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NSE Intra-day chart (31 January 2024)
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Market Commentary 01 February 2024
Markets to get flat-to-positive start ahead of Interim Budget presentation

Bulls made a comeback over the Dalal Street on Wednesday, with both Sensex and Nifty ending notably higher, ahead to the Federal Reserve's rate decision later in the day and the interim budget tomorrow. The start of the day was in red, as foreign fund outflows dented sentiments. The provisional data from the NSE showed that foreign institutional investors (FIIs) net sold shares worth Rs 1,970.52 crore on January 30. However, markets soon gained traction, as traders got support after the International Monetary Fund (IMF) raised India's growth projection for 2024-25 (FY25) by 20 basis points (bps) to 6.5 per cent in its World Economic Outlook (WEO) update, citing buoyant domestic spending and improved global growth prospects. Firm trade continued in equity markets during the second half of the trading session, aided by heavy buying at Healthcare, Realty and Auto counters along with positive cues from the European markets. Sentiments also remained optimistic, after Union Minister Jitendra Singh said that India will emerge as the world's third largest economy in Narendra Modi's third term as Prime Minister. He said the country has great stakes in the return of the Government headed by PM Modi in order to continue the upward trend in Bharat's growth story. The street took a note of report stating that the government is considering tweaking production linked incentive (PLI) schemes for certain sectors including textiles, food processing, and pharmaceuticals. Finally, the BSE Sensex rose 612.21 points or 0.86% to 71,752.11 and the CNX Nifty was up by 203.60 points or 0.95% to 21,725.70.

The US markets ended lower on Wednesday with Nasdaq settling cut of over two percent following the Federal Reserve's highly anticipated monetary policy announcement. The Fed announced its widely expected decision to maintain the target range for the federal funds rate at 5.25 to 5.50 percent in support of its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run. The decision to leave rates unchanged came as the Fed acknowledged inflation has eased over the past year but said it remains elevated. The central bank also described economic growth as solid while noting job gains have moderated since early last year but remain strong. The Fed's statement notably removed the reference to any additional policy firming that may be appropriate. However, the Fed also said it does not expect it will be appropriate to lower rates until it has gained greater confidence that inflation is moving sustainably toward 2 percent. Fed Chair Jerome Powell said he doesn't think it's likely the central bank will reach that level of confidence by the time of the March meeting. Besides, a steep drop by shares of Alphabet (GOOGL) weighed on the tech sector, with the Google parent tumbling by 7.6 percent. Alphabet came under pressure after reporting fourth quarter results that beat estimates on the top and bottom lines but weaker than expected ad revenue.

Crude oil futures ended lower on Wednesday on concerns about the outlook for demand after data showed another contraction in Chinese manufacturing activity. Further, oil prices also fell as data from U.S. Energy Information Administration (EIA) showed crude oil inventories in the U.S. increased by 1.2 million barrels last week (January 26). Gasoline stockpiles increased by 1.2 million barrels last week, while distillate stockpiles dropped by 2.5 million barrels in the week. Benchmark crude oil futures for March delivery dropped $1.97 or 2.5% to settle at $75.85 a barrel on the New York Mercantile Exchange. Brent crude for March delivery fell $1.16 or 1.4% to $81.71 per barrel on London's Intercontinental Exchange.  

Indian rupee ended higher against the dollar on Wednesday supported by a firm trend in domestic equities. Traders got support after the International Monetary Fund (IMF) raised India's growth projection for 2024-25 (FY25) by 20 basis points (bps) to 6.5 per cent in its World Economic Outlook (WEO) update, citing buoyant domestic spending and improved global growth prospects. On the global front, dollar was edging higher on Wednesday and headed for its biggest monthly gain since September, while the yen was set for its sharpest monthly drop in almost a year, as traders waited on a U.S. rates decision to round out January. Finally, the rupee ended at 83.04 (Provisional), stronger by 6 paise from its previous close of 83.10 on Tuesday.

The FIIs as per Wednesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 14446.61 crore against gross selling of Rs 16261.26 crore, while in the debt segment, the gross purchase was of Rs 3205.16 crore with gross sales of Rs 698.61 crore. Besides, in the hybrid segment, the gross buying was of Rs 15.40 crore against gross selling of Rs 18.42 crore.

The US markets ended significantly lower on Wednesday after the US Federal Reserve, as expected, left interest rates unchanged, but indicated it would not cut rates until inflation was moving sustainably towards its 2 per cent target. Asian markets are trading mostly in red on Thursday as the US Fed pushed against near-term rate cuts. Indian markets ended with strong gains on Wednesday on account on value buying. Today, the start of the session is likely to be flat-to-positive ahead of the Interim Budget presentation. Investor's focus will be on the Budget even though it is a vote on account. Finance Minister Nirmala Sitharaman is all set to announce her sixth Budget today, which will be an Interim Budget as India is scheduled to hold its Lok Sabha elections later this year. Traders to take some encouragement as Prime Minister Narendra Modi said the interim Budget to be presented in Parliament will have some guiding points for the country's economic growth trajectory. Foreign fund inflows likely to aid sentiments. Provisional data from the NSE showed that foreign institutional investors (FIIs) net bought shares worth Rs 1,660.72 crore on January 31. Some support will come as Goods and services tax (GST) collections hit the second highest monthly figure ever at over Rs 1.72 trillion in January, growing by 10.4 per cent over Rs 1.56 trillion from the same month in the previous year. These GST figures were till 5 pm of January 31, and final collection for the month would be higher. Traders may take note of a labour ministry statement that retail inflation for industrial workers eased marginally to 4.91 per cent in December from 4.98 per cent in November 2023, mainly due to lower prices of certain food items. Besides, the Controller General of Accounts (CGA) data showed that the fiscal deficit touched 55 per cent (Rs 9.8 trillion) of the full-year target for the April-December period of FY24. The fiscal deficit was marginally lower at Rs 9.9 trillion, recorded during the corresponding period last year. Moreover, the Reserve Bank of India's (RBI) Digital Payments Index, a measure of the extent of digitisation of payments across the country, increased to 418.77 in September 2023 from 395.57 in March 2023. However, there may be some volatility in the markets amid weekly F&O expiry. Traders may be concerned as the Ministry of Commerce and Industry data showed that India's core sector output growth hit a 14-month low of 3.8 per cent year-on-year in December on the back of a high base and a moderation in the growth of six constituent sectors. This was sharply down from 7.9 per cent witnessed in the previous month. Meanwhile, Adani Enterprises, Adani Ports, Dr Lal Pathlabs, Texmaco Rail, Ather India, Bata, Aavas Financiers, Abbott India and Aditya Birla Capital, among others to report their Q3 results later in the day.

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