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NSE Intra-day chart (30 January 2018)
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Market Commentary 31 January 2018
Markets to make pessimistic start on weak global cues


Tuesday turned out to be a daunting day of trade for Indian equity benchmarks, with frontline gauges settling below their crucial 36,100 (Sensex) and 11,050 (Nifty) levels. Markets kick-started the session on pessimistic note, as traders remained concerned over valuations after recent strong gains. Traders also remained on sidelines ahead of upcoming budget, as this will be the last full year budget of the government before next year's Lok Sabha election. Afterwards, markets traded in a tight band throughout the session, as sentiments remained dampened with Chief Economic Adviser Arvind Subramanian's statement that the scope for the Reserve Bank of India (RBI) to lower interest rate may be limited with growth picking up and inflation hardening. He added however that it would be inappropriate for him to comment on rate cut as it is the domain of the RBI. Traders also remained nervous with NITI Aayog Vice Chairman Rajiv Kumar's statement that the government may settle for slightly higher fiscal deficit in 2018-19 as well. The government aims to restrain the fiscal deficit for 2017-18 to 3.2% of the GDP and 3% in 2018-19. Some anxiety spread among the investors after yesterday's Economic Survey, while painting a bright picture for India's short and medium term growth, pointed out some pitfalls. It enlightened that despite better-than-expected GST revenue growth, India is headed for some fiscal slippage and could miss the target of 3.2% of GDP. The survey also added that agriculture income may fall by up to 25% in the medium term because climate change will hit crop yields, making it imperative to replace power and fertilizer subsidies by direct income support and to drastically expand irrigation. Market participants shrugged off report that Securities and Exchanges Board of India (SEBI) may tighten net worth norms, bring in new shareholding rules and ease directorship conditions for stock exchanges, depositories and clearing corporations. Finally, the BSE Sensex declined 249.52 points or 0.69% to 36,033.73, while the CNX Nifty was down by 80.75 points or 0.73% to 11,049.65.


The US markets closed lower on Tuesday, for a second straight session, with the Dow suffering its biggest one-day drop in eight months, as heavy losses in health-care and energy shares weighed on the main indexes. Meanwhile, climbing US bond yields, which imply a rise in borrowing costs, were also weighing on stocks in a repeat of Monday's action. Investors are looking ahead to the State of the Union address by President Donald Trump. The Atlanta Federal Reserve's GDP Now forecast model showed that the US economy is on track to grow at a 4.2 percent annualized rate in the first quarter, accelerating from the final quarter of 2017 that was held back by a surge in imports. On the economy front, consumer confidence rebounded in the first month of the New Year, climbing to 125.4 in January from a revised 123.1 at the end of 2017. Americans were a little less sure about the economy in early 2018, but they expect growth to improve in the months ahead. The Dow Jones Industrial Average dropped 362.59 points or 1.37 percent to 26,076.89, the Nasdaq lost 64.023 points or 0.86 percent to 7,402.48, and the S&P 500 edged lower by 31.1 points or 1.09 percent to 2,822.43. 


Crude oil futures extended its southward journey on Tuesday amid expectations that U.S. oil production will remain robust throughout the year. Recently, the IEA warned that U.S. production will surpass Saudia Arabia, offsetting Organization of the Petroleum Exporting Countries' (OPEC's) supply quota plan with Russia. The number of active U.S. rigs drilling for oil climbed by 12 at 759 last week, as U.S. companies want to take advantage of oil prices at their highest in four years. It was the biggest weekly rise seen in the Permian field since 2013. Meanwhile, the Fort Hills oil sands project in Alberta, Canada, has achieved first oil. Benchmark crude oil futures for March delivery slipped $1.06 or 1.5% at $64.50 a barrel on the New York Mercantile Exchange. Brent crude for March delivery declined by 44 cents or 1.5% to $69.46 a barrel on the ICE.


Extending previous session losses, Indian rupee weakened against dollar on Tuesday, due to sustained bouts of month-end dollar demand from importers and banks. Weak domestic equities markets also weighed on the domestic unit. Traders remained cautious with NITI Aayog Vice Chairman Rajiv Kumar's statement that the Fiscal deficit may be slightly higher than FY18 target. He also said the government may settle for slightly higher fiscal deficit in 2018-19 as well. Investors also turned their attention to US President Donald Trump's State of the Union speech and a Federal Reserve policy meeting. However, dollar's weakness overseas capped rupee's losses. On the global front, the euro rose against dollar on Tuesday, buoyed by data showing that the euro zone economy recorded its strongest rate of annual growth since the global financial crisis in the fourth quarter. Finally, the rupee ended at 63.61, 3 paise weaker from its previous close of 63.58 on Monday.


The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 8805.37 crore against gross selling of Rs 8161.52 crore, while in the debt segment, the gross purchase was of Rs 1287.70 crore with gross sales of Rs 855.94 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.46 crore against gross selling of Rs 3.51 crore.


The US markets ended mostly in red on Tuesday due to profit taking, with traders cashing in on the recent strength of the markets. Traders were also looking ahead to the Federal Reserve's monetary policy announcement on Wednesday. Asian indices were trading mostly lower across the board in early deals after Wall Street sold off for a second consecutive day, although losses in the region were initially slighter than those seen stateside. Indian equity benchmarks ended lower on Tuesday, as traders opted to stay away of investing in risky assets ahead of upcoming budget, as this will be the last full year budget of the government before next year's Lok Sabha election. Today, the start is likely to be on the lower side, tracking weak global cues. Traders might remain on sidelines ahead of upcoming budget to be released on February 1, 2018. Though, traders may get some support with ratings agency Moody's statement that this recently introduced goods and services tax (GST) mechanism is still a work in progress that will ultimately result in formalisation of economy. It added that it was a necessary step to help banks and such reforms should continue. Meanwhile, Chief Economic Adviser (CEA) Arvind Subramanian argued that the estimated GDP growth for the next fiscal in the Economic Survey 2017-18 is based on the pre-assumed crude oil prices. Traders may also get some support with report that India has been ranked sixth in the list of wealthiest countries with total wealth of $8,230 billion, while the United States topped the chart. Stocks related to infrastructure, power and petroleum will be buzzing after a high powered committee headed by telecom secretary and consisting of secretary road transport and highways, power, petroleum and member (engineering) rail board has been formed to look into modalities of government to government sharing of infrastructure for setting up utilities such water pipes, telecom and power cables and national highways. There will be lots of important earnings announcements to keep the market buzzing for the day. 


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  • Hero MotoCorp has unveiled the all-new -- Xtreme 200R -- which will be available for sale across the company's dealerships in the country from April 2018.
  • HCL Technologies has entered into a global reseller agreement with SAP SE.
  • Maruti Suzuki India will invest Rs 4,000 crore in the next fiscal on capital expenditure.
  • NTPC has inked a pact with Jabalpur City Transport Service for setting up charging infrastructure for all segments of EVs across the city.
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