NSE Intra-day chart (26 August 2019)
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Market Commentary 27 August 2019
Benchmarks to make a positive start on firm global cues


Indian equity benchmarks logged strong gains on Monday, with both the larger peers, Sensex and Nifty, closing higher by over 2%. After a positive start, markets slipped in red terrain for a small period, as Moody's Investors Service in its latest report revised downwards India's Gross domestic product (GDP) growth forecast to 6.2% for 2019 calendar year. The GDP growth forecast for current year was revised downwards from its previous estimation of 6.8%. But soon, key indices gained traction, aided by Finance Minister Nirmala Sitharaman's statement the India's Gross Domestic Product continues to grow at a faster pace than the global economy and any other major economy. She said reform is a continuous process for her government and it tops the agenda. Bulls hold their grip on markets in the second half of the session, as the Reserve Bank of India (RBI) Governor Shaktikanta Das said that the RBI will continue to unlock entrepreneurial energies and set the country firmly on track to become $5 trillion economy in the next five years. Adding more confident among traders, former president Pranab Mukherjee said the government's ambitious target of becoming a $ 5 trillion economy by 2024-25 is possible through prudent fiscal management. Some support also came with industry body, Confederation of Indian Industry's (CII) statement that the multi-sectoral and multi-dimensional policy stimulus announced by the government will have significant impact, imparting stability and underpinning a new growth impetus for India. Finally, the BSE Sensex gained 792.96 points or 2.16% to 37,494.12, while the CNX Nifty was up by 228.50 points or 2.11% to 11,057.85.


The US markets ended higher with gains of over one percent on Monday after President Donald Trump said China wants to return to the negotiating table, in the wake of another round of tariffs announced Friday by Beijing and Washington. Trump said at the G-7 summit in France that top Chinese officials had called asking for the resumption of trade talks. He added they have been hurt very badly, but they understand this is the right thing to do. And I have great respect for it. This is a very positive development for the world. However, Chinese Foreign Ministry spokesman Geng Shuang said he was not aware of any call between US and Chinese officials and Trump refused to provide details. Besides, Trump announced after the market's close Friday that the US would raise tariffs on $250 billion worth of Chinese goods to 30% from 25%, while tariffs on $300 billion in imports from China would go to 15% from 10%. On the economic data front, reflecting a continued spike in orders for transportation equipment, the Commerce Department released a report showing new orders for US durable goods jumped much more than expected in the month of July. The report said durable goods orders surged up by 2.1 percent in July following a downwardly revised 1.8 percent increase in June. Street had expected orders to climb by 1.1 percent compared to the 1.9 percent jump that had been reported for the previous month. The much stronger than expected growth came as orders for transportation equipment spiked by 7.0 percent in July after surging up by 4.1 percent in June. Orders for transportation equipment plunged by 7.5 percent in May. Orders for non-defense aircraft and parts and defense aircraft and parts soared by 47.8 percent and 34.4 percent, respectively. Dow Jones Industrial Average surged 269.93 points or 1.05 percent to 25898.83, Nasdaq gained 101.97 points or 1.32 percent to 7853.73 and S&P 500 was up by 31.27 points or 1.10 percent to 2878.38.


Crude oil futures ended lower on Monday on speculation that oil supply from Iran could rise weighed on crude prices. According to reports, French President Emmanuel Macron announced that preparations were on for a meeting between Iranian President Hassan Rouhani and US President Donald Trump in the coming weeks to find a solution to a nuclear standoff. However, downside remained capped as President Trump said that US officials had received calls from Chinese negotiators and that the two sides would return to the table. Benchmark crude oil futures for October dropped 53 cents or 1 percent to settle at $53.64 a barrel on the New York Mercantile Exchange. October Brent declined 64 cents or 1.1 percent to settle at $58.70 a barrel on London's Intercontinental Exchange.


Indian rupee ended considerably weaker against the US dollar on Monday, due to strong dollar demand from banks. Market participants also remained worried on report that Moody's Investors Service revised downwards India's GDP growth forecast for the current year to 6.2%, saying the economy remains sluggish due to a combination of factors such as weak hiring, distress among rural households and tighter financial conditions. Traders failed to take support with CII's statement that the multi-sectoral and multi-dimensional policy stimulus announced last week will have significant impact, imparting stability and underpinning a new growth impetus for India. On the global front, China's currency on Monday slid to its lowest point in more than 11 years as concerns over the US trade war and the potential for global recession weighed on markets.  Finally, the rupee ended at 72.02, 36 paise weaker from its previous close of 71.66 on Friday.


The FIIs as per Monday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4342.20 crore against gross selling of Rs 6171.00 crore, while in the debt segment, the gross purchase was of Rs 431.32 crore with gross sales of Rs 1597.66 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.48 crore against gross selling of Rs 6.58 crore.


The US markets ended higher on Monday after President Trump said China wants to reach a trade agreement, signaling a potential de-escalation in tensions between the world's two largest economies. Asian markets are trading in green on Tuesday amid easing signs of Sino-US trade dispute. Indian markets ended with solid gains of over 2 percent each on Monday after government rolled back the enhanced surcharge on foreign portfolio investors and unveiled a slew of measures to boost the economy. Today, the markets are likely to make a positive start mirroring firm cues from global markets. Traders will be taking encouragement with Chief Economic Advisor Krishnamurthy Subramanian's statement that the ongoing trade war between the United States of America and China will not have any impact on Indian export which is just below 2 per cent of the global trade. He also said that the slew of measures announced by the Centre for the revival of muted growth in the economy was in the right direction, though it was necessary to focus on the structural reforms. Some support will also come as the Reserve Bank of India (RBI) decided to transfer a record Rs 1,23,414 crore of its surplus to the central government for the fiscal year 2018-19 or FY19 (July to June), and an additional Rs 52,637 crore of excess provisions as recommended by the Bimal Jalan committee on Economic Capital Framework (ECF). Traders may take note of Ficci Economic Outlook Survey stating that India's economy will grow at a median rate of 6% during the Q1FY20. Also, it pegged the annual median GDP growth forecast for 2019-20 at 6.9%, with a minimum and maximum estimate of 6.7% and 7.2%, respectively. Meanwhile, the finance ministry has said the last date for filing annual GST returns has been extended by three months to November 30 as taxpayers were facing technical problems in furnishing returns. Earlier, GST taxpayers were to file required returns by August 31. There will be some buzz in the banking stocks with rating agency Moody's statement that the government's announcement of an upfront capital infusion of Rs 70,000 crore in public sector banks (PSBs) will enable them to grow loans by around 13-15% in the fiscal year ending March 2020 and will also allow them to meet the final Basel III capital requirements. There will be some reaction in steel stocks with ICRA's report that the demand for steel in India could grow at the slowest pace in three years as an economic slowdown in the global industry's bright spot deepens. Oil and gas sector stocks will be in focus as Petroleum minister Dharmendra Pradhan said that the country's oil and gas sector is at present seeing investments worth around Rs 5 trillion in exploration, distribution, marketing, regasification, pipeline network laying.


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  • ITC is expecting its stationery business to get back to double-digit growth from December after dropping to single digit in the last six months.  
  • Tata Motors' wholly owned subsidiary -- JLR has opened its new 3S retailer facility in Pune with Ace Perkins. 
  • Maruti Suzuki is looking at CNG option to fill in the space vacated by small diesel engine cars in future. 
  • HDFC Bank is feeling the consumption story is still on and will keep growing the unsecured lending business going forward.
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