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NSE Intra-day chart (29 February 2016)
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Market Commentary 01 March 2016
Markets to make a cautious start on mixed global cues

It turned out to be a roller-coaster ride for the frontline indices, which declined over two percent in today's session but finished the day with moderate losses of just over half a percent. After getting a cautious start, Indian benchmark traded below neutral line for most part of morning tread, but sharp selling was witnessed in mid afternoon session as investors took to across the board, spooked by Finance Minister Arun Jaitley's proposals to reintroduce General anti-avoidance rule (GAAR) from April 2017, allocating Rs 25,000 crore for recapitalization of PSU banks that is much below Street's estimates and proposal to levy 10% dividend distribution tax in the hands of investors. However, sharp recovery in late afternoon trade managed to take the indices into the positive territory but only for a brief period as fresh bouts of profit booking again brought the indices to lower levels by the end of trade. Eventually the NSE's 50-share broadly followed index Nifty, took a cut of over half a percent to settle below the crucial 7,000 support level, while Bombay Stock Exchange's Sensitive Index, Sensex slipped by over a hundred and fifty points and closed above the psychological 23,000 mark. On the global front, Asian market ended mostly in red on Monday after a weekend meeting of the Group of 20 economic policymakers ended with no new coordinated action to spur global growth, European stocks too slipped in early trading. Back home, the broader markets managed to escape heavy losses and settled on a flat note, yet outperformed their larger peers. On the BSE sectoral space, the high beta sectors like - IT and Teck pockets remained among top laggards in the space as they got lacerated by 2.11% and 2% respectively. Finally, the BSE Sensex plunged by 152.30 points or 0.66% to 23002, while the CNX Nifty dropped 42.70 points or 0.61% to 6,987.05. 


The US markets closed lower on Monday, with the S&P 500 and Nasdaq Composite posting three straight monthly declines for the first time since 2011, while the Dow industrials bucked the trend to post their first monthly gain since November. The market sold off in the final two hours of a volatile session, as investors took a defensive posture, bidding up utility stocks while selling energy and health-care shares even as crude-oil futures ended sharply higher. On the economy front, a gauge of Chicago-area economic activity retreated below 50, indicating a contraction in February after looking strong a month earlier. The Chicago PMI fell 8 points to 47.6. In January, the index had increased 12.7 points to 55.6, the highest reading in a year. Meanwhile, a gauge of pending home sales dipped 2.5% in January, the National Association of Realtors reported. NAR's monthly gauge fell to 106.0 from an upwardly-revised 108.7 in December. The Dow Jones Industrial Average lost 123.47 points or 0.74 percent to 16,516.50, the Nasdaq was down 32.52 points or 0.71 percent to 4,557.95 while, the S&P 500 dropped 15.82 points or 0.81 percent to 1,932.23.   


Crude oil futures surged on Monday and managed to close the volatile month of February on a flat note, after Saudi Arabia said that it would work collaboratively with other major oil producers to help bring some stability to the struggling oil market. The Saudi Arabian cabinet said that "The kingdom seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action". Benchmark crude oil futures for April delivery gained $1.02 or 3.11 percent to $ $33.80 a barrel after trading in a range of $32.34 and $33.92 a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery closed at $36.64, up $1.20 or 3.39 percent on the ICE.


Indian rupee appreciated for the second consecutive session on Monday as Finance Minister Arun Jaitley said that the government would stick to its fiscal deficit target of 3.5 per cent of gross domestic product for the 2016-17 year. Besides, dollar sales by banks and exporters also supported the domestic currency. Investors further got some support with Chief Economic Advisor Arvind Subramanian's statement that India is expected to accelerate to 8-10 percent growth rate in two to five years on account of structure reforms and encouraging competitive federalism. Investors even ignored the losses in the local equity market. On the global front, yen advanced against dollar, after a slump in stocks renewed demand for the currency as a haven. Finally, the rupee ended at 68.41, 21 paise stronger from its previous close of 68.62 on Friday.


The FIIs as per Monday's data were net sellers in equity and in debt segments both. In equity segment, the gross buying was of Rs 2834.32 crore against gross selling of Rs 3418.63 crore, while in the debt segment, the gross purchase was of Rs 758.76 crore with gross sales of Rs 2527.97 crore.        


The US markets ended lower in last session, with downbeat economic news renewing fears of a US economic slowdown. Pending home sales index slumped 2.5 percent to 106.0 in January, also there was an unexpected contraction in Chicago-area business activity in the month of February. The Asian markets have made a mixed start and some of the indices are in red after a gauge of Chinese manufacturing declined, matching its lowest level of the past seven years that weighed on crude oil and copper. Japanese market too was down on strength in yen. The Indian markets after witnessing huge round of volatility and once slumping to their fresh 52 weeks low bounced back, though despite recovery ended with cut of over half a percent on the big budget day. Today, the start is likely to remain cautious and traders after analyzing the impact of the budget proposals will be taking selective bets. Meanwhile, Finance Minister Arun Jaitley has said that there are serious challenges as far as agrarian sector is concerned and this Budget is a combination of several things... In addition to priority to agriculture and to rural sector, I am putting in place targeting of subsidies through a legislation which I would introduce immediately. India Inc has lauded the budget proposals to boost rural and infrastructure sectors, saying they will have a multiplier effect on the economy. Though, they expressed dissatisfaction on the corporate taxation front, which was expected to see phased reduction to 25 per cent from 30 per cent. Jaitley also reiterated his commitment to implement General Anti Avoidance Rules (GAAR) from April 1, 2017, that can give some respite to the FIIs about the clarity. The rules are aimed at minimising tax avoidance for investments made by entities based in tax havens. However, there will sectoral impact and apart from the additional cess, Aviation sector will have to face a hike of 6 percent in excise duty on jet fuel. On the same time car companies are likely to feel the heat of an additional percent of cess hike.


Support and Resistance: NSE Nifty and BSE Sensex



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  • State Bank of India, the country's largest public sector lender, has received its shareholders' approval to raise up to Rs 15,000 crore.
  • Yes Bank is aiming to increase its market share to more than two fold at 2.5 percent by 2020 to emerge as one of the major private sector lenders in the country.
  • Larsen & Toubro secured order worth RS 800 crore from DLF to build its office complex in Gurgaon.
  • Maruti Suzuki India has started shipping its premium hatchback Baleno to Europe, ahead of the formal launch of the model by its Japanese parent Suzuki Motor Corp.
  • Bharti Airtel has unveiled its high speed 4G services in Kannur and Kota.
News Analysis