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Market Commentary 01 January 2021
Markets to start the New Year on positive note


Indian equity benchmarks concluded last trading session of calendar year (CY) 2020 on a flat note, as investors tracked news related to Covid-19 vaccines rollout across the globe for further bets. For most part of the day, benchmarks traded in a choppy manner, as future and option contracts for the month of December expired. Traders remained cautious with Finance ministry in its latest quarterly report on public debt management has said that total liabilities of the government increased to Rs 107.04 lakh crore at end of Q2 (July- September) of FY21 from Rs 101.3 lakh crore at end of Q1 (April-June) of FY21. This represented a quarter-on-quarter increase of 5.6 percent in Q2 FY21. Some anxiety also came with data showing that India's current account surplus moderated to $15.5 billion (2.4 per cent of Gross Domestic Product) in quarter ended September 2020 (Q2FY21) from $19.2 billion (3.8 per cent of GDP) in (Q1FY21). The current account balance was in deficit to the tune of $7.6 billion in Q2 of 2019-20 (1.1 per cent of GDP). However, traders found some support with report that President Vladimir Putin expressed hope that next year Russia and India would continue to work towards stepping up constructive bilateral cooperation as well as coordinating efforts to address topical issues on the regional and global agendas. Traders also took note of report that Federation of Indian Exports Organisations (FIEO) President Sharad Kumar Saraf stated that the country's exports may reach $290 billion by the end of this fiscal (FY21) as the outbound shipments were hit hard by the COVID-19 pandemic during the first half of the year. He also said that 2021 would bring a ray of hope and optimism for the exporting community. Meanwhile, the commerce ministry has said that an import monitoring system (IMS) is being developed for several sectors, including aluminium, copper, footwear, furniture, sports goods, and gym equipment. The system would help gather advanced information on imports of these products and make it available to the stakeholders, including government and domestic industries. The system is already in place for steel and coal. Finally, the BSE Sensex rose 5.11 points or 0.01% to 47,751.33, while the CNX Nifty was down by 0.20 points to 13,981.75.


The US markets ended higher on Thursday as traders looked to give their portfolio a boost going into the end of the year. Traders seemed reluctant to make significant moves for much of the session, with some likely looking to get a head start on New Year's Eve celebrations. The gains on the day capped off a strong year for US stocks, which moved sharply higher for 2020 despite the ongoing coronavirus pandemic. For the year, the Dow jumped by 7.3 percent and the S&P 500 surged up by 16.3 percent, while the tech-heavy Nasdaq skyrocketed 43.6 percent. The substantial gain by the Nasdaq came as tech stocks benefited from the stay-at-home orders issued in response to the spread of the deadly coronavirus. On the economic data front, the Labor Department released a report unexpectedly showing a modest drop in first-time claims for US unemployment benefits in the week ended December 26th. The Labor Department said initial jobless claims edged down to 787,000, a decrease of 19,000 from the previous week's revised level of 806,000. The dip surprised participants, who had expected jobless claims to rise to 833,000 from the 803,000 originally reported for the previous month.


Crude oil futures ended higher on Thursday despite concerns about the outlook for energy demand due to imposition of restrictions on movements in several countries amid a surge in coronavirus cases. In the US, daily new case rate crossed the 200,000 mark for the second consecutive day. With nearly 230,000 new cases reporting across the country in the last 24 hours, the total number of patients infected with the disease increased to over 19,744,700. Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia, are scheduled to meet on January 4 to discuss policy and to consider a possible tapering of production cuts. Crude oil futures for February rose $0.12 or 0.3 percent to settle at $48.52 a barrel on the New York Mercantile Exchange. March Brent crude gained $0.17 or 0.3 percent to settle at $51.80 a barrel on London's Intercontinental Exchange.


Continuing gaining momentum, Indian rupee ended stronger against dollar on Thursday supported by sustained foreign fund inflows and weakness of the American currency in the overseas market. Sentiments were upbeat with Federation of Indian Exports Organisations (FIEO) President Sharad Kumar Saraf's statement that the country's exports may reach $290 billion by the end of this fiscal (FY21) as the outbound shipments were hit hard by the COVID-19 pandemic during the first half of the year. Traders ignored Finance ministry's latest quarterly report on public debt management stating that the total liabilities of the government increased to Rs 107.04 lakh crore at end of Q2 (July- September) of FY21 from Rs 101.3 lakh crore at end of Q1 (April-June) of FY21. On the global front; dollar was ending 2020 in a downward spiral on Thursday with investors wagering a global economic recovery will suck money into riskier assets even as the U.S. has to borrow ever more to fund its swelling twin deficits. Finally, the rupee ended at 73.07, 24 paise stronger from its previous close of 73.31 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 5386.06 crore against gross selling of Rs 3623.35 crore, while in the debt segment, the gross purchase was of Rs 803.00 crore with gross sales of Rs 963.72 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.48 crore against gross selling of Rs 23.73 crore.


The US markets ended higher as rollout of coronavirus vaccines have bolstered expectations that the economy will quickly rebound from the pandemic. Most of the Asian markets are closed on Friday on account of the New Year holiday. Indian equity markets ended last trading day of Calendar Year 2020 on a flat note. Today, the start of the New Year is likely to be positive. Traders will be getting some encouragement with NITI Aayog Vice-Chairman Rajiv Kumar stating that India's economy will grow at 10 per cent in real terms and by the end of next year it will reach pre-COVID-19 level. Talking about the farmers' protest against the three agriculture laws, the NITI Aayog Vice Chairman said the government is trying its best to get their understanding and that they are not misguided and their doubts are cleared. Some support may also come on report that foreign direct investment (FDI) equity inflows into India grew 21 per cent to USD 35.33 billion during April-October period of the current financial year. In the year-ago period, FDI equity inflows stood at USD 29.31 billion. Meanwhile, retail inflation for industrial workers eased to 5.27 per cent in November compared to 5.91 per cent in October, mainly due to lower prices of certain food items. However, traders will remain concern on report that contracting for the ninth consecutive month, the output of eight core infrastructure sectors dropped by 2.6 per cent in November, mainly due to decline in production of natural gas, refinery products, steel and cement. The production of eight core sectors had recorded a growth of 0.7 per cent in November 2019. Meanwhile, India's federal fiscal deficit in the eight months to the end of November stood at 10.75 trillion rupees, or 135.1% of the budgeted target for the whole fiscal year. Net tax receipts were 6.88 trillion rupees, while total expenditure came to 19.06 trillion rupees.


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  • Tata Steel has installed a state-of-the-art Long Pipe Conveyor (LPC) at its opencast coal mines at West Bokaro Division.
  •  Larsen & Toubro's construction arm -- L&T construction has secured orders from prestigious clients for two of its businesses.
  •  The Mahindra Group has published the findings of the Mahindra Good Business Study, outlining revealing people's changing definition of what a Good Business actually means.
  •  Reliance Industries' telecom arm -- Reliance Jio Infocomm (Jio) has declared that all calls from its network to other networks anywhere in India will be free from January 1, 2021.
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