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Market Commentary 08 December 2022
Benchmarks to get cautious start amid lackluster global cues


Indian equity benchmarks traded lackluster for yet another session on Wednesday due to losses in Utilities, Realty and Consumer Durables stocks amid weak global cues. After making cautious start, key gauges trade marginally in green as traders took some support with Fitch Ratings' report in which it has retained India's economic growth forecast at 7 per cent for the current fiscal, saying India could be one of the fastest-growing emerging markets this year. Some support also came as the World Bank in its India Development Update said the central government is on track to meet its fiscal deficit target of 6.4 per cent of the GDP for 2022-23 on the back of strong growth in revenue collections. High nominal GDP growth in the first quarter supported strong growth in revenue collection, especially Goods and Services Tax (GST), despite tax cuts on fuel. However, markets failed to hold gains and slipped into red terrain in late morning deals, as investors booked profits post the rate hike by the RBI governor. The Reserve Bank of India (RBI) has increased the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points to 6.25 per cent with immediate. Meanwhile, it also announced a mild reduction in the GDP growth forecast for the current financial year to 6.8 per cent from 7 per cent earlier. It said that while the growth forecast had been reduced, India would still be among the fastest-growing major economies. Some concern also came as Niti Aayog has raised objections to certain provisions pertaining to the proposed DESH bill, which seeks to replace the existing law for special economic zones. In the Union Budget 2022-23, the government had proposed to replace the existing law governing Special Economic Zones (SEZs) with a new legislation to enable states to become partners in Development of Enterprise and Service Hubs (DESH). Finally, the BSE Sensex fell 215.68 points or 0.34% to 62,410.68 and the CNX Nifty was down by 82.25 points or 0.44% to 18,560.50.


The US markets ended mostly lower on Wednesday as traders expressed uncertainty about the near-term outlook for the markets ahead of next week's Federal Reserve meeting. The Fed still seems poised to slow the pace of interest rate hikes, but recent upbeat economic data has raised concerns about how much further the central bank will raise rates at future meetings. The recent selling on markets partly reflects worries the Fed will be need to push the economy into a prolonged recession in order to bring inflation down close to its 2 percent target. On the sectoral front, reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves in afternoon trading. Airline stocks showed a substantial move to the downside, however, dragging the NYSE Arca Airline Index down by 3.1 percent to its lowest closing level in a month. Considerable weakness also emerged among oil service stocks, as reflected by the 2.3 percent slump by the Philadelphia Oil Service Index. Steel, networking and brokerage stocks also moved to the downside, although selling pressure was somewhat subdued. On the economic data front, revised data released by the Labor Department on Wednesday showed U.S. labor productivity increased by much more than initially estimated in the third quarter. The Labor Department said labor productivity climbed by 0.8 percent in the third quarter compared to the previously reported 0.3 percent uptick. Street had expected productivity growth to be upwardly revised to 0.5 percent. The upward revision to labor productivity, a measure of output per hour, came as the spike in output was upwardly revised to 3.3 percent from 2.8 percent, while the jump in hours worked was upwardly revised to 2.5 percent from 2.4 percent.


Crude oil futures ended lower on Wednesday, magnifying recent losses, as Energy Information Administration (EIA) in its data showed a sharp increase in gasoline inventories in the week ended December 2nd. Gasoline inventories rose by 5.320 million barrels in the week, beating expectations for a build of 2.707 million barrels. Recession worries also hurt markets after top U.S. banks warned of a recession in 2023 and China reported weak trade balance figures for November. However, Data from Energy Information Administration showed crude inventories fell by 5.187 million barrels last week versus an expected decline of about 3.305 million barrels. Benchmark crude oil futures for January delivery fell $2.24 or 3 percent at $72.01 a barrel on the New York Mercantile Exchange. Brent crude for February delivery dropped $2.18 or 2.8 percent to settle at $77.11 a barrel on London's Intercontinental Exchange.


Indian rupee strengthened against the dollar on Wednesday after Reserve Bank of India (RBI) has increased the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points to 6.25 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 6.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent. Besides, RBI Governor said it decided to add a new feature in its Unified Payments Interface (UPI) platform where the delivery of service or goods happens later such as e-commerce purchases, hotel bookings or investments in equities. On the global front, dollar was little changed on Wednesday after some of the biggest U.S. banks warned of an impending recession, while China's yuan firmed as authorities loosened some of the country's zero-COVID rules. Finally, the rupee ended at 82.47 (Provisional), stronger by 3 paise from its previous close of 82.50 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 7088.27 crore against gross selling of Rs 7345.28 crore, while in the debt segment, the gross purchase was of Rs 889.79 crore against gross selling of Rs 444.37 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.55 crore against gross selling of Rs 5.85 crore.


The US markets ended mostly in red on Wednesday as investors struggled to grasp a clear direction as they weighed how the Federal Reserve's monetary policy tightening might feed through into corporate America. Asian markets are trading mostly lower on Thursday with recession fears weighing on continued negative sentiment. Indian markets ended modestly lower on Wednesday as the Reserve Bank of India (RBI) raised its benchmark interest rates for the fifth consecutive meeting. Today, domestic indices are likely to get cautious start amid lackluster cues from global markets. The Gujarat and Himachal Pradesh assembly election results will be the key triggers for the equity markets today. Traders will be concerned with a private report stating that India's GDP growth may slow down sharply to 5.1 percent in 2023-24 and force the Reserve Bank of India (RBI) to cut the key repo rate by 75 basis points (bps) in the second half of 2023. Besides, foreign fund outflow likely to dent sentiments. Foreign institutional investors (FIIs) net sold shares worth Rs 1,241.87 crore on December 7, as per provisional data available on the NSE. However, traders may be taking encouragement with a private report that robust GST collections will help achieve the FY23 revenue growth target on the indirect taxes front, despite the impact of duty cuts on central excise and customs mop-up. Some support may come as the government extended export benefits under the tax refund scheme -- RoDTEP -- to chemicals, pharmaceuticals and products of iron and steel for a specified period with a view to boost shipments of these goods, amidst exports growth recording a contraction of 16.65 per cent in October. Traders may take note of report that the government is working on ways to contain surge in imports of non-essential goods with an aim to boost the country's exports and reduce trade deficit. Power stocks will be in focus as Union minister R K Singh said the single-day peak demand for power is expected to increase by up to 35,000 MW in April 2023 and the government has started preparations to meet the same. Separately, India plans to build more nuclear power plants to increase the production of clean energy. Meanwhile, Dharmaj Crop Guard shares are likely to get listed on BSE and NSE today. Dharmaj Crop Guard IPO had received a good response from investors, and the company is likely to see a strong debut on stock exchanges.


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  • ITC has acquired 1,967 Compulsorily Convertible Preference Shares of Rs 10 each of Delectable Technologies (Delectable) in the fourth tranche on December 06, 2022. 
  • Bajaj Finserv's unlisted insurance subsidiary -- Bajaj Allianz General Insurance Company has reported Gross Direct Premium underwritten of Rs 1,338.10 crore in the month of November 2022. 
  • Larsen & Toubro's construction arm -- L&T construction has secured various orders for its Minerals & Metals Business in the Iron & Steel and Beneficiation sectors from ArcelorMittal Nippon Steel India. 
  • HCL Technologies has collaborated with Intel Corporation and Mavenir to develop and provide scalable private 5G network solutions for CSP and broader cross-vertical enterprise.
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