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NSE Intra-day chart (30 September 2016)
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Market Commentary 03 October 2016
Markets to extend gains with a positive start of new week


Indian equity markets showcased a lackadaisical performance on the first day of a new F&O series, as sentiments were marred by the looming pessimism about geo-political tension arising between India and Pakistan after the Indian Army conducted surgical strikes across LoC in Pakistan on Wednesday night.  The last trading day of September was characterized by high amount of volatility and the indices failed to protect their important psychological 8,600 and 27,900 levels. Though the key indices ended on positive note, they oscillated in an extremely tight range through the session, as market participants remained on the sidelines lacking conviction amid the persistent worries over global markets. Investors' morale was dampened  with report that unemployment rate in India has shot up to a five-year high of 5 percent in 2015-16, with the figure significantly higher at 8.7 percent for women as compared to 4.0 percent for men. However, good buying was observed in final hours of trade on speculation that slowing inflation will allow new Reserve Bank of India (RBI) governor Urjit Patel to cut interest rates at next week's monetary policy review.  Some support also came with the report that Employees' Provident Fund Organisation (EPFO) has decided to invest 10% of its annual incremental deposits or an estimated Rs 13,000 crore in the current fiscal in equity exchange traded funds (ETFs). Also, GST Council chaired by Union Finance Minister Arun Jaitley was meeting and will finalise the rules regarding registration, refunds and payment and also take a view on exemption of goods under the upcoming Goods and Services Tax (GST) regime. It will also deliberate on a formula for payment of compensation to states for revenue loss in the aftermath of implementation of the GST. Meanwhile, Liquor stocks rallied after the Patna HC struck down the Bihar Prohibition of Liquor Act, calling it illegal. The ruling comes only five months after the Nitish Kumar government decided to impose a total ban on alcohol in towns and cities. Further, rate sensitive sectors like Banking, Realty and Auto also observed good buying on the expectations of rate cut in upcoming monetary policy meeting. Finally, the BSE Sensex gained 38.43 points or 0.14% to 27865.96, while the CNX Nifty ended up by 19.90 points or 0.23% to 8,611.15. 


The US markets bounced back on Friday, boosted by a double-digit rally in Deutsche Bank AG shares, which were recovering from brutal losses in the previous session amid heightened concerns about the health of the German lender's balance sheet. US equities also garnered support from modest gains in oil prices after a turbulent week during that resulted in a tentative agreement to limit crude production by some of the world's biggest producer.  On the economy front, consumers spending were barely changed in August as lower sales of new cars and trucks offset an increase in services such as education and health care. The flat reading last month - the weakest since March - fell short of expectations. Meanwhile, the final reading of the University of Michigan's consumer sentiment index showed a rise in September to a level of 91.2, up from 89.8 in August. The gains were due to improving sentiment among households making $75,000 per year or more. The University of Michigan said there's no evidence of an improving trend, as the average since the start of the year, 91.4, is basically at September's level. The Dow Jones Industrial Average added 164.70 points or 0.91 percent to 18,308.15, Nasdaq gained 42.85 points or 0.81 percent to 5,312.00, while S&P 500 was up 17.14 points or 0.80 percent to 2,168.27. 


Crude oil futures continued their upmove on Friday and extended their gains after OPEC members agreed on output cuts for the first time in eight years to stifle a two-year price slide. The cartel had agreed in principal on output cuts aimed at stabilizing crude oil prices above $50 a barrel heading into the New Year. Though, the prices suffered some setback with strengthening of dollar and as investors cashed in on crude's 6 percent one-day rise. Also, the United States, a non-OPEC country that is now the world's biggest oil producer, said it had little faith in this week's deal leading to higher prices in the long term. Benchmark crude oil futures for November delivery gained $0.41 or 0.9 percent to close at $48.24 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for November delivery declined by $0.19 or 0.3 percent to $49.05 a barrel on the ICE.


Recovering from previous session losses, following India's surgical strike on Pakistan based terrorist camps in the aftermath of Uri attack, Indian rupee ended considerably stronger against US dollar as the government tries to contain military tensions. Domestic currency got some support on speculation that slowing inflation will allow new Reserve Bank of India (RBI) governor Urjit Patel to cut interest rates at next week's monetary policy review. Increased foreign fund inflows also supported the rupee. On the global front, euro lost ground broadly on Friday as concerns about the health of Deutsche Bank weighed on the single currency and undermined risk appetite across global markets. Finally, the rupee ended at 66.60, 26 paise stronger from its previous close of 66.86 on Thursday.


The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 11492.67 crore against gross sell of Rs 8081.64 crore, while in the debt segment, the gross purchase was of Rs 2194.65 crore with gross sales of Rs 789.80 crore.


The US markets surged in last session with major indices gai8ning about a percent each after the recovery in German lender and oil prices. The Asian markets have made a positive start with some indices showing gains of over a percent on ebbing concern about Deutsche Bank AG's finances, though many of the markets in the region are closed today. The Indian markets recovering from the day's low managed a modestly positive close in last session, today the start of the crucial week when the policy rates will be decided is likely to be in green on supportive global cues. Traders will also be getting some support with India's core sector output rising to 3.2% in August on the back of sharp rise in steel production and a pickup in cement, suggesting a lift in infrastructure and construction activity. Steel production rose 17% to a 37-month high, aided by the low base of last year. There is another major positive for the markets, foreign investors making it the highest net inflow in 11 months pumped in more than Rs 20,000 crore into the capital market in September. Meanwhile, noted economist Kaushik Basu has warned against low interest regimes and the rich countries following "foolish policies" like protectionism even as he asserted India stands out with a growth rate of over 7 per cent. The power, fertilizer and CNG suppliers will be in action, as price of natural gas for all these sector have been cut by 18 percent to $2.5 per million British thermal unit, it's the fourth reduction in 18 months. The PSU stocks too will be in action on report that the government is preparing a plan for big-ticket asset sales that involves the disposal of controlling stakes in 22 listed and unlisted companies as the Centre looks to meet the full-year disinvestment target of Rs 56,500 crore.


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  • NHPC has signed a wind power purchase agreement with Rajasthan Government and INOX on September 28, 2016 for 50 MW Wind Power Project in Jaisalmer, Rajasthan.
  • Eicher Motors' motorcycle division has reported a 30% jump in total sales in September 2016 at 57,842 units, as against 44,491 units in the same month last year.
  • Kotak Mahindra Bank has executed a binding share purchase agreement to acquire 99.49% of equity shares of BSS Microfinance, a Non-Banking Finance Company, classified as a NBFC-MFI, from existing shareholders subject to regulatory and other approvals, including Reserve Bank of India.
  • Maruti Suzuki India has sold at 1,49,143 units in the month of September 2016 and has registered a rise of 31.1% in its total car sales (Domestic + Export), as against 1, 13,759 units in September 2015.
  • HCL and IBM have entered into a 15-year partnership that takes the best of their shared knowledge and teaming experience to build industry-leading Automation and DevOps solutions.
News Analysis