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NSE Intra-day chart (25 September 2018)
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Market Commentary 26 September 2018
Markets likely to make optimistic start on penultimate day of F&O expiry


Snapping five days of losing streak, Indian equity benchmarks ended the Tuesday's trade in green terrain with frontline gauges recapturing their crucial 36,600 (Sensex) and 11,050 (Nifty) levels. Soon after a cautious start markets gained traction and entered into green terrain mid-morning deals with traders taking encouragement with report that rising imports from China have taken a heavy toll on the employment-generation potential of the manufacturing sector, especially among the micro, small and medium enterprises (MSMEs). Key gauges pared all of their gains and entered into red terrain in late noon session as sentiments turned pessimistic with private report stating that India's current account deficit (CAD) is expected to be widened by 0.20% to 2.8% of GDP for fiscal year 2018-19. The widening current account gap is one of the major concerns which is putting pressure on the rupee, which has depreciated 13% against dollar this year. Sentiments also weighed down with World Bank's report that India's current trade in goods with its neighbouring countries in the South Asian region is a mere 30.65% of the potential trade of $62 billion, which can be boosted if certain restrictions on the current trade, like tariffs, port restrictions and other non-tariff barriers can be eased. Some anxiety also came with a private report that India's crude oil demand is forecast to grow to 500 million tonnes per year by 2040, but persistent increase in oil prices might act as a dampener for the rate of growth. But, rally in last leg of trade helped markets to end near intraday high levels. Sentiments turned positive with PHD Chamber of Commerce and Industry Vice President D K Aggarwal's statement that India is approaching towards $100 billion FDI inflow per annum by 2022 as volumes of foreign direct investment are increasing year after year. Meanwhile, the Central Board of Direct Taxes (CBDT) has postponed the deadline for filing income tax returns (ITR) as well as reports of Audit to October 15, 2018, from September 30 for financial year 2017-18. It had received representations from stakeholders seeking extension of the last date for filing of returns by taxpayers whose accounts have to be audited. Finally, the BSE Sensex surged 347.04 points or 0.96% to 36,652.06, while the CNX Nifty was up by 100.05 points or 0.91% to 11,067.45.


The US markets ended mostly in red terrain on Tuesday, as traders seemed reluctant to make significant moves ahead of the Fed announcement on September 26, 2018. The Fed is widely expected to raise interest rates by 25 basis points, although traders are likely to pay close attention to the accompanying statement for clues about the outlook for rates. Fed Chairman Jerome Powell's subsequent press conference is also likely to attract attention, with the central bank expected to raise rates by at least once more this year. Traders largely shrugged off a report from the Conference Board showing an unexpected improvement in consumer confidence in the month of September. The Conference Board said its consumer confidence index climbed to 138.4 in September from an upwardly revised 134.7 in August. The street had expected the consumer confidence index to drop to 131.7 from the 133.4 originally reported for the previous month. With the unexpected increase, the consumer confidence index reached a new 18-year high and is not far from the all-time high of 144.7 reached in 2000. The S&P 500 slipped 3.81 points or 0.13 percent to 2915.56 and Dow Jones Industrial Average was down by 69.84 points or 0.26 percent to 26,492.21, while Nasdaq was up by 14.22 points or 0.18 percent to 8,007.47.


Crude oil futures settled higher on Tuesday, with traders weighing the prospects of a supply shortage due to upcoming U.S. sanctions against Iran. The signal from OPEC members and top non-OPEC oil producers that they are in no rush to increase output aided oil's uptick. Meanwhile, President Donald Trump at the United Nations assembly reiterated calls on the Organization of the Petroleum Exporting Countries to lower oil prices and said the U.S. would take action if it didn't. Traders looked ahead to weekly crude inventories report from the American Petroleum Institute and the official data from the U.S. Energy Information Administration, due on September 26, 2018. Benchmark crude oil futures for October gained 20 cents or 0.3 percent to settle at $72.28 a barrel on the New York Mercantile Exchange. November Brent crude was up by 67 cents or 0.8 percent to settle at $81.87 a barrel on London's Intercontinental Exchanged.


Paring most of its early losses, Indian rupee ended marginally weaker against the American currency on Tuesday, due to dollar demand from banks and importers. Sentiments remained down-beat with private report stating that India's current account deficit (CAD) is expected to be widened by 0.20% to 2.8% of GDP for fiscal year 2018-19. The widening current account gap is one of the major concerns which is putting pressure on the rupee, which has depreciated 13% against dollar this year. However, the local currency trimmed most of its initial losses, as traders found some support with PHD Chamber of Commerce and Industry Vice President D K Aggarwal's statement that India is approaching towards $100 billion foreign direct investment (FDI) inflow per annum by 2022 as volumes of FDI are increasing year after year. On the global front, dollar edged lower against a basket of the other major currencies on Tuesday as investors looked ahead to the upcoming Federal Reserve policy meeting, at which it was widely expected to deliver its third rate hike this year. Finally, the rupee ended at 72.69, 6 paise weaker from its previous close of 72.63 on Monday.


The FIIs as per Tuesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 7826.54 crore against gross selling of Rs 8884.48 crore, while in the debt segment, the gross purchase was of Rs 1454.51 crore with gross sales of Rs 1915.96 crore. Besides, in the hybrid segment, the gross selling was of Rs 3.94 crore against no buying.


The US markets ended mostly lower on Tuesday as rising interest rates hurt stocks that pay big dividends and higher oil prices pushed transportation and shipping companies lower. Asian markets were trading mostly in green on Wednesday, shrugging of tepid close on the Wall Street. A sharp recovery in the dying hours of the day mainly helped the Indian markets to end Tuesday's volatility session near intra-day high levels, helped by value buying in banking and FMCG stocks after recent heavy losses. Today, the markets are likely to extend previous session's gains on penultimate session of F&O expiry following firm Asian markets. Traders will be getting some encouragement with Finance Minister Arun Jaitley's statement that the new insolvency law, indirect tax regime and demonetization will help drive India's growth rate and sustain it at 8%. Traders will take note of the government's data showing that fiscal deficit touched 94.7% of the FY18 estimate at end of August, marginally better than 96.1% at the same point last fiscal. In absolute terms, fiscal deficit at end of August was Rs 5.91 lakh crore. Meanwhile, the commerce and industry ministry has said that the government's export promotion measures, implementation of minimum standards for imports, and continued healthy inflow of remittances by non-resident Indians will help control the country's rising current account deficit (CAD). There will be some buzz in the banking sector stocks with Union finance minister Arun Jaitley's statement that non-performing assets (NPA) of public sector banks (PSB) are on the decline as recoveries have picked up, but it's a challenge to loan growth. Finance minister said recoveries have not just picked up because of National Company Law Tribunal (NCLT) resolutions, but also borrowers are paying up in anticipation of losing companies. Also, there will be some reaction in energy sector stocks with Moody's report that the share of renewable energy in the country's electricity generation mix is likely to rise to around 18% by 2022, from 7.8% at present, owing to the continuous focus on capacity addition from solar and wind.


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  • Infosys' subsidiary -- IPS -- has been awarded a CAD $80.3 million contract by PSPC to modernize and automate their procurement processes. 
  • NTPC has received environment clearance from the Union Environment Ministry for expansion of the Talcher Thermal Power Station in Odisha for worth Rs 7,732.35 crore.  
  • Bharti Airtel will deploy more than 17,313 new mobile sites along with 6,650 km of fresh optic fibre across UP and Uttarakhand this fiscal under an expansion project. 
  • TCS has conducted a National Qualifier Test - an all-inclusive online campus hiring initiative- on its digital platform TCS iON.
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