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NSE Intra-day chart (03 October 2016)
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Market Commentary 04 October 2016
Markets to start on a cautious note ahead of monetary policy review


Indian equity indices witnessed a blockbuster performance on the first day of the week by vehemently rallying over a percentage points and re-conquering their psychological levels. Except for some mild profit taking in early afternoon trades, Monday's session remained a day of recovery as key equity indices enthusiastically rallied through the day. Investors continued to build hefty positions across the board as sentiments got a boost 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. Adding the optimism among the market participants, credit rating agency Crisil expects India's gross domestic product (GDP) to grow at 7.9 per cent and agriculture to grow above trend at 4 per cent. The country's GDP will be supported by a boost from consumption especially in the hinterland after a well distributed monsoon this year. Some support also came with the report that foreign investors pumped in more than Rs 20,000 crore into the capital market in September, making it the highest net inflow in 11 months. Investors didn't give any heed to geo-political tension arising between India and Pakistan Pakistani troops opened fire on forward areas along the LoC in Poonch district of Jammu and Kashmir.  Meanwhile, Auto stocks gained traction after many automakers posted a solid show in September ahead of the crucial festival season.  Certain power, fertilizer and CNG suppliers were also under the spotlight as price of natural gas for all these sectors were cut by 18 percent to $2.5 per million British thermal unit, it's the fourth reduction in 18 months. On the global front, Asian markets ended mostly higher on Monday, while the European markets started the week little changed.Back home, finally, the BSE Sensex surged by 377.33 points or 1.35% to 28243.29, while the CNX Nifty ended up by 126.95 points or 1.47% to 8,738.10.


The US markets closed lower on Monday, as concerns over Deutsche Bank's financial condition and the UK's plan for exiting the European Union outweighed stronger-than-expected manufacturing data. UK Prime Minister Teresa May stated that she plans on triggering the process of leaving the European Union in late March or early April. New York Fed President William Dudley stated that the Federal Reserve would probably not be able to cut interest rates as aggressively as the last time around if it were faced with a US recession in the next few years. Beginning in 2007, the US central bank slashed rates by 5.25 percent as the financial crisis took hold. On the economy front, outlays for US construction projects weakened in August and July led by steep declines in spending on public projects. Spending on construction tumbled 0.7% in August. Outlays in July were reduced to a 0.3% fall from an initial flat reading. August spending of $1.14 trillion was 0.3% lower than a year ago. Despite the losses, outlays for the first eight months of the year are 4.9% higher compared with the same period in 2016. The Dow Jones Industrial Average lost 54.30 points or 0.30 percent to 18,253.85, Nasdaq dropped 11.13 points or 0.21 percent to 5,300.87, while S&P 500 was down 7.07 points or 0.33 percent to 2,161.20. 


Crude oil futures extended their gains to the new week and gained around a percent on Monday, with Brent settling above $50 a barrel the first time since August and U.S. crude hitting three-month highs. Prices got some support with a report that Iranian President Hassan Rouhani had told his Venezuelan counterpart Nicolás Maduro that it was essential for oil producing countries to take a decision to raise the price of oil and stabilize the market. Benchmark crude oil futures for November delivery was up by $0.57 or 1.2 percent to close at $48.81 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for November delivery surged by $0.70 or 1.4 percent to $50.89 a barrel on the ICE.


Indian rupee strengthened on Monday due to sustained selling of the US currency by exporters and banks amid strong gains in local market. Indian rupee got some support with data showing that 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. Some support also came with the report that foreign investors pumped in more than Rs 20,000 crore into the capital market in September, making it the highest net inflow in 11 months. On the global front, the pound lost ground against major currency crosses on Monday, nearing a 31-year low versus the greenback, after UK's Prime Minister Theresa May said that government would trigger Article 50, the prelude to British exit talks from the European Union, by the end of March 2017. Finally, the rupee ended at 66.58, 3 paise stronger from its previous close of 66.61on Friday.


The FIIs as per Monday'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 5293.71 crore against gross selling of Rs 5477.54 crore, while in the debt segment, the gross purchase was of Rs 1146.17 crore with gross sales of Rs 1099.74 crore.


The US markets ended modestly lower in the last session, as traders coming out of the Deutsche fiasco looked ahead to the jobs report due out at the end of the week. The Asian markets have mostly made a positive start though the mood was a bit cautious following a retreat in US equities. The Indian markets went for a rally in last session ahead of the monetary policy review, on hopes of a rate cut. Today, the start of the crucial day is likely to be in green though all eyes will be on the bi-monthly monetary policy meet where six-member Monetary Policy Committee (MPC) will announce its decision on interest rates later in the day. Apart from hopes of a rate cut, the language of the policy too will also be watched closely for cues on the future course of RBI's action on various areas. Traders will be getting some support with global ratings agency Crisil predicting a strong boost to India's domestic consumption in 2016-17 led by implementation of 7th pay panel`s recommendations, with reforms like the Goods and Services Tax (GST) to benefit the uptick. Also, the Union Minister for Commerce and Industry Nirmala Sitharaman has said that the 'One Nation One Tax' regime through the Goods and Services Tax (GST) system would come into effect on April 1, 2017, leading to a unified domestic market. However, there will be some cautiousness too with another rating agency Fitch Ratings projecting Indian economy to grow at a slower pace of 7.4 percent in the current fiscal and touch 8 percent growth only in 2018-19, as it expects the benefits of reforms and impact of monetary easing to kick in with a lag. There will be some buzz in PSU oil marketing companies, as the international oil prices dipped again weighed down by a rise in Iranian exports.


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  • HDFC Bank has selected software major Adobe's 'Marketing Cloud' platform to deliver personalised digital experiences to its 37 million customers.
  • BHEL has bagged two contracts worth Rs 430 crore for Renovation & Modernization of Hydro Electric Plants.
  • M&M has reported its auto sales numbers for the month of September 2016, which stood at 46,130 units as against 42,848 units during September 2015, representing a growth of 8%.
  • Tech Mahindra has been selected by the Government of Jharkhand as a strategic partner to help the state in its digital journey and employment generation through skill development.
  • Tata Motors is planning to increase prices of its passenger vehicles during the ongoing festive season to offset rising input cost.
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