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NSE Intra-day chart (03 November 2022)
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Market Commentary 04 November 2022
Benchmarks likely to make cautious start amid weak global cues


Indian equity benchmarks ended in red for second straight session on Thursday weighed by weak global sentiment as the US Fed raised interest rates by another 75 basis points. Key gauges made a negative start as traders got anxious after an IMF official said that the Asia Pacific region is facing three main risks, including due to global financial tightening and a slowdown in China. Shanaka Jayanath Peiris, Division Chief of Regional Studies Division, Asia Pacific Department at the IMF, also said that currencies in the region have depreciated sharply while public debt ratios have increased. However, markets reversed opening losses and were trading flat with a positive bias in morning deals, after a private survey showed that activity in India's dominant services industry gathered pace in October despite high inflationary pressures, underpinned by robust domestic demand, leading to the second fastest hiring pace in over three years. The S&P Global India services Purchasing Managers' Index (INPMIS=ECI) edged up to 55.1 in October from September's six-month low of 54.3, above the 50-mark that separates expansion from contraction for a fifteenth month. But, buying proved short-lived as the benchmarks eventually slipped back into red, and ended with a minor losses as participants were keenly watching out for the Reserve Bank of India's monetary policy committee (MPC) meet to be scheduled later in the day. However, losses were limited as some optimism remained among traders with PHD Chamber of Commerce and Industry (PHDCCI) stating that deceleration in the wholesale price index (WPI) inflation will continue and it will have a significant impact on the price corrections in the retail inflation; Consumer Price Index (CPI) inflation is expected to soften below 6 per cent by December 2022. It mentioned calibrated steps by the government and RBI would be crucial to bring down inflation in the targeted trajectory along with maintaining economic growth at around 7 per cent in the current financial year 2022-23. Traders also took a note of report that Governor Shaktikanta Das has said the Reserve Bank of India wishes to concentrate on inflation in the same way as Arjuna focussed on hitting the eye of a revolving fish in the epic Mahabharata. Finally, the BSE Sensex fell 69.68 points or 0.11% to 60,836.41 and the CNX Nifty was down by 30.15 points or 0.17% to 18,052.70.


The US markets ended lower on Thursday, magnifying their previous session's losses, as slowing growth and rising interest rates dampened investors sentiment. The fourth straight 75-basis point interest rate hike by the Federal Reserve, and comments from the central bank Chair Jerome Powell that signaled more interest rate hikes in the coming months rendered the mood bearish. Meanwhile, investors also digested the latest batch of economic data and looked ahead to the crucial non-farm payroll data, due on Friday. Stock specific development, Apple Inc was down more than 3 percent. Visa, American Express, Home Depot, Walt Disney and Cisco Systems are down 2 to 2.5 percent. Amazon Inc ended lower by 3 percent, Alphabet dropped about 4 percent, and Meta Platforms drifted down 1.8 percent. On the economic data front, data from the Commerce Department showed the US trade gap widened to a three-month high of $73.3 billion in September, up from a downwardly revised $65.7 billion in August. Exports were down 1.1 percent at $258 million, while imports increased by 1.5 percent to $331.3 million in the month. Data released by the Labor Department showed jobless claims fell by 1,000 to 217,000 in the week ended October 27th. Data from Markit Economics showed the S&P Global US Composite PMI was revised higher to 48.2 in October 2022 from a preliminary estimate of 47.3, compared with September's 49.5.


Crude oil futures ended lower on Thursday on concerns about the outlook for energy demand after China imposed fresh restrictions in several places following a surge in coronavirus cases in the country. China affirmed that a zero-tolerance approach continues to be the overall strategy in tackling Covid-19. Further, the dollar's sharp uptick following hawkish comments from the Federal Reserve weighed as well on crude oil prices. Benchmark crude oil futures for December delivery fell $1.83 or about 2 percent at $88.17 a barrel on the New York Mercantile Exchange. Brent crude for January delivery dropped $1.40 or about 1.47 percent to settle at $94.76 (Provisional) a barrel on London's Intercontinental Exchange.    


Indian rupee tumbled against dollar on Thursday after the US Federal Reserve raised interest rates and maintained a hawkish stance. Traders were concerned after Shanaka Jayanath Peiris, Division Chief of Regional Studies Division, Asia Pacific Department at the IMF said that the Asia Pacific region is facing three main risks, including due to global financial tightening and a slowdown in China. Peiris also said that currencies in the region have depreciated sharply while public debt ratios have increased. Besides, Reserve Bank of India's monetary policy committee (MPC) meet to be scheduled later in the day. On the global front, Sterling slid against the dollar on Thursday after the Federal Reserve jacked up interest rates again, and as traders awaited the latest decision from the Bank of England (BoE). The greenback rose along with U.S. bond yields after Fed Chair Jerome Powell signalled that interest rates were likely to have to rise higher than expected to crush inflation. Finally, the rupee ended at 82.90 (Provisional), weaker by 10 paisa from its previous close of 82.80 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 7615.22 crore against gross selling of Rs 6223.59 crore, while in the debt segment, the gross purchase was of Rs 41.64 crore against gross selling of Rs 435.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 45.21 crore against gross selling of Rs 36.51 crore.


The US markets ended lower on Thursday as Treasury yields again rose to multiyear highs amid investors looked ahead to a closely watched job market report from the government that could influence the Federal Reserve's next move in its fight to bring down inflation. Asian markets were trading mostly in red on Friday on concerns over the outlook for interest rates. Indian benchmarks ended in red on Thursday as traders were cautious after US central bank Federal Reserve continued raising key interest rates in its fight against the multi-decade high inflation. Today, markets are likely to make cautious start amid weak global cues. However, some support may come later in the day as Finance Minister Nirmala Sitharaman said India offers policy stability, transparency and consultative process of governance to incubate investment. The sentiment may also get some boost as Prime Minister Narendra Modi said loans worth Rs 20 lakh crore have been disbursed so far under the Centre's MUDRA scheme to provide self-employment opportunities to the youth, and added that Maharashtra was one of its major beneficiaries. Meanwhile, External Affairs Ministry Spokesperson Arindam Bagchi said India is working sincerely with the UK for finalisation of the proposed free trade agreement, after Prime Minister Narendra Modi and his British counterpart Rishi Sunak agreed on the early conclusion of the deal. Traders may take note of report that the Reserve Bank‘s rate setting panel met on Thursday to discuss and draft a report for the government on why it failed to keep retail inflation below the target of 6 per cent for three consecutive quarters since January this year. It was the first time since the monetary policy framework came into effect in 2016 that RBI had to give an explanation to the government. Reserve Bank of India governor Shaktikanta Das sought to allay concerns that the Monetary Policy Committee's explanation to the government on breaching of the inflation target would not be made public. Das asserted the RBI was not authorised to reveal the contents because this was privileged information, but transparency would not be compromised as the contents of the letter would be made known at some point. There will some buzz in coal related stocks as the Union Ministry of Coal launched a new round of coal mine auction for commercial purposes with the largest-ever basket of 141 mines. Of this, 71 are new mines, 62 from earlier tranches of commercial auctions, and eight being offered as a second attempt of the last round of commercial auctions that did not receive bids.


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