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NSE Intra-day chart (01 September 2016)
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Market Commentary 02 September 2016
Markets to make a cautious start on mixed global cues


Bout of volatility in last leg of trade dragged the Indian benchmarks slightly lower on Thursday and stock markets witnessed consolidation after three days of rally, as investors lacked conviction to open fresh positions. Key gauges made a cautious start and oscillated in an extremely tight range in first half of trade with India's economic growth rate slipped to 6-quarter low of 7.1 percent in April-June, as compared to 7.9 percent in the previous quarter, mainly due to subdued performance of mining, construction and farm sectors. The economy had expanded at 7.5 percent in the April-June quarter of last financial year, 2015-16. Sentiments were also weighed down with the Core Sector growth slowing to 3.2 percent in July, compared to 5.2 percent recorded in June. However, the cumulative growth of the sector during April-July period of the fiscal was 4.9 percent. Meanwhile, fiscal deficit in the first four months of the current financial year reached to Rs 3.93 lakh crore, or 73.3 percent of the Budget estimates for 2016-17. Markets regained momentum in second half  of trade with report of manufacturing sector growth touching a 13-month high in August, bolstered by expansion in new works as well as acceleration in buying and production levels. The Nikkei India Manufacturing PMI jumped to 52.6 in August from 51.8 in July as “Indian manufacturers enjoyed a solid improvement in operating conditions” last month. But, sharp wave of selling in final hour of trade dragged markets lower and local bourses ended the session slightly in red. On the global front, European markets were trading mostly in green in early deals, while Asian markets ended mostly in red. Back home, depreciation in Indian currency dampened sentiments. Telecom stocks witnessed selling after Reliance Industries announced the launch of Reliance Jio with disruptive pricing strategy in addition to voice calls and national roaming free of cost. Finally, the BSE Sensex shed 28.69 points or 0.10% to 28,423.48, while the CNX Nifty slipped 11.55 points or 0.13% to 8,774.65.


The US markets closed mostly higher on Thursday, recovering from earlier losses, as investors braced for the much-anticipated August jobs report on Friday, which could set the stage for a near-term interest-rate increase by the Federal Reserve. On the economy front, the number of Americans who applied for unemployment benefits last week rose slightly, but the level of layoffs remained near post-recession lows that showed the labor market is still fairly robust. Initial jobless claims rose 2,000 to 263,000 at the end of August stretching from August 21 to August 27 and have hovered in the 260,000 range for six straight weeks. New claims have hovered in the 260,000 range for the past six weeks. That's just a touch above the post recession low of 252,000 set in July, itself a 43-year bottom. The average of new jobless claims over the past month, meanwhile, fell by 1,000 and also totaled 263,000. Meanwhile, a key report on US manufacturing fell in August to a level indicating activity shrank, another sign of the difficulties in the factory sector. The Institute for Supply Management reported that its manufacturing index in August fell to 49.4% from 52.6% last month. The Dow Jones Industrial Average added 18.42 points or 0.10 percent to 18,419.30, Nasdaq was up 13.99 points or 0.27 percent to 5,227.21, while S&P 500 inched lower by 0.09 points or to 2,170.86. 


Crude oil futures continued the slump and sank to fresh three-week low for the second day in a row on Thursday. Traders were still pondering on the US crude inventories report, focusing attention on a supply glut that has pushed stockpiles to record highs around the world. Investors monitoring any developments by major producers planning to meet later this month to discuss a freeze in output and looked ahead to figures on US drilling efforts. Benchmark crude oil futures for October delivery dropped $1.65 or 3.56 percent to close at $ $44.70 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for November delivery declined by $0.63 or 1.34 percent to $46.26 a barrel on the ICE.


Indian rupee ended unchanged compared to its previous close ahead of the US payroll data on Friday. Sentiments remained dampened after growth data showing India's gross domestic product (GDP) grew at the slowest pace in the last six quarters at 7.1 percent in the April-June period of current fiscal as compared to 7.9% in the previous quarter. However, domestic currency got some support with report that manufacturing output in India grew at its fastest pace in thirteen months in August. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers Index edged higher in August, at 52.6 compared with 51.8 in July. On the global front, dollar's advanced against the yen on Thursday with investors positioning for Friday's non-farm jobs report, which is set to shape the market's near-term U.S. interest rate expectations.  Finally, the rupee ended unchanged from its previous close of 66.96 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 15504.36 crore against gross selling of Rs 14581.34 crore, while in the debt segment, the gross purchase was of Rs 798.75 crore with gross sales of Rs 1540.00 crore.


The US markets once again showed a lackluster trade and made a flat closing in last session, as traders continued to look ahead to the Labor Department's monthly jobs report due Friday, which is expected to show an increase of about 175,000 jobs in August. The Asian markets have made mostly a lower start, though the losses are modest and the Chinese markets were trading higher, while all eyes are on the non-farm payrolls data from US. The Indian markets after a choppy trade lost their momentum in the final hours and made a modestly lower close in last session. Today, the start is likely to be cautious tailing mixed global cues. Trade will get impacted and essential services such as banking, public transport and telecom may be hit as 10 central trade unions (CTUs) will go on one-day nationwide strike against government's "indifference" towards their demands and effecting "anti-worker" changes in labour laws. Markets, however will be getting some support with Odisha becoming the 16th state to ratify the constitutional amendment bill passed by Parliament to introduce the goods and services tax (GST), helping cross the important threshold of more than half the number of states needed for the proposed law to be sent for presidential assent. There will be some buzz in the retail and FMCG stocks, as Niti Aayog member Amitabh Kant has said that the government is in favour of framing a single policy for retail, FMCG and e-commerce to harmonize the existing varied policies. Sugar stocks may come under pressure, as to check spiraling price of sugar which has crossed Rs 40 per kg, the government imposed stock limits on sugar mills during the festival season till October-end. Telecom stocks too will be in action with price war back in space after the official launch of Reliance Industries RJio.


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  • Mahindra & Mahindra has reported its auto sales numbers for the month of August 2016, which stood at 40,591 units as against 35,634 units during August 2015, representing a growth of 14%.
  • Dr. Reddy's Laboratories has launched Purple Health, a unique platform which is designed to inspire patient-centric innovation and deliver solutions that address unmet needs of patients.
  • Tata Power Company's Strategic Engineering Division has signed letter of intent with Javelin Joint Venture, a partnership between Raytheon Company and Lockheed Martin to explore co-development and production of the Javelin anti-armour missile systems.
  • Maruti Suzuki India has registered a rise of 12.2% in its total car sales for the month of August 2016 at 1,32,211 units, as against 1,17,864 units in August 2015.
  • Eicher Motors' motorcycle division has reported a 32% jump in total sales in August 2016 at 55,721 units, as against 42,360 units in the same month last year.
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