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NSE Intra-day chart (02 November 2016)
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Market Commentary 03 November 2016
Markets to extend the somberness with a soft start

Wednesday's session turned out to be a dreadful session for the Indian equity markets as the benchmark equity indices got bludgeoned by over a percent in the session. The wretchedness in the global markets got transmitted into the domestic frontline indices as a new poll showing Republican candidate Donald Trump leading the US presidential race spooked investors. Polls suggest a tight neck-to-neck race between the two candidates, following last week's news that the FBI had opened a new investigation into Clinton's private email server. Another cause for concern is crude oil prices, which declined for the fourth straight day on expectations that U.S. crude inventories were bolstered significantly last week. Crude oil price has always had a positive correlation with global equities. Investors are also cautious as the US Federal Reserve is due to announce its latest monetary policy decision later in the day. On the domestic front, sentiments were undermined by the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 123.96 crore on November 01, 2016. Depreciation in rupee against dollar also weighed down sentiments. Meanwhile, Standard & Poor's affirmed India's sovereign ratings, welcoming the country's policy stability and improved monetary credibility, but ruled out any upgrade for this year or in 2017 because of weak public finances and low per capita income. The global rating agency has stuck to its rating of 'BBB-' with a 'stable' outlook, saying it would need to see more efforts to lower the country's net general government debt level to below 60% of gross domestic product. The ratings agency also expressed concerns that government could delay subsidy cuts, while noting the country's banking sector would likely need capital infusions of about $45 billion by 2019, or 2% of the country's GDP, to meet global Basel III capital norms. Market participants also overlooked ASSOCHAM's report that Indian economy is expected to fare better in the second half of the current fiscal backed by uptick in sales and improved capacity utilization, though fresh investments and new jobs creation may be a concern going forward. Finally, the BSE Sensex declined by 349.39 points or 1.25% to 27527.22, while the CNX Nifty dropped 112.25 points or 1.30% to 8,514.00.

The US markets closed lower on Wednesday, following the weakness seen in the previous session after the latest polls confirmed the presidential race has tightened days before the election.  The major upset came with rate hike signal after the Federal Reserve on Wednesday kept interest rates unchanged, as expected, but policy makers said the case for a rate hike has strengthened. FOMC members voted 8 to 2 to maintain interest rates in a range of 0.25 to 0.5%. Fed said in its policy statement that committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of further progress toward its objectives. The Dow Jones Industrial Average declined by 77.32 points or 0.4%, to 17,959.78, the S&P 500 index fell 13.73 points or 0.7%, to 2,097, for its longest losing streak in five years, while the Nasdaq lost 48.01 points or 0.9%, to 5,105.57.

Crude oil futures slumped on Wednesday to five weeks low on reports of a build-up in official US crude stocks. The EIA data showed that crude supplies in the U.S. rose by the most since at least 1984 last week. Crude oil inventories rose by 14.4 million barrels in the week ended October 28. The report also showed that gasoline inventories decreased by 2.2 million barrels, while distillate inventories including diesel, reported a drop of 1.8 million barrels. Also, the doubts remain about OPEC's ability to deliver a planned cut in output to 32-5-33 million barrels a day to address a global supply glut. Though, some weakness in dollar restricted further fall. Benchmark crude oil futures for December delivery dropped $1.34 or 2.94 percent to close at $45.27 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery declined by $1.51 or 3.05 percent to $46.62 a barrel on the ICE.

Indian rupee recouped its intraday losses to close little changed against US dollar, after a volatile trading session, on dollar selling by some banks and importers. Losses in the domestic equity market and cautiousness ahead of US Federal Reserve's latest monetary policy decision, also weighed on rupee sentiments. However, domestic currency got some support with ASSOCHAM's report that Indian economy is expected to fare better in the second half of the current fiscal backed by uptick in sales and improved capacity utilization, though fresh investments and new jobs creation may be a concern going forward. On the global front, US dollar slumped against its major rivals as the US presidential election increasingly looked too close to call, jangling investors' nerves and fuelling demand for perceived havens such as the Japanese yen. Finally, the rupee ended at 66.72, 1 paise weaker from its previous close of 66.71 on Tuesday.

The FIIs as per Wednesday'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 4930.89 crore against gross selling of Rs 5026.88 crore, while in the debt segment, the gross purchase was of Rs 1323.08 crore with gross sales of Rs 1010.85 crore. 

The US markets once again ended lower in last session with some polls confirming tightened presidential race days ahead of the election and Federal Reserve's signal that an interest rate hike is imminent. The Asian markets have made mostly a weak start and some of the indices were down by over a percent in early deals on concern of rate hike in US. The Indian markets suffered sharp setback in last session and the major benchmarks deposed over a percent in a broad based selling, mainly on US election jitters. Today the start is likely to be somber again, tailing the weak global cues. Also, there is a big setback with global rating agency Standard & Poor's retaining India's rating at BBB- and ruling out any upgrade in India's sovereign rating through 2017 despite policy stability and reforms. S&P maintained the lowest investment grade rating of 'BBB-' with a 'stable' outlook saying it wants to see more efforts to lower government debt to below 60 percent of GDP and that it did not expect revenues to rise enough to meaningfully lower the deficit over the medium term. There will be some concern with GST Council meet starting today and both the Centre and states seeming to harden their positions with respect to the issues they disagree on.  There is a raging debate on the Centre's proposal for having multiple rates for GST. Though, some support can come with a survey of Federation of Indian Chambers of Commerce and Industry (Ficci), which has said that India Inc believes the economy is faring better and is optimistic about demand rising. Expectations regarding the performance of the economy in the next six months went up, with about 75 per cent positive on growth, up from 66 per cent. There will be some buzz in the banking stocks with two major lenders State Bank of India (SBI) and ICICI Bank cutting their respective lending rates for home loans to boost housing credit during the festive season. There will be lots of earnings announcements too, to keep the markets in action.

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Axis Bank










  • Yes Bank has generated $ 650 million worth of business outstanding at its IFSC Banking Unit in Gujarat International Finance Tec City. 
  • Coal India has produced 273.57 million tonnes of coal in the first seven months of the ongoing fiscal, lower than the target of 307 MT, even as the demand for fossil fuel started picking up.
  •  M&M has reported its auto sales numbers for October 2016 which stood at 52,008 vehicles compared to 51,383 vehicles during October 2015.
  • Tata Consultancy Services and University of New South Wales, Australia have signed a memorandum of understanding to pursue technology research collaboration.
  • Bajaj Auto has registered rise of 0.95% in total sales to 356,168 units in October 2016 against 3,52,822 units in October 2015.

News Analysis