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NSE Intra-day chart (05 August 2020)
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Market Commentary 06 August 2020
Markets likely to open in green ahead of RBI's monetary policy meeting outcome


Equity benchmark indices erased the stellar gains made at open and ended Wednesday's session on flat note, weighed down by blue-chips such as Reliance Industries (RIL), HDFC Bank and Power Grid. Initial rally was largely attributed to strong trend in Asian markets' indices and sustained foreign fund inflows. Traders also took encouragement with the Department of Economic Affairs in its monthly macroeconomic report stating the worst may now be over for India and the road ahead will take the economy back on the track. The sentiments remained up-beat with the Minister of State for Commerce and Industry Hardeep Singh Puri's statement that immediate review of the Association of Southeast Asian Nations (ASEAN)-India trade in goods agreement would help realise the true bilateral trade potential between India and the 10-member Southeast Asian bloc. He said it will also contribute to the realisation of 2020 trade target of $200 billion set by both parties. However, domestic stock markets lost momentum and turned highly volatile in afternoon session, as survey report showed India's service sector remained sluggish in the month of July, with substantial reductions in both activity and inflows of new work were recorded, as ongoing lockdown restrictions stifled demand and forced companies to cease operations. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index was at 34.2 in July from 33.7 in June. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - was at 37.2 in July from 37.8 in June. Some pessimism also came with ICRA's report where it mentioned that the securitisation volumes are estimated to significantly drop to Rs 1.2-1.3 lakh crore during the current fiscal due to the impact of COVID-19 and lower availability of eligible loan pools for securitisation. Finally, the BSE Sensex lost 24.58 points or 0.07% to 37,663.33, while the CNX Nifty was up by 6.40 points or 0.06% to 11,101.65.


The US markets settled higher on Wednesday, leaving the Nasdaq with its 31st record close this year, as investors embraced corporate earnings and service-sector data that surprised to the upside. Reports of some progress in Congress toward a fresh coronavirus relief package also offered some support for the bulls. reports suggested that, Trump administration officials and congressional Democratic leaders are working to reach a coronavirus aid bill deal by the end of the week even if the parties still remain far apart on the issues. As lawmakers wrangle over additional pandemic aid, House Speaker Nancy Pelosi said the Trump administration might be able to unilaterally extend the federal moratorium on tenant evictions put in place in March by the CARES Act that expired on July 25. Adding to the positive sentiment, a report from the Institute for Supply Management (ISM) showed an unexpected acceleration in the pace of growth in service sector activity in the month of July. The ISM said its non-manufacturing index inched up to 58.1 in July after spiking to 57.1 in June, with a reading above 50 indicating growth in service sector activity. Street had expected the index to drop to 55.0. Chair of the ISM Services Business Survey Committee Anthony Nieves said this reading represents growth in the services sector for the second straight month after contraction in April and May, preceded by a 122-month period of expansion. He added respondents remain concerned about the pandemic; however, they are mostly optimistic about business conditions and the economy as businesses continue to reopen.


Crude oil futures ended higher on Wednesday lifted by data showing a sharp drop in US crude inventories in the week ended July 31. The Energy Information Administration said US crude stocks fell by 7.4 million barrels last week, almost 2.5 times the expected decline. The American Petroleum Institute released a report on Tuesday showing an inventory draw of 8.587 million barrels in the week ended July 31. Further, optimism about US lawmakers agreeing on a coronavirus package and a weaker greenback also supported oil prices. Crude oil futures for September surged 49 cents or 1.2 percent to settle at $42.19 a barrel on the New York Mercantile Exchange. October Brent crude rose 74 cents or 1.7 percent to settle at $45.17 a barrel on London's Intercontinental Exchange.


Indian rupee ended stronger against dollar on Wednesday due to fresh selling of the American currency by banks and exporters. Sentiments were positive with Commerce and Industry Minister Piyush Goyal's statement that the country's exports have showed signs of significant improvement and reached almost the level of the corresponding month last year in July 2020. Some support also came with the Department of Economic Affairs' monthly macroeconomic report stating that the worst may now be over for India and the road ahead will take the economy back on the track. On the global front, dollar remained weak on Wednesday as a US coronavirus relief package stalled in Congress and US bond yields sank, with investors weighing prospects of further monetary easing to support the economy. Finally, the rupee ended at 74.94, 10 paise stronger from its previous close of 75.04 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity segment and debt segment both. In equity segment, the gross buying was of Rs 5450.77 crore against gross selling of Rs 4574.99 crore. In the debt segment, the gross purchase was of Rs 1211.71 crore with gross sales of Rs 1089.35 crore. In the hybrid segment, the gross buying was of Rs 2778.73 crore against gross selling of Rs 17.67 crore.


The US markets closed higher Wednesday, supported by hopes for progress toward another fiscal relief package in Congress and better than expected corporate earnings results. Asian markets are trading mostly in green in early deals on Thursday amid encouraging reports for a Covid-19 vaccine. Indian equity indices were volatile in trade before closing flat on Wednesday. Today, the markets are likely to get positive start following firm cues from global markets. Investors will be eyeing ahead of the Reserve Bank of India's (RBI) three-day monetary policy meeting outcome today. Traders will be taking encouragement with Director General of Foreign Trade Amit Yadav's statement that the Directorate General of Foreign Trade will realign itself along the lines of Prime Minister's Make in India and will push for production of items domestically to cut down imports. The organisation is focusing on creating more capacities within the country to produce items that can cut down imports and accelerate exports from the electronics and hardware sector, including ventilators. He also said that the government-run agency is also taking suggestions from the industry and others as to the areas which promise new capacities to reduce import and accelerate exports. Some support may come as the Department for Promotion of Industry and Internal Trade (DPIIT) said that it will rope in a consulting agency to scrutinise tenders of government procuring entities for compliance with public procurement regulations that aim at promoting 'Made in India' products. The DPIIT has floated a notice inviting request for proposal (RFP) from interested agencies. Meanwhile, state Bank of India Chairman Rajnish Kumar said the government and corporates must work together for a quick economic recovery. He added that investment in infrastructure, in particular, should be stepped up. There will be some buzz in stocks of Medical device industry as Medical Technology Association of India (MTaI) said Medical technology industry has suffered around 50-85 percent drop in revenue during April-June with a decline in surgical procedures at hospitals due to COVID-19 situation. There will be some reaction in stocks of Aluminium industry as the Aluminium Association of India (AAI) said that blocking of the online system for exporters to apply for tax incentives under the export incentive scheme MEIS has created an extremely precarious situation for aluminium exports. It added the move will further render exports vulnerable and uncompetitive. There will be lots of important earnings announcements too, to keep the markets in action.


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



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  • Bharti Airtel has entered into a multi-year, Strategic Collaboration Agreement with Amazon Web Services to deliver a comprehensive set of innovative cloud solutions in India.
  •  Maruti Suzuki India has launched all new S-Cross Petrol - The Refined SUV engineered with a powerful 1.5 Litre K series BS6 petrol engine.
  •  Axis Bank has set a floor price of Rs 442.19 per equity share for its proposed Rs 15,000 crore qualified institutional placement (QIP).
  •  Mahindra & Mahindra (M&M) is going to launch the new version of its SUV Thar on August 15. The all-new Thar will be a quantum leap in terms of technology, comfort, and safety features.
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