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NSE Intra-day chart (04 January 2017)
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Market Commentary 05 January 2017
Markets to start on a positive note tailing global cues


It turned out to be a disappointing performance from the Indian benchmark indices on Wednesday, as they failed to snap the session in the positive territory and settled slightly below the neutral line. Investors turned jittery after Centre and state governments failed to reach consensus on the issue of dual control at Goods and Services Tax (GST) Council meeting. States such as Kerala and West Bengal are understood to have stuck to their stance and have sought exclusive control over businesses with an annual turnover of Rs 1.5 crore. Sentiments also dampened with the report that India's services industry contracted for a second month in a row in December as orders shrank amid a severe cash shortage. The Nikkei/Markit Services Purchasing Managers' Index was little changed at 46.8 in December from November's 46.7 (a reading below 50 indicates contraction). A new business sub-index, an indicator of domestic and foreign demand, fell to a 39-month low of 46.0 in December from 46.7, even though firms cut prices of their goods despite input costs rising at a faster pace.  Market participants remained cautious over the report that indicate Fiscal impact of the recent measures announced by prime minister Narendra Modi aimed at helping economically weaker sections could be around Rs 3500 crore. Prime Minister had announced three broad schemes including interest rate sops for housing for the poor and farm loans besides financial incentives for pregnant women. Meanwhile, metal stocks came under pressure after the process plant and Machinery Association of India, which represents the Capital Goods and Process Equipment manufacturing industry, urged the government to reduce import duty on steel to 7.5% from 12.5% to correct the inverted duty structure. On the global front, Asian markets ended mostly higher on Wednesday, boosted by a round of factory surveys from China, the euro zone and United States that pointed to more momentum in the global economy. Back home, finally, the BSE Sensex declined 10.11 points or 0.04% to 26633.13, while the CNX Nifty was down by 1.75 points or 0.02% to 8,190.50. 


The US markets closed higher on Wednesday, just shy of record levels, following the release of the Federal Reserve's policy minutes from its December meeting and a strong showing in auto sales. Federal Reserve officials saw the possibility that they might have to raise interest rates faster than the gradual pace that they have stressed for some time. The accounts of the meeting suggest that an era of a predictable and boring US central bank may be over. By a unanimous vote on December 14, the Fed raised its federal-funds range by a quarter-percentage point to 0.50%-0.75%, its second rate increase in a decade. At the same time, Fed officials said economic conditions will warrant only gradual increases in the federal-funds rate. In the so-called dot plot, Fed officials penciled in three quarter-point rate increases in 2017 instead of two seen in September. On the economy front, auto makers rolled out stronger-than-expected December US sales results, amid robust demand for trucks and hefty year-end incentives, boosting the annual tally for 2016 to a record. It is the seventh year of growth with full-year sales rising 0.4% to 17.55 million in 2016; up from the previous record tally of 17.5 million in 2015. The Dow Jones Industrial Average added 60.4 points or 0.30 percent to 19,942.16, Nasdaq gained 47.93 points or 0.88 percent to 5,477.01 and S&P 500 was up by 12.92 points or 0.57 percent to 2,270.75.


Crude oil futures bounced back on Wednesday, after big losses in previous session, as traders looked ahead to U.S. inventories data and reports indicating that American stockpiles of oil had declined. Crude prices were also bolstered by improving economic growth in mature and emerging markets. Benchmark crude oil futures for February delivery moved up by $0.93 or 1.8 percent to $53.26 on the New York Mercantile Exchange. In London, Brent crude for March delivery was trading higher by $0.89 or 1.64 percent at $56.38 on the ICE.


Indian rupee strengthened on Wednesday due to sustained selling of the US currency by exporters and banks. Sentiments got some support with the report that foreign direct investment (FDI) into the country grew by over 27 per cent to $27.82 billion during April-October this financial year. The FDI stood at $21.87 billion in April-October 2015-2016. Furthermore, expenditure Finance Commission (EFC) under Ministry of Finance cleared 29 proposals of various ministries involving expenditure of about Rs 2.11 lakh crore during the last year. Besides, dollar weakness against other currencies overseas, barring yen, too gave the rupee more muscle. On the global front, Sterling inched higher against a broadly weaker dollar on Wednesday after hitting a two-month low on a volatile first day of 2017 trading in London when Britain's chief EU negotiator quit. Finally, the rupee ended at 68.05, 27 paise stronger from its previous close of 68.32 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 1863.97 crore against gross selling of Rs 2417.00 crore, while in the debt segment, the gross purchase was of Rs 2373.02 crore with gross sales of Rs 1694.13 crore.


The US markets surged in last session with the S&P 500 ending the day just shy of its record closing high, following the release of the minutes of the Federal Reserve's latest monetary policy meeting. The Asian markets have made a mixed start and the Japanese market was giving up some gains of last session as the yen extended the gains and as the Crude oil futures were little changed after Wednesday's advance. The Indian markets after a choppy day of trade of posted modest decline in last session. Today, the start is likely to be in green but cautiousness will prevail as the   8th meeting of GST Council failed to break deadlock over the issue of dual control of assesses under the new indirect tax regime, an issue that has been holding up supporting bills essential for the GST rollout from April 1 next year and GST looking to become a reality only from September. There will be some support to the markets with report that foreign direct investment (FDI) into the country grew by over 27 percent to $27.82 billion during April-October this fiscal, compared to $21.87 billion in April-October 2015-2016. There will be some buzz in the sugar stocks, as the sugar industry has approached the Prime Minister's Office and the finance ministry to relax norms for restructuring its loans under the scheme for sustainable structuring of stressed assets (S4A), in view of the rising debt level.


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  • Coal India will start the second phase of auction of coal linkages for the non-regulated sector and is likely to put on offer 14.5 million tonnes of fuel.
  • Oil and Natural Gas Corporation's overseas arm - ONGC Videsh has won rights to bid for oil and gas development projects in Iran.
  • State Bank of India has launched a Digital Platform, Mobile App powered by Manipal Global Education Services' EduNxt Platform.
  • Yes Bank has underwritten Project Finance Facility of Rs 800 crore for a period of 15 years for the transmission project.
  • Mahindra & Mahindra has reported 20.86% fall in its production to 32355 units in December 2016 as compared to 40885 units in same month last year.
News Analysis