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NSE Intra-day chart (05 October 2020)
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Market Commentary 06 October 2020
Markets to get optimistic start amid rally in global peers


Rising for the third straight session, Indian equity benchmarks ended Monday's session with gains of over half a percent each, propelled by IT, TECK and Metal counters amid positive cues from Asian markets. Key gauges started the session on a high note, as traders got encouragement with Finance Ministry's report that important structural reforms undertaken by the government to combat risks associated with the coronavirus pandemic will strengthen the country's economic fundamentals and ensure long-term sustained growth. Additional support also came with a report stated that the CEOs of top 115 companies who met at CII's National Council earlier this week indicated a revival of business sentiment and a gradual rise in expected corporate performance in a poll, raising hopes that a steady recovery of India's economy is on the anvil. However, domestic indices gave up most of initial gains to come off intraday high point in late afternoon session, as traders turned anxious with report that snapping their three-month buying spree, overseas investors turned net sellers in Indian markets in September due to uncertainty ahead of the US presidential polls and surging coronavirus cases. Some concern also came as the National Bank for Agriculture and Rural Development (Nabard) in its latest data report has showed that regional rural banks (RRBs) as a group reported net loss of Rs 2,206 crore in the fiscal year ended March 31, 2020 (FY20), as against Rs 652 crore net loss in FY19. Finally, the BSE Sensex rose 276.65 points or 0.71% to 38,973.70, while the CNX Nifty was up by 86.40 points or 0.76% to 11,503.35.


The US markets ended higher on Monday amid positive reports about President Donald Trump's health after he was rushed to Walter Reed hospital on Friday. Trump said he is getting great reports from the doctors regarding his battle with the coronavirus. He said Monday afternoon that he would be discharged from Walter Reed National Military Medical Center, following a three-night stay. A key driver for US stocks was hope that experimental drugs used to treat Trump for COVID-19 might become more widely available to the public during the pandemic than expected. Buying interest was also generated following the release of a report from the Institute for Supply Management (ISM) showing activity in the US service sector unexpectedly grew at a faster rate in the month of September. The ISM said its services PMI rose inched up 57.8 in September from 56.9 in August, with a reading above 50 indicating growth in the service sector. Street had expected the index to edge down to 56.3. The unexpected uptick by the headline was partly due to an acceleration in the pace of growth in new orders, as the new orders index jumped to 61.5 in September from 56.8 in August. The report also showed a turnaround in employment in the service sector, with the employment index climbing to 51.8 in September from 47.9 in August. Meanwhile, the report showed a slowdown in the pace of price growth in the sector, as the prices index slumped to 59.0 in September from 64.2 in August.


Crude oil futures ended sharply higher on Monday as optimism surrounding President Donald Trump's COVID-19 treatments fueled risk-on sentiment. Traders also weighed prospects for another round of stimulus in the US and monitored a strike that is curtailing crude output in Norway. An escalation in strike among offshore workers in Norway that resulted in the shutting down of six Norwegian offshore oil and gas fields pushed up oil prices. According to the Norwegian Oil and Gas Association (NOG), the strike will likely cut Norway's total output capacity by over 330,000 barrels of oil equivalent per day, or about 8% of total production. Crude oil futures for November rose $2.17 or 5.9 percent to settle at $39.22 a barrel on the New York Mercantile Exchange. December Brent crude surged $2.02 or 5.1 percent to settle at $41.29 a barrel on London's Intercontinental Exchange.


Indian rupee ended weaker against dollar on Monday with fresh dollar demand by banks and importers. Sentiments were downbeat despite India's merchandise exports snapped six-month losing streak and grew by 5.27 percent to $27.4 billion in September 2020 as compared to $ 26.02 billion in the same month a year ago. Trade deficit, gap between imports and exports, narrowed to $2.91 billion in September 2020 from $11.67 billion a year ago. However, healthy gains in domestic equity markets capped some downfall in rupee. Meanwhile, SEBI has come out with a framework to monitor foreign holding in depository receipts (DRs). It said the broad operational guidelines have been put in place based on discussions with market participants. On the global front; Sterling fell against the euro on Monday as traders were expecting the Britain and the European Union to meet the transition deadline and soon conclude a Brexit deal. Finally, the rupee ended at 73.29, 16 paise weaker from its previous close of 73.13 on Thursday.


The FIIs as per Monday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 4738.36 crore against gross selling of Rs 2876.34 crore, while in the debt segment, the gross purchase was of Rs 928.75 crore with gross sales of Rs 2710.53 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.90 crore against gross selling of Rs 5.13 crore.


The US markets ended sharply higher on Monday as investors viewed more fiscal stimulus as likely and after reports that President Donald Trump will leave the hospital where he is being treated for coronavirus. Asian markets are trading in green on Tuesday following overnight gains on Wall Street. Indian markets ended higher with notable gains on Monday, mainly lifted by information technology (IT) stocks and private sector lenders such as HDFC Bank, and ICICI Bank. Today, the start of session is likely to be positive mirroring rally in global peers. Investors will track the Market Services PMI data for September scheduled to be released later in the day. traders will be taking encouragement with Commerce Minister Piyush Goyal's statement Indian exports will automatically increase if the products are good and competitively priced and that products are entrepreneurs should not think that subsidies are the only solution. Some support will come with India on Monday registered a sharp drop of 59,773 in the number of new Covid-19 cases, taking the tally to 6,681,953. Traders may take note of the IMF's statement that public investment should play a central role in the recovery of both emerging and advanced economies from the coronavirus downturn. Meanwhile, Markets regulator Sebi has revamped the product labelling on mutual fund schemes under the risk-o-meter by introducing very high risk category to warn investors. There will be some buzz in the logistic stocks as ICRA said the near-term growth of the Covid-19-battered logistics sector is expected to be driven by specific segments like e-commerce. Banks and financial services related stocks are likely to be in focus. The government appointed Ashima Goyal, Jayanth R Varma and Shashanka Bhide as members of the rate-setting Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI). The monetary policy review scheduled last week was cancelled as term of previous members of MPC had expired. There will be some reaction in fertiliser industry related stocks with ratings agency Icra's report that the decline in domestic gas prices is likely to benefit urea producers as it will lower the cost of production and reduce the requirement of subsidy.


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