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NSE Intra-day chart (01 September 2021)
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Market Commentary 02 September 2021
Benchmarks likely to make cautious start amid mixed global cues


Indian equity benchmarks snapped their three-day record-breaking streak and ended in the negative territory on Wednesday as investors booked profit at record highs ahead of weekly expiry of index futures and option contracts. The benchmark Indices opened in green due to favourable GDP data. India's economy grew at a record 20.1 per cent year-on-year in April-June quarter, helped by a low base of the year-ago period coupled with improved manufacturing in spite of a devastating second wave of Covid-19 cases. Sentiments also remained positive as the government data stated that high tax collections due to tighter rules for the goods and services tax (GST), and an economy on the recovery path coupled with expenditure compression resulted in the Centre's fiscal deficit narrowing to 21.3 per cent of the Budget Estimates (BE) in the first four months of the current financial year. Adding more optimism, Moody's Investors Service said the economic activity in India is picking up with the gradual easing of COVID restrictions and there could be further upside to growth as economies around the world gradually reopen. However, domestic indices failed to hold onto its early gains and turned negative in late morning session, as traders got worried, after India's manufacturing sector activities moderated in August, as business orders and production rose at softer rates due to the pandemic and rising input costs. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 52.3 in August, down from 55.3 in July, indicating a softer rate of growth that was subdued and below its long-run average. Traders also remain concerned after private report stated that Asia's factory activity lost momentum in August as a resurgence in coronavirus cases disrupted supply chains across the region, raising concerns faltering manufacturing will add to economic woes caused by slumping consumption. Growth in India's factory sector activity also slowed as persistent pandemic-related weakness weighed on demand and output, forcing firms to cut jobs again following a brief recovery in July. Finally, the BSE Sensex fell 214.18 points or 0.37% to 57,338.21, while the CNX Nifty was down by 55.95 points or 0.33% to 17,076.25.


The US markets ended mostly higher on Wednesday with Nasdaq settling the session at a new record closing high. Sentiments got boost after a separate report from the Institute for Supply Management (ISM) showed manufacturing activity in the US unexpectedly grew at a slightly faster rate in the month of August. The ISM said its manufacturing PMI inched up to 59.9 in August from 59.5 in July, with a reading above 50 indicating growth in the sector. The uptick surprised participants, who had expected the index to dip to 58.6. The unexpected increase by the headline index came as the new orders index climbed to 66.7 in August from 64.9 in July and the production index rose to 60.0 from 58.4 in the previous month. Meanwhile, the report showed the employment index slid to 49.0 in August from 52.9 in July, indicating a modest contraction in employment in the manufacturing sector. Besides, construction spending in the US increased by slightly more than expected in the month of July, according to a report released by the Commerce Department. The report said construction spending rose by 0.3 percent to an annual rate of $1.569 trillion in July after edging down by less than a tenth of a percent to revised rate of $1.563 trillion in June. Street had expected construction spending to inch up by 0.2 percent compared to the 0.1 percent uptick originally reported for the previous month. Meanwhile, private sector employment in the U.S. increased by much less than expected in the month of August, according to a report released by payroll processor ADP. ADP said private sector employment climbed by 374,000 jobs in August after rising by a downwardly revised 326,000 jobs in July. Street had expected employment to jump by 613,000 jobs compared to the addition of 330,000 jobs originally reported for the previous month.


Crude oil futures ended marginally higher on Wednesday after data showed a drop in U.S. crude inventories in the week ended August 28. Data released by Energy Information Administration (EIA) showed U.S. oil stockpiles dropped by 7.169 million barrels last week, more than twice the expected drop of about 3.1 million barrels. A report from the American Petroleum Institute on Tuesday showed crude inventories dropped by 4.045 million barrels last week, as against expectations for a 2.833 million decline. Traders also noted that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, decided in a meeting today to stick to their earlier plan of boosting oil production by 400,000 barrels per day each month through December. Crude oil futures for October gained $0.09 or about 0.1 percent to settle $68.59 barrel on the New York Mercantile Exchange. However, November Brent crude fell $0.16 or about 0.22% percent to settle at $71.47 a barrel on London's Intercontinental Exchange.


Erasing previous session gains, Indian Rupee ended weaker against dollar on Wednesday, on account of sustained dollar demand from importers and banks. Sentiments got hit as India's manufacturing sector activities moderated in August, as business orders and production rose at softer rates due to the pandemic and rising input costs. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 52.3 in August, down from 55.3 in July, indicating a softer rate of growth that was subdued and below its long-run average. However, downfall remained capped as India's economy grew by 20.1 per cent in the first quarter of 2021-22, helped by a low base of the year-ago period. On the global front; sterling steadied on Wednesday close to two-week highs versus the dollar, with the pound taking its cue from other currencies given this week is light on data and Bank of England speakers. Finally, the rupee ended 73.08, weaker by 8 paise from its previous close of 73.00 on Tuesday.


The FIIs as per Wednesday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 21856.58 crore against gross selling of Rs 19043.57 crore, while in the debt segment, the gross purchase was of Rs 3093.75 crore against gross selling of Rs 1484.45 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.32 crore against gross selling of Rs 12.13 crore.


The US markets ended mostly higher on Wednesday as investors looked beyond weak economic data that weighed on the dollar to focus on the likely continuation of massive central bank stimulus measures. Asian markets are trading mixed on Thursday after Australia reported a higher-than-expected trade surplus in July. Indian markets once again soared higher on Wednesday to hit fresh all-time highs but failed to hold the gains and finished the day down in the red amid mixed global cues. Today, the start of session is likely to be cautious tracking mixed global cues. Also, adjustment to 100 per cent peak margin norms may add volatility. Some support will come as Goods and services tax (GST) collection moderated in August to Rs 1.12 trillion as against Rs 1.16 trillion in July, but exceeded the Rs 1-trillion mark for the second month as economic activity gained pace with a decline in Covid-19 cases. Traders may take note of report that the country received 24 per cent less than normal rainfall in August, a vast deviation from the IMD's predictions for the month, but latest forecasts say it is expected to be above normal in September. Meanwhile, the International Monetary Fund (IMF) has sharply increased its allocation of Special Drawing Rights (SDR) to India, in line with the country's existing quota in the fund. There will be some buzz in the metal stocks with a private report that Indian steel prices are at an all-time high of Rs 67,500/tonne, which is 5 per cent above their June quarter average. Spot aluminum price at $2,674/tonne is also 12 per cent higher than the June quarter average. Power stocks will be in focus as power ministry data showed that India's power consumption grew 18.6 per cent in August to 129.51 billion units (BU) and remained higher than the pre-COVID level due to improved economic activities amid easing of lockdown curbs by states. There will be some reaction in OMCs stocks as India's fuel demand recovery remained patchy in August as petrol consumption continued to rise but diesel sales fell, preliminary data from state fuel retailers showed.


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



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Nifty Top volumes





Previous close (Rs)

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Axis Bank





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