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NSE Intra-day chart (15 January 2018)
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Market Commentary 16 January 2018
Markets to make a flat-to-cautious start

Continuing their record hitting spree, Indian equity benchmarks once again traded jubilantly and settled at all time closing levels with frontline gauges surpassing their crucial 34,800 (Sensex) and 10,700 (Nifty) levels for the first time ever. Markets started the session with gap-up start, as traders reacted positively to the IIP numbers, as an exponential rise in the manufacturing output lifted India's total factory production by over 8 percent in November from 1.99 percent in October and 5.1 percent during the corresponding period of 2016-17. On a year-on-year basis, the manufacturing sector expanded by 10.2 percent, whereas mining's output inched-up by 1.1 percent and the sub-index of electricity generation increased by 3.9 percent. Some support also came with the wholesale price index-based inflation easing to a three-month low of 3.58 per cent in December, down from 3.93 per cent the month before. This decline comes after recent data released by the central statistics office (CSO) had shown that retail inflation had risen to a 17-month high of 5.21 per cent in December up from 4.88 per cent in November. However, India's annual retail inflation data accelerated in December to a 17-month high of 5.21 percent, mainly driven by faster rises in prices of food and fuel products. Some support also came with report that foreign investors have pumped in over Rs 5,200 crore in the Indian capital markets this month so far on anticipation of recovery in corporate earnings and attractive yields. Traders also took some encouragement with a foreign brokerage report enlightening that Indian economy is expected to witness an average GDP growth of 7.3% over 2020-22. According to the global financial services major, the structural growth story in India remains strong from a medium term perspective. The report highlighted that the uptick in the private capex cycle, which it anticipates will begin in 2018, will ensure that the economy enters into a sustained and productive growth cycle. Also traders reacted positively to report that the World Economic Forum (WEF) has ranked India at 30th position on a global manufacturing index -- below China's 5th place but above other BRICS peers, Brazil, Russia and South Africa. Finally, the BSE Sensex surged 251.12 points or 0.73% to 34,843.51, while the CNX Nifty was up by 60.30 points or 0.56% to 10,741.55.


The US markets remained closed on Monday on account of ‘Martin Luther King Jr. Day' holiday.


Crude oil futures remained flat in a holiday thinned trade on Monday, though Nymex crude still continued hovering near multi-year highs as overall optimism regarding the rebalancing of the market continued to support the commodity. Trading volume remained thin as there was no floor trading on the Nymex because of the Martin Luther King Day holiday in the US. Benchmark crude oil futures for February delivery was up by $0.11 or 0.17 percent at $64.41 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude for March delivery was down by 5 cents or 0.09 percent to $69.83 a barrel on the ICE.


Indian rupee shed most of its early gains but still ended higher against the American currency on Monday, due to selling of the US currency by exporters and banks. Sentiments remained positive as India's inflation on wholesale level eased in the month of December, supported by lower food articles and minerals prices. Also, industrial production growth accelerated to 25-month high of 8.4% in November 2017, as compared to 5.1% in November 2016, on the back of robust performance of manufacturing and capital goods sectors. Besides, the dollar's weakness against some currencies overseas along with good gains in local equities largely supported the rupee trade. However, the local currency trimmed most of its initial gains, as some concern came with data showing that India's retail inflation or Consumer Price Index (CPI) shot up to a 17-month high of 5.2% in the month of December 2017, as against 3.41% growth in December 2016. On the global front, euro held at three-year highs against dollar on Monday after last week's surge, its rise fueled by growing expectations that the European Central Bank will tighten monetary policy, while the dollar weakened further. Finally, the rupee ended at 63.48, 14 paise stronger from its previous close of 63.62 on Friday.


The FIIs as per Monday'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 5944.46 crore against gross selling of Rs 5973.57 crore, while in the debt segment, the gross purchase was of Rs 547.17 crore with gross sales of Rs 385.95 crore. Besides, in the hybrid segment, there was no buying against gross selling of Rs 1.47 crore.


The US markets remained closed in the last session on Martin Luther King Day holiday, unable to give any cues to the other global markets. The Asian markets have made a mixed start taking a breather in the absence of fresh catalysts to spur the rally on. The yen halted a five-day advance as Japanese Finance Minister Taro Aso said sudden moves in exchange rates are a problem. The Indian markets surged to fresh record highs on firm global cues with strong industrial output data boosting sentiment. Today, the start is likely to be flat but in green, supported by the unexpected drop in the wholesale price inflation to 3.58 percent at the month of December. Traders however, will be a bit cautious with the merchandise export growth slowing sequentially to 12.4% in December, while imports jumping 21.1% during the month, aided by a spike in crude oil prices and a favourable base. The trade deficit widened to its highest level in over three years in December to $14.9 billion, a three-year peak. However, excluding the almost 35% rise in oil purchases from overseas, overall imports rose 17.2% in December. The export oriented stocks will be in focus, as the various export bodies have expressed concern over delay in refunds under GST and have written to the Union Commerce Ministry seeking faster refunds. There will be lots of important companies announcing their quarterly earnings today, keeping the markets buzzing.


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  • Tata Motors' subsidiary -- JLR is planning to open new software hub at Shannon in Ireland.
  • TCS has expanded strategic technology partnership with Marks and Spencer to enable the iconic retailer to become a digital-first business.
  • Lupin has made a foray into the OTC segment under the 'Lupin Life Consumer Healthcare' umbrella with the pan-India launch of Softovac.
  • HDFC is planning to raise about Rs 11,100 crore from a preferential share sale to investors including affiliates of Singapore state investor GIC and private equity KKR & Co. LP.
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