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Market Commentary 01 February 2023
Benchmarks to make positive start ahead of Union Budget 2023


In a highly volatile day, Indian equity benchmarks erased all of their initial losses to end marginally higher on Tuesday led by gains in PSU, Utilities and Industrials stocks. After a positive opening, the markets came under selling pressure in the first half as investors resorted to profit-taking ahead of the Union Budget announcement. Also, the US Federal Reserve meeting on interest rate decision overnight tomorrow prompted investors to take selective bets with a cautious stance. Traders were concerned with the International Monetary Fund's (IMF) statement that it is expecting some slowdown in the Indian economy next fiscal year and projected the growth to 6.1 percent from 6.8 percent during the current fiscal ending March 31. Also, continuous foreign funds outflow played spoilsport for the markets. Foreign Institutional Investors (FIIs) offloaded shares worth Rs 6,792.80 crore on Monday, according to exchange data. However, a fag-end buying helped domestic markets stage turnaround in Tuesday's trade, after Finance minister Nirmala Sitharaman tabled Economic Survey 2023 in Lok Sabha. The 2022-23 Economic Survey said India is projected to grow at a baseline rate of 6.5 per cent and a range of 6-6.8 per cent in the coming 2023-24 (FY24) with the global macroeconomic slowdown being the key risk factor to the forecast. The baseline nominal GDP growth is forecasted at 11 percent. Growth is expected to be brisk in FY24 as a vigorous credit disbursal, and capital investment cycle is expected to unfold in India with the strengthening of the balance sheets of the corporate and banking sectors. Finally, the BSE Sensex rose 49.49 points or 0.08% to 59,549.90 and the CNX Nifty was up by 13.20 points or 0.07% to 17,662.15.


The US markets ended higher on Tuesday amid the Federal Reserve's key monetary meeting began. The Federal Reserve is widely expected to raise interest rates by 25 basis points (bps) at the conclusion of its two-day policy meeting on Wednesday. Investors will closely monitor comments from Fed Chair Jerome Powell following the announcement for clues on the path of monetary policy. On the economic data front, data from the Labor Department showed employment cost index wages in the U.S. increased by 1% on quarter in the fourth quarter of 2022, after rising 1.3% in the previous quarter. The S&P/Case-Shiller Home Price Index in the United States decreased 0.8% month-over-month in November of 2022, the same as in October and marking a fifth consecutive decline. A report from the Institute for Supply Management (ISM) said the Chicago PMI in the United States fell back to 44.3 points in January of 2023 from 44.9 in December and compared to market forecasts of 45. The reading pointed to a fifth consecutive month of contraction in business activity in the Chicago region. Meanwhile, the Conference Board's consumer confidence index came in with a score of 107.1 in January, after coming in at a revised 109.0 a month earlier. Stock specific development, General Motors soared more than 8 percent after the company reported a 14.8 percent in surge in fourth-quarter net profit.


Crude oil futures ended higher on Tuesday, drawing support from a weakening dollar and on data showing that demand for US crude and petroleum products rose in November. However, oil prices hovered around 3-week lows earlier in the day amid concerns about the outlook for energy demand and prospect of further interest rate hikes. The Federal Reserve is widely expected to raise interest rate by 25 basis points amid signs of cooling inflation. The accompanying statement and post meeting comments from Fed Chief Jerome Powell are in focus for clarity on future rate hikes. Benchmark crude oil futures for March delivery rose $0.97 or 1.3 percent at $78.87 a barrel on the New York Mercantile Exchange. Brent crude for April delivery gained $0.46 or 1 percent at $85.46 (Provisional) a barrel on London's Intercontinental Exchange.


Indian Rupee ended lower against the US dollar on Tuesday after the Economic Survey 2022-23 said the domestic unit may remain under pressure on account of plateauing of exports and subsequent widening of current account deficit. Traders overlooked International Monetary Fund's (IMF) statement that inflation in India is expected to come down from 6.8 percent in the current fiscal year ending March 31 to 5 percent the next fiscal, and then drop further to 4 percent in 2024. On the global front, dollar ticked higher on Tuesday ahead of a raft of central bank decisions but remained on track for its fourth consecutive monthly loss. The Federal Reserve will set interest rates on Wednesday, followed by the European Central Bank (ECB) and Bank of England (BoE) on Thursday. Finally, the rupee ended at 81.93 (Provisional), depreciate by 41 paise from its previous close of 81.52 on Monday.


The FIIs as per Tuesday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 12690.58 crore against gross selling of Rs 18383.43 crore, while in the debt segment, the gross purchase was of Rs 942.70 crore against gross selling of Rs 517.16 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.24 crore against gross selling of Rs 19.74 crore.


The US markets ended higher on Tuesday as labor cost data encouraged investors about the Federal Reserve's aggressive approach to taming inflation a day ahead of the central bank's critical policy decision. Asian markets are trading mostly in green on Wednesday following overnight rally on Wall Street. Indian markets recovered from an early slide to end on a positive note on Tuesday, as oil extended losses on demand concerns and the International Monetary Fund sounded bullish on India's growth prospects. Today, markets are likely to get optimistic start tracking firm global cues. Sentiments will get a boost as the government data showed that production of eight infrastructure sectors rose at a three-month high of 7.4 per cent in December 2022 against 4.1 per cent in the same month of previous year on a better show by coal, fertiliser, steel, and electricity segments. Traders will be taking encouragement as the finance ministry said the GST collection in January surged to over Rs 1.55 lakh crore, the second highest-ever mop-up. Some support will come as Federation of Indian Export Organisations (FIEO) said increasing exports to markets such as Brazil, South Africa and Saudi Arabia are boosting the growth of the country's outbound shipments. However, there may be some volatility in the markets ahead of the Union Budget 2023 to be presented by Finance Minister Nirmal Sitharaman. Her Budget speech will be tracked closely for key announcements on areas such as railway, defence, education, social welfare, GDP, fiscal deficit, inflation, disinvestment, income tax and COVID. Meanwhile, the finance ministry data showed that the government's fiscal deficit as of End-December touched 59.8 per cent of the full-year Budget Estimate on subdued growth in revenue collections. Moreover, investors will be eyeing manufacturing PMI data to be out later in the day. There will be some buzz in two-wheeler company's stocks with a private report that electric two-wheeler sales in the country are expected to grow to around 22 million by 2030 amid a demand for affordable transportation and the focus on reducing carbon emissions. Sugar stocks will be in focus as industry body ISMA said India's sugar production is estimated to fall 5 per cent during 2022-23 marketing year ending September to 340 lakh tonnes as more quantity of sugarcane juice is being diverted for production of ethanol. There will be some reaction in electronic goods company's stocks as industry body India Cellular and Electronics Association (ICEA) said electronic goods export is likely to grow by 36.8 per cent to cross Rs 1.6 lakh crore in the current fiscal, with mobile phone export accounting for nearly half of the total pie. Auto stocks will be in limelight reacting to their monthly sales numbers. Investors will continue to keep eye on earnings from some companies including Britannia, Siemens, Ashok Leyland, Jubilant Foodworks, Tata Chemicals, Ajanta Pharma later in the day.


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  • ITC has commissioned its Rs 450 crore state-of-the-art integrated food manufacturing and logistics facility at Medak, Telangana. 
  • Bharti Airtel has launched its cutting edge 5G services in Warangal and Karimnagar. 
  • Hero MotoCorp is betting big on the sporty 110 cc scooter segment as it looks to accelerate sales. 
  • IOC has started exports of aviation gasoline, the fuel that fires unmanned aerial vehicles and small planes -- turning a chapter in the nation's fuel history from being a net importer to an exporter.
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