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NSE Intra-day chart (17 December 2020)
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Market Commentary 18 December 2020
Benchmarks likely to make positive start on Friday


Indian equity benchmarks ended at record closing highs yet again on Thursday, tracking gains in index majors HDFC, Bajaj Finance, HDFC Bank and Indusind Bank. Markets made slightly positive start, as traders took some support with Commerce and Industry Minister Piyush Goyal's statement that the government is making efforts to deregulate the economy with an aim to attract greater investments from across the world. He said the government has opened up defence, manufacturing, mining, finance and capital market sectors. Buying further crept in as SBI Research scaled up its projections for the economy, projecting gross domestic product (GDP) to contract 7.4 per cent during the current financial year compared to its earlier forecast of a 10.9 per cent fall. Key indices added more gains in the late afternoon session, taking support from Former RBI Governor D Subbarao's statement that while managing a crisis is extremely difficult and the Reserve Bank of India (RBI) had been successful in preserving the financial stability of the economy during the present coronavirus disease (covid-19) pandemic. Some respite also came as a study by the World Economic Forum showed that few economies in the world are ready for long-term prosperity through improved public services, green investments and digitization. The special edition of the WEF's Global Competitiveness Report, which examined how the recovery from the COVID-19 crisis can build productive, sustainable and inclusive economic systems, found that the countries with advanced digital economies, strong social safety nets and robust healthcare systems have managed the impact of the pandemic more effectively. Finally, the BSE Sensex rose 223.88 points or 0.48% to 46,890.34, while the CNX Nifty was up by 58.00 points or 0.42% to 13,740.70.


The US markets ended higher on Thursday amid positive developments on the stimulus front, with lawmakers signaling progress toward an agreement on a new relief package. Following a meeting with other congressional leaders, Senate Majority Leader Mitch McConnell, R-Ken., said the talks have made major headway toward hammering out a targeted pandemic relief package that would be able to pass both chambers with bipartisan majorities. Senate Minority Leader Chuck Schumer, D-N.Y., agreed that the two sides are close to an agreement' but cautioned that it's not a done deal yet. The positive sentiment was partly offset by a report from the Labor Department showing an unexpected increase in first-time claims for US unemployment benefits in the week ended December 12th. The report said initial jobless claims rose to 885,000, an increase of 23,000 from the previous week's revised level of 862,000. The continued increase surprised participants, who had expected jobless claims to drop to 800,000 from the 853,000 originally reported for the previous week. With the unexpected increase, jobless claims climbed to their highest level since hitting 893,000 in the week ended September 5th. However, while the data has raised concerns about the outlook for the labor market, it could also put further pressure on lawmakers to reach an agreement on a stimulus bill.


Crude oil futures ended higher on Thursday, extending their previous sessions' gains, on optimism about a coronavirus relief package in the US and the rollout of vaccines contributed to oil's uptick. Recent data from the Energy Information Administration (EIA) showing a sharp drop in US crude inventories last week also supported oil prices. The Federal Reserve vowed to continue bond-buying until substantial economic progress is made in inflation and the labor market. Crude oil futures for January gained $0.54 or 1.1 percent to settle at $48.36 a barrel on the New York Mercantile Exchange. February Brent crude rose $0.40 or 0.8 percent to settle at $51.48 a barrel on London's Intercontinental Exchange.


Indian rupee ended tad weaker against dollar on Thursday due to fresh selling of the American currency by banks and exporters. Traders were concerned with a report released by the United Nations Development Programme (UNDP) showing that India dropped one spot to 131 among 189 countries in the 2020 human development index. Human Development Index is the measure of a nation's health, education, and standards of living. However, downfall remain capped as SBI Research latest report has scaled up its projections for the economy, projecting gross domestic product (GDP) to contract 7.4 per cent during the current financial year (FY21) compared to its earlier forecast of a 10.9 per cent fall. On the global front; dollar fell to its lowest in more than two years against the British pound and euro on Thursday after the Federal Reserve stuck to its current policy while hopes for more US stimulus and a post-Brexit trade deal boosted risk appetite. Finally, the rupee ended at 73.59, 1 paise weaker from its previous close of 73.58 on Wednesday.


The FIIs as per Thursday's data were net buyer in equity segment, white net seller in debt segment. In equity segment, the gross buying was of Rs 8074.47 crore against gross selling of Rs 6058.04 crore, while in the debt segment, the gross purchase was of Rs 325.27 crore with gross sales of Rs 683.24 crore. Besides, in the hybrid segment, the gross buying was of Rs 13.11 crore against gross selling of Rs 27.75 crore.


The US markets ended higher on Thursday as investors grew more optimistic about a coronavirus stimulus bill, helping markets look past signs of economic strain brought on by the COVID-19 pandemic. Asian markets are trading mixed on Friday as the investor mood in the region shifted to broader caution about the economic outlook and as post-Brexit worries weighed. Indian markets ended nearly record highs on Thursday led by gains in heavyweights HDFC twins, RIL, and Bajaj Finance. Today, the domestic indices are likely to continue record hitting spree with positive start tracking overnight gains on Wall Street. Traders will be taking encouragement as the Reserve Bank of India will conduct the third auction of state developments loans (SDLs) aggregating Rs 10,000 crore under the Open Market Operations (OMO) on December 23. The RBI had decided to conduct OMOs in SDLs as a special case during the current financial year with an aim to improve liquidity and facilitate efficient pricing. Some support will come as Icra pegged the contraction in the economy at 7.8 per cent for 2020-21. Before the GDP numbers for Q2 were out, it had predicted the fall in the economy at 11 per cent. It said improving economic fundamentals, a bright outlook for the rabi season, and the visibility of vaccine availability are expected to strengthen demand. Also, as per a report, CBDT has said further adding to the recovery signals, advance tax payment by companies has shown a massive 49 per cent growth to Rs 1,09,506 crore in the third quarter this fiscal. Traders may take note of Finance minister Nirmala Sitharaman's statement that strong decisions taken by the Modi government have ensured steady flow of foreign direct investment (FDI) into the country which is far greater than what comparable economies have attracted during the pandemic. However, there may be some cautiousness as India reported 26,762 fresh Covid-19 cases pushing the overall tally to 9,977,834, according to Worldometer. The death toll from the deadly infection jumped to 144,829. There will be some reaction in gas and infrastructure stocks with Petroleum Minister Dharmendra Pradhan's statement that the government has planned a $60-billion investment for creating gas infrastructure in the country till 2024, and gas' share in the energy mix is expected to rise to 15 per cent by 2030.


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