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NSE Intra-day chart (25 October 2017)
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Market Commentary 26 October 2017
Positive but cautious start on cards on the series expiry day

Wednesday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges hitting record highs and ending above their crucial 33,000 (Sensex) and 10,250 (Nifty) levels for the first time ever after the Union Cabinet on Tuesday announced various measures to boost economy. Markets made a firm start and traded jubilantly throughout the session, as sentiments remained up-beat with Union Cabinet approving a massive recapitalisation plan for public sector banks (PSBs) worth Rs 2.11 lakh crore. Of this amount, Rs 1.55 lakh crore would be raised through recapitalisation bonds. Another Rs 76,000 crore would be available from budgetary support and raised through market borrowings. The whopping Rs 14 lakh crore package announced by the Union Cabinet apart from the massive recapitalisation plan for public sector banks, also include investments in key development sectors such as Rural Roads, Housing, Railways, Power, Highways and Digital Infrastructure. Traders also took some encouragement with Union Finance Minister Arun Jaitley's statement that the Indian economy was on a strong wicket with sound macro-economic fundamentals. Some support also came on report that the government has collected Rs 92,150 crore as Goods and Services Tax (GST) in September from 42.91 lakh business. The finance ministry said that of this, Rs 14,042 crore is on account of central GST, while state GST is to the tune of Rs 21,172 crore. Integrated GST collections stood at Rs 48,948 crore, of which Rs 23,951 crore was on account of imports. Adding to the optimism, Finance Minister Arun Jaitley said that Indian economy is on a strong wicket with sound macro-economic fundamentals. He added that India has been the fastest growing major economy for the last three years and the attempt is to maintain high growth rate in coming years. Finally, the BSE Sensex surged 435.16 points or 1.33% to 33,042.50, while the CNX Nifty was up by 87.65 points or 0.86% to 10,295.35.

The US markets suffered setback on Wednesday after ending the previous session mostly higher. It was mainly due to profit taking that contributed to the weakness; however the economic news came is positive. Orders for long-lasting manufacturing goods surged in September; the U.S. Department of Commerce reported that durable goods orders rose by 2.2% in September. On the same time new home sales in the U.S. showed a substantial increase in the month of September, according to a separate report released by the Commerce Department, new home sales surged up by 18.9 percent to an annual rate of 667,000 in September from a revised rate of 561,000 in August. The Dow Jones Industrial Average lost 112.30 points or 0.48 percent to 23,329.46, the Nasdaq dropped 34.54 points or 0.5 percent to 6,563.89, and the S&P 500 edged lower by 11.98 points or 0.47 percent to 2,557.15.

Crude oil futures fell on Wednesday for the first time in three days, as concerns over a surge in US production weighed on upside momentum while a mixed report from the Energy Information Administration (EIA) showing crude stockpiles rose for the first time in five weeks and gasoline supplies fell more-than-expected failed to lift sentiment. EIA said that inventories rose by 900,000 barrels for the week ended Oct. 20. Gasoline stockpiles dropped by 5.5 million barrels for the week, while distillate stockpiles fell 5.2 million barrels. Benchmark crude oil futures for December delivery ended lower by 29 cents at $52.18 a barrel on the New York Mercantile Exchange. Brent crude for December delivery lost 17 cents to $58.16 a barrel on the ICE.

Indian rupee strengthened against US dollar on Wednesday, on increased selling of the American currency by exporters and banks. Sentiments remained positive with Finance Minister Arun Jaitley's statement that the Indian economy is on a strong wicket with sound macro-economic fundamentals. He added that India has been the fastest growing major economy for the last three years and the attempt is to maintain high growth rate in coming years. Besides, sustained foreign capital inflows into equity markets also boosted the rupee against dollar. On the global front, dollar got a lift on Wednesday after a report that Republican senators were leaning towards John Taylor to be the next Federal Reserve chief, while share markets turned flat after a run of highs.  Finally, the rupee ended at 64.90, 16 paise stronger from its previous close of 65.06 on Tuesday.

The FIIs as per Wednesday'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 4039.94 crore against gross selling of Rs 5231.43 crore, while in the debt segment, the gross purchase was of Rs 2051.15 crore with gross sales of Rs 798.76 crore.

The US markets in the last session went through their worst day in two months, with Dow losing 100 points from its record peak, mainly on profit taking with all the major averages at record highs. The Asian markets were showing mixed trend in early deals following the weakness in US markets overnight with investors assessing earnings and economic data for indications of broadening growth that may sustain gains in global equities. The Indian markets surged to fresh record highs in the last session, led by the PSU banking stocks on hopes that recapitalization plan announced by the government will improve their lending capacity and help address their weak capitalization levels. Today the start of the F&O series expiry day is likely to be in green but volatility may creep in with the progress of the trade. Meanwhile, Arvind Subramanian, chief economic adviser (CEA) in the finance ministry, has suggested that measures such as privatisation, selective capital infusion into viable banks, and taking stressed loans off the balance sheet of banks will make the record bailout of state-owned banks, announced by finance minister Arun Jaitley, even more effective. Steel stocks will be in action, as India imposed anti-dumping duty on some cold-rolled flat products of stainless steel from China, the US, South Korea and the European Union, to curb the influx of cheaper imports and help local producers. The duty, which will be in effect until 10 December 2020, exempts certain grades of stainless steel. There will be buzz in the aviation stocks too on reports that Airlines in India carried 95.83 lakh passengers in September, up 16.34% from last September. The January to September passenger traffic was also higher compared to the previous year. 

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News Analysis