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NSE Intra-day chart (21 February 2024)
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Market Commentary 22 February 2024
Benchmarks likely to get gap-up opening on Thursday

Indian equity benchmarks snapped 6-days winning run and ended lower by over half a percent on Wednesday amid fag-end selling triggered by a rush for profit booking and mixed global cues. Markets made a positive start and remained range-bound for most part of the day, as traders took support with the Finance Ministry in its latest the Monthly Economic Review report stating that the outlook for the country's economy appears bright with Gross Domestic Product (GDP) likely to clock 7 per cent growth rate next fiscal (FY25) although the nation needs to keep a watch on global headwinds emanating from geopolitical tensions and volatility in international financial markets. Key gauges soon turned volatile but managed to keep their heads above water in late morning deals, taking support from a report that retail inflation for farm workers and rural labourers eased marginally to 7.52 per cent and 7.37 per cent in January as compared to the previous month, mainly due to lower prices of certain food items. However, equity markets erased initial gains and fell sharply lower in fag-end, as traders turned cautious with provisional data from the NSE showing that foreign institutional investors (FIIs) net sold shares worth Rs 1,335.51 crore on February 20. Traders overlooked the latest payroll data released by the Employees' Provident Fund Organisation (EPFO) showing that the labour market recovered slightly in December as fresh formal job creation hit a three-month high. As per the data, in December 2023, the number of new monthly subscribers under the Employees' Provident Fund (EPF) increased by nearly 10 per cent to 840,584 in December from 762,513 in November. Traders also paid no heed towards the Reserve Bank of India's (RBI) latest Bulletin stating that fresh round of capital expenditure by the corporate sector is likely to fuel the next leg of growth. It stressed that stable and low inflation at 4 per cent provides the bedrock for sustaining GDP expansion. Finally, the BSE Sensex fell 434.31 points or 0.59% to 72,623.09 and the CNX Nifty was down by 141.90 points or 0.64% to 22,055.05.

The US markets ended mostly higher on Wednesday despite the minutes of the Federal Reserve's latest monetary policy meeting revealed most officials remain wary of cutting interest rates too quickly. The minutes of the late-January meeting said participants acknowledged risks to achieving the Fed's employment and inflation goals were moving into better balance, but they remained highly attentive to inflation risks. The Fed said in particular, they saw upside risks to inflation as having diminished but noted that inflation was still above the Committee's longer-run goal. Most participants subsequently highlighted the risks of moving too quickly to lower interest rates and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to the Fed's 2 percent target. On the sectoral front, despite the late-day recovery by the broader markets, networking stocks continued to see substantial weakness, dragging the NYSE Arca Networking Index down by 3.0 percent to its lowest closing level in over two months. Palto Alto Networks (PANW) led the sector lower, with the cybersecurity company plummeting by 28.4 percent after reporting better than expected fiscal second quarter results but lowering its forecast for full-year revenue growth. Computer hardware and software stocks also saw considerable weakness on the day, contributing to the lower closing by the tech-heavy Nasdaq. In the stock specific development, Shares of Nvidia have skyrocketed this year amid optimism about demand for its AI chips, but traders are wary of whether its results will support further upside.

Crude oil futures ended higher on Wednesday as concerns about supply disruptions due to the tensions in the Middle East outweighed weak outlook for demand. Due to continued attacks on commercial vehicles in the Red Sea route, tankers have been diverting to longer routes. Houthi rebels have reportedly said ships in the Red Sea and Arabian Sea are their latest maritime targets. With no immediate possibility of a ceasefire between Israel and Hamas, it is uncertain when the vessels will start using their normal routes again. Benchmark crude oil futures for April delivery rose $0.87 or 1.1% to settle at $77.91 a barrel on the New York Mercantile Exchange. Brent crude for April delivery surged $0.69 or 0.84% to $83.03 per barrel on London's Intercontinental Exchange.

Indian rupee ended higher against the dollar on Wednesday. Traders got encouragement as economists in the Finance Ministry said with the stable downward movement in core inflation and moderation in food prices, the outlook for a reasonably low headline inflation rate is good. They said the outlook for the Indian economy appears bright with GDP likely to grow by 7% next financial year beginning April 1 from an estimated 7.3% in the current financial year. Some support also came in with report that retail inflation for farm workers and rural labourers eased marginally to 7.52 per cent and 7.37 per cent in January as compared to the previous month, mainly due to lower prices of certain food items. On the global front, dollar fell broadly on Wednesday as it tracked a global decline in bond yields, while sterling struggled to retain gains following dovish comments from Bank of England (BoE) Governor Andrew Bailey on the central bank's rate outlook. Finally, the rupee ended at 82.96 (Provisional), stronger by 1 paisa from its previous close of 82.97 on Tuesday.

The FIIs as per Wednesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 15007.68 crore against gross selling of Rs 12034.18 crore, while in the debt segment, the gross purchase was of Rs 2402.28 crore with gross sales of Rs 563.33 crore. Besides, in the hybrid segment, the gross buying was of Rs 173.24 crore against gross selling of Rs 147.73 crore.

The US markets ended mostly in green on Wednesday after Fed FOMC minutes reiterated that the officials will be in no hurry to start cutting rates, while signaling a likely peak in the tightening cycle. Asian markets are trading mixed on Thursday amid largely positive session on Wall Street overnight. Indian markets ended the range-bound trade sharply lower on Wednesday due to fag-end selling in IT, financial, and pharma shares. Today, markets are likely to get gap-up opening with Japan's Nikkei hitting record highs. Sentiments will get a boost as the country's G20 Sherpa Amitabh Kant said India will be the third largest economy by 2027 and it needs to grow at rapid rates to become a $35 trillion economy by 2047. Kant further said that India needs to grow at 9-10 per cent year after year for the next three decades. Besides, a study by Nasscom showed that India's digital public infrastructure (DPIs) has the potential to drive the gross domestic product (GDP) growth by three times till 2030. The report titled -- India's Digital Public Infrastructure - Accelerating India's Digital Inclusion -- says that the economic value added by DPIs could potentially increase to around 4.2 per cent of GDP by 2030, up from 0.9 per cent in 2022. However, upside may get hurt as the US 10-year bond yield continued to quote around 4.3 per cent level. Brent Crude Oil futures were also more or less unmoved around $83 per barrel level. Traders may be concerned as a research report by CRISIL Market Intelligence and Analytics showed that financial conditions have tightened the economy with liquidity going into a deeper deficit putting upward pressure on short-term rates. The report released during the month also said that foreign portfolio investors turned net sellers further aggravating the tight liquidity conditions. Some cautiousness may come as credit rating agency ICRA said India's Gross Domestic Product (GDP) growth is projected to moderate sequentially to 6 per cent year-on-year (YoY) in the third quarter of FY24 as against 7.6 per cent in Q2. Sugar stocks will be in focus as the Cabinet Committee on Economic Affairs approved a hike in the Fair and Remunerative Price (FRP) of sugarcane to Rs 340 per quintal from Rs 315 per quintal for the 2024-25 (October-September) season. The Rs 25-per-quintal increase in the FRP of sugarcane is significantly higher than what was announced last year, when the government had raised it by Rs 10 per quintal to Rs 315.

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  • Wipro has expended collaboration with Intel Foundry to accelerate chip design innovation.
  • ONGC has received an in-principle approval for formation of JV companies either by the company or through its subsidiary (ies)/ associates to set up and operate 15 CBG Plants, subject to requisite approval(s).
  • TCS has expanded its partnership with The Co-operative Group to adopt a cloud first strategy that will support the group's business growth.
  • UltraTech Cement has commissioned a 1.8 mtpa brownfield cement capacity at Kotputli, Rajasthan.

News Analysis