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NSE Intra-day chart (01 September 2020)
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Market Commentary 02 September 2020
Benchmarks to make cautious start amid mixed Asian cues


Indian equity benchmarks managed to close higher with gains of over half percent each on Tuesday despite high volatility, led by buying pressure in telecom, metal and power stocks, amid positive global equities. After making cautious start, domestic bourses gained traction, as the Reserve Bank of India (RBI) announced a host of steps, including term repo operations totalling Rs 1 lakh crore in mid-September in order to ease pressure on the liquidity and maintain congenial financial conditions with a view to ensuring sustainable recovery of economic growth. However, markets soon turned highly volatile, as some anxiety remained among the local traders with report that India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. There was some cautiousness too with report that the output of eight core infrastructure industries tumbled by 9.6%, for the fifth consecutive month in July, due to the decline mostly in production of steel, refinery products and cement. But, local indices regained some traction to end higher, taking support from the survey report showing that  Indian manufacturing activity signalled growth in the month of August 2020, led by an improvement in customer demand as client businesses reopened, after lockdown restrictions eased amid the coronavirus disease 2019 (COVID-19). The Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - jumped to 52.0 in August as against 46.0 in July. A sharp appreciation in the rupee against the US dollar added to the momentum. Indian rupee settled at 72.87 against the US dollar, registering a surge of 73 paise over its previous close. Finally, the BSE Sensex gained 272.51 points or 0.71% to 38,900.80, while the CNX Nifty was up by 82.75 points or 0.73% to 11,470.25.


The US markets ended higher on Tuesday, with Nasdaq and S&P 500 closing at record highs as big tech and working-from-home shares drive gains. Sentiments got boosted as upbeat economic reports and dovish tones from the Fed helped feed the buying momentum on markets. Federal Reserve Governor Lael Brainard said the central bank should pivot to provide more support for US economic growth, presumably meaning the Fed could purchase more assets, such as US Treasury or privately issued debt. Meanwhile, Manufacturing activity in the US expanded at a faster rate in the month of August, the Institute for Supply Management (ISM) revealed in a report. The ISM said its purchasing managers index rose to 56.0 in August from 54.2 in July, with a reading above 50 indicating growth in manufacturing activity. Street had expected the index to inch up to 54.5. Besides, construction spending in the US saw a modest increase in the month of July, according to a report released by the Commerce Department. The report said construction spending inched up by 0.1 percent to an annual rate of $1.365 trillion in July after falling by 0.5 percent to a revised rate of $1.363 trillion in June. Street had expected construction spending to jump by 1.0 percent compared to the 0.7 percent drop originally reported for the previous month. The uptick in construction spending came as spending on private construction climbed 0.6 percent to an annual rate of $1.014 trillion. Spending on residential construction spiked 2.1 percent to a rate of $546.6 billion, while spending on non-residential construction slumped by 1.0 percent to a rate of $466.9 billion.


Crude oil futures ended higher on Tuesday as some economic data show signs of recovery, boosting prospects for energy demand. In the US, the Institute for Supply Management said its manufacturing index rose to 56% in August, up a fourth month in a row, from 54.2% in July. Meanwhile, energy production in the Gulf of Mexico region has seen significant recovery following Hurricane Laura last week. The Bureau of Safety and Environmental Enforcement estimated that about 28.4% of the current oil production in the Gulf of Mexico has been shut in, along with around 25% of natural-gas output. Crude oil futures for October rose 15 cents or 0.4 percent to settle at $42.76 a barrel on the New York Mercantile Exchange. November Brent crude gained 30 cents or 0.7 percent to settle at $45.58 a barrel on London's Intercontinental Exchange.


Reversing previous session drubbing, Indian rupee appreciated significantly against dollar on Tuesday, owing to dollar sale by exporters and banks and positive domestic equities. Traders took encouragement as India's Manufacturing Purchasing Managers' Index (PMI) for August has come in at 52, compared to 46 in July, signalling growth and rebound in production volumes for the first time in five months. For the first time since March, output expanded in the Indian manufacturing sector in August. Meanwhile, RBI announced new measures to maintain stability in the financial system, including two more tranches of special OMOs in its Operation Twist and some easing of held-to-maturity (HTM) limits for bond holdings by banks. On the global front; pound scaled new eight-month highs on Tuesday above $1.34 as broad-based dollar weakness deepened in the wake of the Federal Reserve's new policy framework that suggests U.S. interest rates will remain at record lows for the foreseeable future. Finally, the rupee ended at 72.87, 73 paise strong from its previous close of 73.60 on Monday.


The FIIs as per Tuesday's data were net sellers in both equity segment and debt segment. In equity segment, the gross buying was of Rs 17681.15 crore against gross selling of Rs 20039.09 crore, while in the debt segment, the gross purchase was of Rs 1129.59 crore with gross sales of Rs 1355.86 crore. Besides, in the hybrid segment, the gross buying was of Rs 2498.49 crore against gross selling of Rs 15.78 crore.


The US markets ended higher on Tuesday led by tech shares, as traders kicked off a historically tough month for the market on the right foot and built on Wall Street's best August performance since the 1980s. Asian markets are trading mostly in green on Wednesday following overnight gains on Wall Street. Indian markets ended higher on Tuesday led by gains in metals, pharma and FMCG stocks amid positive global cues. Today, the start of session is likely to be cautious amid mixed Asian cues. Traders will be concerned with the Finance Ministry's statement that the gross GST collection in August stood at Rs 86,449 crore, down from Rs 87,422 crore collected in July. There will be some cautiousness as Moody's Investors Service said India will be among the large emerging market sovereigns to have highest debt burden by 2021. Also, rising coronavirus cases is likely to dampen the sentiments in the markets. India has recorded over 68,000 new cases in the past 24 hours, taking its total caseload to 3,766,108. However, some respite may come later in the day with CII-IBA survey report stating that the financial conditions are looking up in the current quarter (Q2FY21) due to policy decisions and steps the government and Reserve Bank of India have taken to support economy. Traders may also take note of Union Minister of Commerce and Industry Piyush Goyal's statement that the whole package of the US-India trade deal is almost ready and it can be finalised when the local political situation in the United States is conducive. Aviation stocks will be in focus with airlines body -- International Air Transport Association's (IATA) statement that global air passenger traffic was 79.8 percent less in July this year compared to the corresponding period a year ago. There will be some reaction in power stocks with report that the slump in overall power consumption has narrowed to just 0.85 percent in August at 110.57 billion units (BU) amid considerable rise in economic activities and raised hopes that it would surpass normal level this month. Also, auto stocks will also be in action reacting to their monthly sales numbers.


Support and Resistance: NSE (Nifty) and BSE (Sensex)



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  • L&T has completed the strategic divestment of its Electrical & Automation business to Schneider Electric. 
  • Maruti Suzuki India has reported total sales of 124,624 units in August 2020, as compared 106,413 units in August 2019, registering rise of 17.1%. 
  • M&M's FES has reported domestic sales of 23,503 units in August 2020, as against 13,871 units during August 2019. 
  • Bharti Infratel's board has decided to proceed with the scheme for a merger with Indus Towers.
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