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NSE Intra-day chart (24 October 2018)
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Market Commentary 25 October 2018
Markets to make pessimistic start on weak global cues


After four days of losses, the equity benchmarks rebounded on Wednesday to end the trading session in green terrain, mirroring positive cues from European markets. The markets made a gap-up opening and remain firm for the most part of the session, as street got comfort with a report stating that government is responding well to the rising trade tensions between the world's two largest economies, maintaining a stance that serves the cause of Indian exporters best.  Adding some optimism, Asian Development Bank's (ADB) latest report said that greenfield or new investments generated some 667,000 jobs in 2017-mainly in India, the PRC, Viet Nam, the Philippines, and Singapore-in real estate, software and information technology (IT) services, and electronic components, among others. Traders took note of the commerce ministry's statement that it is important to resume long-stalled talks for the proposed free trade agreement (FTA) between India and the European Union (EU) at the earliest and without any pre-conditions, in order to boost trade and investment. In the last leg of the trade, the markets gave up all the gains to enter in the red, amid reports that Private Equity (PE) investments moderated to $14.60 billion during January-September period, owing to macroeconomic concerns, market volatility and valuations of companies. Some concerns also came with a private report which stated that the Indian growth story has been far from perfect. That is not an understatement by any stretch of imagination. A growing challenge for the economy is the fast-evolving problem of inequality. But, the volatility was for the short period, as the key indices recovered to settle the day in green, supported by the Directorate General of Foreign Trade (DGFT)'s statement that India relaxed some restrictions on imports of petcoke for use as feedstock in some industries. Meanwhile, the Insolvency and Bankruptcy Board of India (IBBI) notified the mechanism to be followed for issuing regulations under the insolvency law. A set of procedures would be followed for making or amending regulations under the Insolvency and Bankruptcy Code (IBC). Finally, the BSE Sensex surged 186.73 points or 0.55% to 34,033.96, while the CNX Nifty was up by 77.95 points or 0.77% to 10,224.75.


Extending previous session losses, the US markets ended sharply lower on Wednesday, with the Dow declining to its lowest closing level in over three-months, while the Nasdaq and the S&P 500 tumbled to five-month closing lows. The renewed selling pressure on Wall Street largely reflected amid another negative reaction to the latest batch of earnings news from several big-name companies. Shares of AT&T moved substantially lower after the telecom giant reported third quarter earnings that came in below street estimates. Delivery giant UPS (UPS) also fell sharply after reporting third quarter earnings that matched estimates but weaker than expected revenues. Sentiments also remained under pressure with the release of a report from the Commerce Department showing a steep drop in new home sales in the month of September. The report said new home sales plunged by 5.5% to an annual rate of 553,000 from the revised August rate of 585,000. Street had expected new home sales to edge down to a rate of 625,000 from the 629,000 originally reported for the previous month. With the substantial decrease, new home sales fell to their lowest level since hitting a rate of 546,000 in December of 2016. Dow Jones Industrial Average slipped 608.01 points or 2.41 percent to 24,583.42, Nasdaq declined 329.14 points or 4.43 percent to 7,108.40 and S&P 500 was down by 84.59 points or 3.09 percent to 2,656.10.


After declining sharply in previous session, crude oil futures ended higher on Wednesday amid concerns over weakening demand and on Saudi Arabia's reassurance that it would increase output to offset loss of Iranian oil post US sanctions from early November. Traders overlooked the US Energy Information Administration's report that US crude inventories rose by 6.35 million barrels in the week to October 19, it was fifth straight week rise, exceeding street's forecasts by a significant margin. Benchmark crude oil futures for December gained 39 cents or 0.6 percent to settle at $66.82 a barrel on the New York Mercantile Exchange. December Brent crude fell 27 cents or 0.4 percent to settle at $76.17 a barrel on London's Intercontinental Exchanged.


Snapping two days of depreciation, Indian rupee ended considerably higher against dollar on Wednesday, on persistent selling of the American currency by exporters. Sentiments turned optimistic with a report stating that government is responding well to the rising trade tensions between the world's two largest economies, maintaining a stance that serves the cause of Indian exporters best. The market participants overlooked private report stating that liquidity crunch may hurt economic growth. The report penciling in a few basis points shave off in economic growth in the December quarter if the hoarding of cash by banks and mutual funds continue threatening on-lending non-banking finance companies, the lifeline of lakh of medium and small enterprises. The domestic unit also found support from strong gains in local equity markets. On the global front, euro skidded more than half a percent to its weakest since Aug. 20 on Wednesday after signs that economic growth could be slowing across the euro zone. Finally, the rupee ended at 73.16, 41 paise stronger from its previous close of 73.57 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4997.55 crore against gross selling of Rs 5099.03 crore, while in the debt segment, the gross purchase was of Rs 298.69 crore with gross sales of Rs 1992.00 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.45 crore against gross selling of Rs 1.55 crore.


The US markets ended lower on Wednesday after another round of mixed US earnings that exacerbated fears about slowing profits. Asian markets were trading in red on Thursday, tracking decline on Wall Street, with trading floors awash with negativity on geopolitical concerns and following weak US economic and earnings data. Snapping four-day losing streak, Indian markets ended higher on Wednesday, on the back of easing crude oil prices, which dropped below $75 per barrel, coupled with a recovery in the rupee. Today, the markets are likely to make gap-down opening of F&O expiry session, following weak global cues amid economic growth concerns. There will be some cautiousness with a private report that Indian financial markets' liquidity position has worsened with cash deficit widening to about Rs 1.4 lakh crore this week compared with a small surplus in first week of October. There will be some concern with a report that the latest government data shows that during the first six months of the financial year, trade deficit in oil already touched $46.6 billion, up 67% from 27.9 billion during the same period in 2017-18. However, traders may take some support with private report that corporate India's business optimism for the October-December quarter improved marginally on expectations of higher festive season demand, implementation of the 7th Pay Commission awards and increase in minimum support price (MSP) of Kharif crops. Traders may take note of Economic Affairs Secretary Subhash Chandra Garg's statement that some problems are temporary like oil prices, currency etc and those should be seen in that context. Oil prices have come down, currency is now stabilizing. Similarly, the non-banking financial companies (NBFCs) liquidity problems are also temporary. Meanwhile, the Directorate General of Foreign Trade (DGFT) said that India relaxed some restrictions on imports of petcoke for use as feedstock in some industries. India allowed imports of 500,000 tonnes of petcoke per year by aluminium companies and 1.4 million tonnes of petcoke by calcined petcoke makers. There will be some buzz in the telecom sector stocks with Moody's Investor Service in its latest report stating that Indian telecom players, who are involved in an intense competition, are unlikely to see any increase in average revenue per user (ARPU) soon. There will be some reaction in auto sector stocks with report that emphasising on the urgent need to move to a cleaner fuel as early as possible, the Supreme Court directed that only Bharat Stage VI (BS-VI) vehicles shall be sold across the country from April 1, 2020. There will be some important earnings announcements too to keep the markets buzzing.


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  • Sun Pharmaceutical Industries has launched its plaque psoriasis treatment drug ILUMYA 100 mg/mL in the United States. 
  • Infosys' fully owned product subsidiary -- Infosys Finacle, part of EdgeVerve Systems and R3 has partnered to collaborate on blockchain solutions. 
  • Bajaj Auto has reported a rise of 5.28% in its net profit at Rs 1,256.57 crore for Q2FY19 as compared to Rs 1,193.58 crore for Q2FY18. 
  • TCS has successfully completed a Proof of Concept around a blockchain-based non-exchange trade settlement using TCS' Quartz Blockchain Solution.
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