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NSE Intra-day chart (22 October 2020)
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Market Commentary 23 October 2020
Benchmarks likely to make flat-to-positive start amid positive global cues


Snapping four straight days of gains, Indian equity benchmarks settled in the red on Thursday as IT, banking and healthcare stocks declined amid weak cues from global markets. The benchmarks traded in a range-bound with a negative bias for most part of the day, as the International Monetary Fund (IMF) in its report on the Asia-Pacific region has slashed this year's economic forecast for Asia, reflecting a sharper-than-expected contraction in countries like India, a sign the coronavirus pandemic continues to take a heavy toll on the region. While the IMF upgraded next year's growth forecast, it warned the recovery will be sluggish and patchy with countries dependent on tourism seen taking a particularly hard hit. Some anxiety also came with a private report that the government expects the fiscal deficit to be close to 7 percent of GDP or thereabouts in the current financial year. The general deficit is unlikely to be lower than 11 percent, with the state government borrowings estimated at 4 percent levels. However, losses were limited as some support came with Reserve Bank Governor Shaktikanta Das' statement that the country is at the doorstep of economic revival on the back of accommodative monetary and fiscal policies being pursued by the central bank and the government. More stimulus hopes also added support to the markets. Some support also came with Economic Affairs Secretary Tarun Bajaj's statement that the government is open to further stimulus measures to boost the coronavirus-hit economy. Meanwhile, the Reserve Bank announced an on tap Targeted Long-Term Repo Operations (TLTRO) scheme of up to Rs 1 lakh crore to enable banks to provide liquidity support to a host of sectors, including agriculture, retail, drugs and pharmaceuticals and MSMEs. Finally, the BSE Sensex fell 148.82 points or 0.37% to 40,558.49, while the CNX Nifty was down by 41.20 points or 0.35% to 11,896.45.


The US markets ended higher on Thursday as House Speaker Nancy Pelosi indicated Democrats and the White House continue to make progress toward an agreement on a new stimulus bill. Pelosi said the two sides are just about there on certain provisions but noted they have not agreed on issues such as state and local aid. While Pelosi acknowledged it will take a while to write the bill, she said she believes both sides want to reach an agreement. The latest comments from Pelosi came after her deputy chief of staff Drew Hammill revealed the Speaker spoke with Treasury Secretary Steven Mnuchin again on Wednesday, saying the conversation brought the two sides closer to being able to put pen to paper to write legislation. Hammill said with the exchange of legislative language, we are better prepared to reach compromise on several priorities. Besides, Upbeat US economic data added to the positive, with a report from the Labor Department showing initial jobless claims came in well below street estimate in the week ended October 17th. The Labor Department said initial jobless claims fell to 787,000, a decrease of 55,000 from the previous week's revised level of 842,000. Street had expected jobless claims to drop to 860,000 from the 898,000 originally reported for the previous week. A separate report from the National Association of Realtors (NAR) showed existing home sales spiked by much more than anticipated in the month of September. NAR said existing home sales soared by 9.4 percent to an annual rate of 6.54 million in September after jumping by 2 percent to a revised rate of 5.98 million in August. Street had expected existing home sales to surge up by 5.0 percent to a rate of 6.30 million from the 6.00 million originally reported for the previous month.


Crude oil futures ended higher on Thursday as a fall in US weekly jobless claims to a new pandemic low and progress toward a fresh coronavirus aid package boosted prospects for energy demand. Oil prices also found support after Russia's President Vladimir Putin said his country has not ruled out delaying production increases by the Organization of the Petroleum Exporting Countries and their allies that are set to be implemented in January. The group of producers, collectively known as OPEC+, includes Russia. Crude oil futures for December gained 61 cents or 1.5 percent to settle at $40.64 a barrel on the New York Mercantile Exchange. December Brent crude rose 73 cents or 1.8 percent to settle at $42.46 a barrel on London's Intercontinental Exchange.


Indian rupee ended marginally higher against dollar on Thursday, on persistent selling of the American currency by exporters. Traders remained positive with Reserve Bank of India (RBI) Governor Shaktikanta Das's statement that Indian economy is nearing revival from the coronavirus disease (covid-19) pandemic. He also said that banks and non-banking financial companies (NBFCs) should have adequate capital in today's day and age when the country's economy is at the brink of revival. However, upside remain limited as United Nations Conference on Trade and Development (UNCTAD) has said that India's export growth saw a decline of 6.1 per cent in the third quarter of 2020 as compared to third quarter of last year. Though, it said that India recorded export growth of four per cent in September. On the global front, pound slipped slightly on Thursday, but held close to six-week highs it touched on the previous day after news that stalled Brexit negotiations were due to resume. Finally, the rupee ended at 73.54, 4 paise stronger from its previous close of 73.58 on Wednesday.


The FIIs as per Thursday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 8465.36 crore against gross selling of Rs 6350.78 crore, while in the debt segment, the gross purchase was of Rs 919.88 crore with gross sales of Rs 1053.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.96 crore against gross selling of Rs 12.79 crore.


The US markets ended in green on Thursday ahead of the US Presidential Debate. Asian markets are trading mostly higher on Friday after positive U.S. economic data and signs of progress in stimulus talks in Washington lifted Wall Street benchmarks. Indian markets snapped the four-day gaining streak and ended lower on Thursday due to the slip in pharma, IT and banking stocks. Today, the markets are likely to get flat-to-positive start amid gains in global peers coupled with hopes of economic revival. Investors will be taking some encouragement with NITI Aayog Vice Chairman Rajiv Kumar's statement that the Indian economy might end up with a lower contraction in the current fiscal than projected by various organisations and also stressed that the next stimulus should focus on short-gestation infrastructure projects. However, there may be some cautiousness as a private report stated that with no signs of reprieve from the pandemic in near future and economy yet to show major indications of a revival, India's consumer confidence has declined by 0.3 percentage points in October 2020. Traders may be concerned as India on Thursday recorded 54,482 cases, taking its tally to 7,759,640. Death toll rose to 117,336. Meanwhile, capital markets regulator Sebi COVID-19 pandemic, the watchdog, in March, came out with various measures, including revision of market wide position limit, to ensure orderly trading and settlement to contain high market volatility. Housing finance companies stocks will be in focus with a private report that housing sales in the December quarter likely to rise by 35 percent over the previous quarter boosted by festive demand amid reduced cost of acquisition. Besides, the Reserve Bank of India (RBI) has fixed the minimum Net Owned Fund (NOF) size for housing finance companies at Rs 25 crore. The housing finance companies (HFCs) holding a Certificate of Registration (CoR) and having an NOF of less than Rs 25 crore will be required to achieve NOF of Rs 15 crore by March 31, 2022 and Rs 25 crore by March 31, 2023. Pharma stocks will be in limelight with a private report that US regulators have approved the first drug to treat COVID-19: remdesivir, an antiviral medicine given through an IV for patients needing hospitalization. There will be some buzz in the e-commerce stocks with report that a buying spree among consumers during the current festive season has ushered in green shoots of recovery in the retail sector, which was severely affected due to the COVID-19 crisis, while e-commerce companies enjoy a higher pie of sales as people prefer online shopping now. There will be lots of earnings reaction based on the performance of the companies.


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



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  • Wipro has entered into an agreement with SAP SE to deliver SAP Enable Now. 
  • Reliance Industries' subsidiary company -- Reliance Retail Ventures has received the subscription amount of Rs 3,675 crore from General Atlantic Singapore RL. 
  • Dr. Reddy's Laboratories has isolated all data centre services following a cyber-attack. 
  • ONGC has won seven out of the 11 oil and gas exploration blocks offered for bidding in the latest licensing round.
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