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NSE Intra-day chart (02 December 2020)
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Market Commentary 03 December 2020
Markets to get flat-to-positive start amid positive global cues


Indian equity benchmarks ended the volatile day of trade on quiet note on Wednesday, as traders remained on sidelines ahead of outcome of Reserve Bank of India's (RBI) December Policy Meet, schedule to take place from December 02 to December 04. Markets started the session on cautious note as sentiments remained downbeat with ICRA's latest report where it has said that debt resolution through the insolvency and bankruptcy code (IBC) and the resultant realisation for financial creditors has taken a hit so far this fiscal due to the pandemic that led to suspension of fresh proceedings. Markets extended losses in second half of the day amid reports that COVID-19 has drastically affected the investment climate in all economies of the world, causing a sharp decline in the demand and supply equilibrium everywhere. India has been no exception to this unprecedented economic shock. Yet, investment sentiment in the Indian economy has been buoyed by the frequent and active intervention of the Government of India despite being hit by a world-wide pandemic. However, markets witnessed recovery and markets regained almost all of their lost ground to end flat as traders took some support with report that the Organization for Economic Co-operation and Development (OECD) has raised prospects of India's economy by pegging contraction at 9.9 per cent, against 10.2 per cent it projected in September. Markets participants also took note of report that the gross Goods and Services Tax (GST) collection for November stood at Rs 1.04 lakh crore, 1.4 percent higher than the sum collected in the same month last year. Some relief also came with report that the Reserve Bank of India monetary policy committee is expected to leave interest rates unchanged when it meets on Friday, after data showing the economy contracting less than expected and persistently high inflation. Finally, the BSE Sensex slipped 37.40 points or 0.08% to 44,618.04, however the CNX Nifty was up by 4.70 points or 0.04% to 13,113.75.


The US markets ended mostly higher on Wednesday as traders remain optimistic about potential coronavirus vaccines. The UK has approved the vaccine candidate developed by Pfizer and BioNTech, with the vaccine expected to be rolled out next week. Meanwhile, traders also seemed optimism lawmakers in Washington will reach an agreement on a new fiscal stimulus bill as both parties issue new proposals. However, upside remained capped amid lingering concerns about the economic impact of the recent spike in new coronavirus cases.  Negative sentiment was also generated in reaction to a report from payroll processor ADP showing private sector employment in the US increased by less than expected in the month of November. ADP said private sector employment rose by 307,000 jobs in November after climbing by an upwardly revised 404,000 jobs in October. Street had expected employment to increase by 410,000 jobs compared to the addition of 365,000 jobs originally reported for the previous month. Meanwhile, economic growth in the US has been characterized as modest or moderate by most Federal Reserve districts, according to the Fed's Beige Book released. However, the Fed said four of the twelve districts described little or no growth, and five narratives noted that activity remained below pre-pandemic levels for at least some sectors. The central bank also cautioned that Philadelphia and three of the four Midwestern Districts observed that activity began to slow in early November as new coronavirus cases surged.


Crude oil futures ended higher on Wednesday as data showed a drop in US crude inventories in the week ended November 27. Data from Energy Information Administration (EIA) showed crude inventories in the US dropped by 0.679 million barrels last week. The EIA data also showed Distillate stockpiles were up 3.238 million barrels in the week, as against expectations for a 0.209 million barrel drop. Besides, positive updates on the vaccine front contributed as well to oil's uptick. The U.K. has approved the coronavirus vaccine developed by Pfizer and BioNTech. The vaccine is expected to be rolled out next week. Crude oil futures for January rose $0.73 or 1.6 percent to settle at $45.28 a barrel on the New York Mercantile Exchange. February Brent crude gained $0.78 or1.65 percent to settle at $48.20 a barrel on London's Intercontinental Exchange.


Indian rupee ended weaker against the US dollar on Wednesday, on increased demand for the greenback from importers and banks. Traders remain concerned as ICRA in its latest report has said that debt resolution through the insolvency and bankruptcy code (IBC) and the resultant realisation for financial creditors has taken a hit so far this fiscal due to the pandemic that led to suspension of fresh proceedings. Besides, losses in the local equity markets also dampened the sentiments. However, downfall remained capped as The Organization for Economic Co-operation and Development has raised prospects of India's economy by pegging contraction at 9.9%, against 10.2% it projected in September for the current financial year (FY21). On the global front; dollar rose from a two-and-a-half-year low on Wednesday as investors assessed the likelihood of further fiscal stimulus in the United States, while a rally in riskier currencies lost steam. Finally, the rupee ended at 73.81, 13 paise weaker from its previous close of 73.68 on Tuesday.


The FIIs as per Wednesday's data were net buyer in equity segment and net seller in debt segment. In equity segment, the gross buying was of Rs 12174.98 crore against gross selling of Rs 8637.31 crore, while in the debt segment, the gross purchase was of Rs 496.67 crore with gross sales of Rs 959.94 crore. Besides, in the hybrid segment, the gross buying was of Rs 24.86 crore against gross selling of Rs 38.58 crore.


The US markets ended mostly higher on Wednesday as investors weighed upbeat vaccine developments and a potential coronavirus fiscal package against a bleak private jobs report. Asian markets are trading mostly in green on Thursday as investors await the release of a private survey on China's services sector activity in November. Indian markets ended Wednesday's choppy session on a flat note as gains in metals and auto stocks were countered by losses in financials. Today, the markets are likely to get flat-to-positive start tracking positive global cues. Traders will be taking encouragement with Niti Aayog Vice Chairman Rajiv Kumar's statement that the Indian economy is coming out of the pandemic-induced degrowth and GDP growth will enter the positive territory in the fourth quarter of this fiscal. Some support will come as rating agency Moody's said the earnings of most Indian companies will grow in 2021 as demand starts to recover following a sharp slump, supporting deleveraging. Besides, a private report said that Indian businesses expect a quicker return to pre-COVID levels of profitability than most others, and are positive about international trade despite the ongoing protectionism. However, traders may be concerned with report that on Wednesday, India reported 33,761 fresh Covid-19 cases. Its case tally now stands at 9,533,471. The country's death toll has mounted to 138,657. There may be some cautiousness as Commerce Secretary Anup Wadhawan said the country's exports declined by 17.84 per cent during April-November this fiscal while imports contracted by 33.56 per cent in the same period. He said that the trade deficit has come down. Meanwhile, exporters has suggested to the government a series of steps, including extension of fiscal benefits to SEZ units, presumptive tax for cross-border e-commerce and free trade pacts with countries like the US and UK, to boost domestic manufacturing and outbound shipments. There will be some buzz in sugar industry stocks as industry body ISMA said India's sugar production jumped over two fold at 42.9 lakh tonnes during October-November owing to early start of mills this season. Tech stocks will be in focus after a California federal judge in the US struck down two of Donald Trump administration's recent rules meant to drastically curtail the number of visas issued to skilled foreign workers every year. There will be some reaction in infrastructure industry stocks with Union Minister Nitin Gadkari's statement that the government has taken multiple steps to attract investments in the infrastructure sector, including revising asset monetisation models and setting up special purpose vehicles for the Rs 1 lakh crore Delhi-Mumbai corridor project.


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