pressing China to halt what Washington calls illicit technology transfers and improper subsidies for state-owned firms. For the week, West Texas Intermediate (WTI) rose roughly 3%. The international benchmark (Brent crude) gained 1.3% for the week. Benchmark crude oil futures for April gained 30 cents or 0.5 percent to settle at $57.26 a barrel on the New York Mercantile Exchange. April Brent crude added 5 cents or less than 0.1 percent to settle at $67.12 a barrel on London's Intercontinental Exchange.


Indian rupee ended marginally higher against US dollar on Friday as exporters and banks stepped up selling of the American currency. Sentiments remained positive with Niti Aayog's report stating that the host of reforms undertaken by the government has transformed India into the fastest-growing major economy along with the macroeconomic stability not witnessed in the past. The market participants took a note of the Reserve Bank of India's monetary policy committee (MPC) statement in minutes released on Thursday that India needs to take steps to boost economic growth as the inflation outlook remains low. The rupee's rise was also aided by falling crude oil prices. However, dollar's strength against major global currencies overseas along with lackluster trade in the equity markets capped the rupee's gain. On the global front, dollar held gains against its peers early on Friday, bolstered by a rise in US yields. Finally, the rupee ended at 71.14, 10 paise stronger from its previous close of 71.24 on Thursday.


The FIIs as per Friday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 4887.97 crore against gross selling of Rs 5225.58 crore, while in the debt segment, the gross purchase was of Rs 1171.57 crore with gross sales of Rs 437.15 crore. Besides, in the hybrid segment, the gross selling was of Rs 1.33 crore against no buying.


The US markets ended higher on Friday as traders continued to express optimism about ongoing trade talks between the US and China. Asian markets are trading mostly in green on Monday after US President Donald Trump confirmed he would delay a planned increase on Chinese imports as talks between the two sides were making substantial progress. Indian markets ended a choppy session on a flat note on Friday amid selling pressure after RBI MPC minutes expressed concerns about growth. Today, the markets are likely to make a cautious start of the F&O series expiry week despite positive cues from Asian peers. There will be some cautiousness with report that foreign portfolio investors sold debt securities worth over Rs 1,900 crore in February amid escalation of cross-border tensions in the wake of Pulwama terror attack. Latest data from the depositories showed that overseas players pumped in Rs 2,039 crore into equities even as they dumped debt during February till 22. Traders will also be concerned about Financial Services Secretary Rajiv Kumar's statement that ensuring intermediation by financial institutions like banks and NBFCs in a clean manner is one of the major challenges faced by the Indian banking sector. He added that making credit rating agencies more accountable is also another challenge. However, some support may come later in the day with Commerce and industry minister Suresh Prabhu's statement that the government is making a strategy to make India a $5 trillion economy and simultaneously fine tuning the plan to take it to $10 trillion. Some support may also come with the Central Board of Indirect Taxes and Customs (CBIC) setting up three working groups to suggest ways to facilitate exports, especially through e-commerce, and improve compliance by way of curbing tax evasion. Meanwhile, the Reserve Bank of India (RBI) announced that it will merge three categories of Non Banking Financial Companies (NBFCs) into a new one. According to a release, NBFCs categorized as Asset Finance Companies (AFC), Loan Companies (LCs) and Investment Companies (ICs), will be merged into a new category called NBFC - Investment and Credit Company (NBFC-ICC). There will be some buzz in the real estate sector stocks with report that the Goods and Services Tax (GST) Council slashed tax rate on under-construction residential properties, making the effective tax rate 5% for the normal category and 1% for the affordable housing category. In both cases, builders will not be able to claim the input tax credit (ITC). There will be some reaction in banking sector stocks with report that the finance ministry expects three to four more lenders to come out of weak bank list of the Reserve Bank in the next six to eight months on account of improvement in financial health amid capital infusion and falling bad loans.


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  • Dr Reddy's Laboratories is recalling 2,770 bags of epilepsy drug Levetiracetam Sodium Chloride injection in the US market, on account of a labelling error.   
  • Bajaj Finance has raised Rs 100 crore through allotment of 1,000 Secured redeemable NCDs of face value of Rs 10 lakh each. 
  • IOC has signed an agreement with United Arab Emirates' National Oil Company Group. 
  • NTPC has paid an interim dividend of Rs 2,951.88 crore for the financial year ending March 31, 2019.
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