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NSE Intra-day chart (03 January 2017)
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Market Commentary 04 January 2017
Markets to make a positive start on sanguine global cues


Tuesday's trading session was clearly of consolidation as the Indian frontline equity indices appeared a bit fatigued and remained in tight range for most part of the day. Investors got some comfort after Finance Minister Arun Jaitley expressed hope that Goods and Services Tax (GST) will be implemented in 2017 and a digitised economy will be future of India. He also said that the last year was a very successful year for India as the country continued to remain the fastest economy in the world. He further added that Indian economy will continue to be one of the fastest growing economies in 2017 as well. Some support also came with the report that Core sector output rose 4.9% in November on the back of a strong expansion in steel production and electricity generation, though the pace is down from 6.6% in October 2016, due to decline in production of crude oil and natural gas. However, the upside remained capped with report that global private equity players pulled out a record $10.3 billion of their investments in 2016 from domestic markets. While demonetisation still dominates most of the headlines, rising crude prices could prove to be the next policy headache. India, which depends on imports to meet 80 per cent of its oil needs, will have to spend Rs 9,126 crore ($1.36 billion) more every year for one dollar per barrel increase in crude oil. Oil prices rose in the first trading day of 2017, buoyed by hopes that a deal between OPEC and non-OPEC members to cut production, which kicked in on Sunday, will be effective in draining a global supply glut. International Brent crude oil prices rose to $56.98 a barrel on Tuesday - close to last year's high of $57.89 per barrel, hit on December 12, 2016. Meanwhile, select IT companies like Infosys and Wipro were trading under pressure after Wipro Chairman Azim Premji and Infosys CEO Vishal Sikka have sent out letters to their respective employees cautioning them about serious dangers facing the world and the IT industry. Globalised industries like IT services are at risk due to the recent political and social developments pose huge risks. On the other hand, sugar stocks gained traction on report from domestic rating agency ICRA that Sugar prices are expected to remain firm in the near term due to tight stock position following 9% decline in production and steady growth in consumption. Shares of logistics companies edged higher ahead of the GST Council meet. Finally, the BSE Sensex gained 47.79 points or 0.18% to 26643.24, while the CNX Nifty added 12.75 points or 0.16% to 8,192.25. 


The US markets closed higher on the first trading day of 2017 on Tuesday, but closed off of intraday highs as oil prices turned sharply lower, puncturing some of the initial exuberance that underpinned an early rally in the Dow Jones Industrial Average. On the economy front, American manufacturers finished 2016 on a wave of optimism, as a survey of executives hit the highest level in two years. The Institute for Supply Management said its manufacturing index climbed to 54.7% in December from 53.2%. The index is compiled from a survey of executives who order raw materials and other supplies for their companies. The gauge tends to rise or fall in tandem with the health of the economy. Eleven of the 18 US manufacturing industries surveyed by ISM reported growth. The ISM's new-orders gauge leaped to 60.2% from 53.0%, while production index climbed 4.3 points to 60.3%. Both are also near two-year highs. Meanwhile, outlays for US construction projects rose 0.9 % in November, the sixth increase in the past seven months. The level of spending is now at its highest level in more than a decade. The government revised October's result to a 0.6% rise. The Dow Jones Industrial Average added 119.16 points or 0.60 percent to 19,881.76, Nasdaq gained 45.96 points or 0.85 percent to 5,429.08 and S&P 500 was up by 19.00 points or 0.85 percent to 2,257.83.


Crude oil futures suffered sharp decline on Tuesday, plunging from their highest since 2015 amid doubts about whether OPEC production cuts will re-balance the oil markets. Prices were also under pressure with a Genscape data showing a large build in crude inventories at the Cushing hub. The inventory data released by Genscape revealed a build of 1,038,251 barrels for the week ending December 30th. Benchmark crude oil futures for February delivery declined by $1.39 or 2.6% to $52.33 on the New York Mercantile Exchange. In London, Brent crude for March delivery was down by 2.16 percent at $55.58 on the ICE.


Extending losses for the second straight session, Indian rupee ended at 1-month low as against the US dollar on Tuesday. Sentiments remained down-beat after government report showed that Core sector output in the month of November slowed down to 4.9% from 6.6% in October and 5.01% in September, mainly due to decline in production of crude oil and natural gas. Though, it was higher than the 0.6% growth seen in November 2015, on the back of healthy performance by sectors, including coal, steel and electricity. Traders remained cautious ahead of the release of the minutes of the Federal Open Market Committee meeting on January 5, 2017. The minutes will be closely watched for signs of any potential change in the fiscal policy and any impact on the US monetary policy. Besides, dollar strengthened against other currencies overseas, also weighed on rupee sentiments. On the global front, US dollar racked up its biggest rise in two weeks in 2017's first full day of European trading on Tuesday, as dealers and investors in London returned to push the greenback to within 1 per cent of December's long-term highs. Finally, the rupee ended at 68.32, 9 paise weaker from its previous close of 68.23 on Monday.


The FIIs as per Tuesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 867.26 crore against gross sell of Rs 1215.04 crore, while in the debt segment, the gross purchase was of Rs 49.63 crore with gross sales of Rs 54.15 crore.


The US markets made a modestly positive start of the new year, though the major indices pulled off the day's high but managed decent gains on heels of some upbeat economic data, including a report from the Institute for Supply Management showing that growth in U.S. manufacturing activity accelerated by more than anticipated in December. The Asian markets have made mostly a positive start led by the Japanese market after yen weakened against dollar on confidence in the US economy. The Indian markets despite a slow start managed a positive close in last session as the banking stocks recovered their losses and traders digested the slow growth report of Core sector. Today, the start is likely to be in green tailing the positive global cues. Though, there will be some cautiousness too, as the prospects of a rollout of the Goods & Services Tax regime from April 1, 2017 appeared to recede further after representatives of States expressed concern about the timeline at a meeting of the GST Council.  They demanded taxation rights for sales in high seas and also increasing the number of items on which cess is to be levied to compensate the states to deal with revenue loss estimated at Rs 90,000 crore post demonetisation. Meanwhile, the Commerce and Industry Ministry has pressed the GST Council to keep exports out of the GST framework and levy lower taxes on labour-intensive sectors like leather, cement and plantation. There will be some buzz in the market with the Cabinet Committee on Parliamentary Affairs on Tuesday recommending holding of the Budget Session from January 31 when the government is likely to table the Economy Survey followed by the Union Budget on February 1. The PSU oil marketing companies will see some action on report that state-owned companies plan to introduce dynamic pricing to their entire retail network in 2017 and beyond. Some sectoral buzz can be seen in leather and capital goods as the Commerce and Industry Ministry has sought exemption from the Goods and Services Tax (GST) for the leather and plantation sectors as well as for exporters importing capital goods under special incentive schemes.


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  • Tata Motors has unveiled its new pick-up vehicle Tata Xenon Yodha with price starting at Rs 6.05 lakh.
  • Idea Cellular has decided to raise Rs 1000 crore through issuance of unsecured redeemable Non-Convertible Debentures on private placement basis.
  • Yes Bank has implemented a multi-nodal Blockchain transaction to fully digitize vendor financing for Bajaj Electricals.
  • Bharti Airtel has launched a special offer under which, it will offer free data for 12 months, worth up to Rs 9000, to customers who switch to Airtel 4G.
  • ICICI Bank has announced a reduction of 0.70% in I-MCLR benchmarks across tenures.


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