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NSE Intra-day chart (07 October 2020)
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Market Commentary 08 October 2020
Benchmarks to open in green amid positive global cues


Extending their gaining streak into the fifth session in a row, Indian equity benchmarks ended over half a percent higher on Wednesday, led by buying in consumer durables, energy and auto stocks. Markets made a cautious start, amid reports that workers in India are facing increased burnout due to lack of separation between work and personal life as well as concerns of contracting COVID-19. Close to one-third of workers in India cited increased rates of burnout over the past six months with the lack of separation between work duties and personal obligations as negatively impacting their well-being. However, key gauges soon gained ground and traded in fine fettle throughout the day, as traders found support with report that companies garnered more than Rs 1 lakh crore from the capital markets in August, a surge of 64 percent from the preceding month, with private placement of debt instruments emerging as the most preferred route for financing business needs. The funds have been mopped-up mainly for business expansion plans, loan repayments and working capital requirements. Domestic indices held on to their firm undertone in late afternoon trading, taking support from Fitch Ratings' report that IT services sector is likely to resume high single-digit revenue growth in 2021-2022 on the back of higher demand for digital transformation after a flattish 2020. However, further up-move got restricted as traders awaited corporate earnings from heavyweights and the outcome of a policy review by the RBI due in the coming days. The Reserve Bank of India's Monetary Policy Committee will to begin a three-day review later in the day. The central bank is widely expected to hold key interest rates at existing levels in the upcoming policy statement, due on October 9, in a bid to tackle high inflation. Tata Consultancy Services (TCS) - the country's largest IT company - will kick of the earnings season by reporting its financial results for the July-September period. Finally, the BSE Sensex rose 304.38 points or 0.77% to 39,878.95, while the CNX Nifty was up by 76.45 points or 0.66% to 11,738.85.


The US markets ended sharply higher on Wednesday after Trump indicated he would support individual stimulus measures after calling off negotiations over a broader relief package. He said the House & Senate should immediately Approve $25 Billion for Airline Payroll Support, & $135 Billion for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now. He added later that he will sign a Stand Alone Bill for Stimulus Checks ($1,200) the moment it is sent to him. They will go out to our great people immediately. Meanwhile, minutes of the Federal Reserve's September policy meeting showed senior Fed officials thought the US economy was recovering faster than expected, but many had penciled in another stimulus package before the end of this year. Without additional spending, Fed officials expected the recovery to slow more than anticipated. Besides, Technology stocks were in focus after the House Judiciary Antitrust, Commercial and Administrative Law Subcommittee issued a highly critical report on the business practices of industry juggernauts Amazon.com Inc., Apple Inc., Facebook Inc. and Google parent Alphabet Inc.


Crude oil futures ended lower on Wednesday as hopes about a new stimulus package faded after US President Donald Trump halted negotiations with Democrats, and data showed an increase in crude stockpiles last week. The Energy Information Administration reported that US crude inventories rose by 500,000 barrels for the week ended October 2. The American Petroleum Institute on Tuesday had reported a rise of 951,000 barrels. However, prices finished off the session's worst levels following reports that more than 80% of oil production in the Gulf of Mexico has been halted as a major hurricane approaches the region. Crude oil futures for November dropped 72 cents or 1.8 percent to settle at $39.95 a barrel on the New York Mercantile Exchange. December Brent crude fell 66 cents or 1.6 percent to settle at $41.99 a barrel on London's Intercontinental Exchange.


Erasing previous two sessions drubbing, Indian rupee ended stronger against dollar on Wednesday due to fresh selling of the American currency by banks and exporters. Sentiments were positive with the International Monetary Fund's (IMF) statement that the global economy has started on a long climb to stronger growth with prospects looking a little better than four months ago. Global economic activity suffered an unprecedented fall in the spring when 85 per cent of the global economy was in lockdown for several weeks. The situation currently is less dire with many countries experiencing a better-than-expected rebound in recent weeks. Besides, healthy gains in the domestic equity markets added to the rupee gains. On the global front; dollar steadied on Wednesday, ticking down against most currencies after an initial jump triggered by U.S. President Donald Trump cancelling stimulus talks with Democrat lawmakers, a move which increased demand for safe-haven assets. Finally, the rupee ended at 73.33, 13 paise stronger from its previous close of 73.46 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity, while net sellers in debt segment. In equity segment, the gross buying was of Rs 6003.58 crore against gross selling of Rs 4942.18 crore, while in the debt segment, the gross purchase was of Rs 335.74 crore with gross sales of Rs 623.59 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.03 crore against gross selling of Rs 13.03 crore.


The US markets ended sharply higher on Wednesday as investors regained optimism that at least a partial deal on more US fiscal stimulus may happen. Asian markets are trading mostly in green on Thursday tracking overnight gains on Wall Street. Indian markets ended higher on Wednesday led by gains in heavyweight Reliance Industries after it secured a $750 million investment in its retail arm. Today, the markets are likely to continue their winning streak with positive start following gains in Asian peers. Traders will be taking encouragement with the Union health ministry's statement that the number of people recovered from Covid-19 has exceeded those with active infection by more than 48 lakh as the recovery rate surpassed 85% on Wednesday. Some support will come with the chairman of the Standing Committee on Statistics, ministry of statistics and programme implementation Pranob Sen stating that the government should continue with the stimulus to revive the economy for three years and it should not be one off. Some optimism will also come in with Union Minister VK Singh's statement that highways and infrastructure can spur the country's economic growth. Traders may take note of Principal Economic Adviser Sanjeev Sanyal's statement that the government recognises the need for further stimulus at an appropriate time to perk up demand in the economy, hit by COVID-19. Meanwhile, there are expectations that the revamped Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) may at last release a GDP forecast for the fiscal, which the apex bank has refrained from giving since the outbreak of the pandemic. MSME stocks will be in focus as the RBI said the two per cent interest subvention scheme for micro, small and medium enterprises (MSMEs) on loans extended by co-operative banks has been extended till March 31 next year. There will be some reaction in pharma stocks with report that the initial response to the four schemes launched by the Department of Pharmaceuticals (DoP) for promoting domestic manufacturing of drugs, APIs/ KSMs and medical devices is quite encouraging.


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



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