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NSE Intra-day chart (05 January 2016)
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Market Commentary 06 January 2016
Markets to see some stabilization after two days of fall

Indian markets were unable to make any recovery after plunging in previous session and witnessed a volatile day of trade, finally closing in red with marginal losses, extending the declining trend for yet another session. Sentiments remained down-beat with retail inflation for farm labourers and rural workers in November rising to 4.92 percent and 5.02 percent, respectively, due to increase in prices of food items. Besides, caution continues to envelop the D-Street as investors eagerly await the upcoming macro-data on industrial output, retail inflation and the third-quarter earnings results which start from January 14, 2016. However, losses remained capped with the Finance Minister, Arun Jaitley's statement that the public investments would continue to 'remain stepped up' in the Indian economy, which has emerged as a stable force in the midst of global slowdown. Earlier on Dalal Street, the benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. However, the indices dropped into the red terrain sooner than later, lacking any significant upside cues.  Thereafter, the key indices failed to show any kind of eagerness to regain those levels as they oscillated around the neutral line for most part of morning trades and drifted deeper into the red terrain in afternoon session. Finally some short covering in the dying hours of trade ensured that the bourses snap the session with moderate cuts.  However, the broader markets showed some resilience and settled on a positive note, outperforming their larger peers by quite a margin. On the BSE sectoral space, the IT index remained the top laggard in the space and settled with about half percent cuts followed by the TECK pocket which too went home with similar losses. On the other hand, the Metal pocket remained the top gainer in the space following stability in China after its central bank infused capital into the financial system. Stocks related to power counter surged as the power ministry Piyush Goyal has said that fifteen states have joined the debt recast scheme for power distribution companies covering 90% of the losses accumulated with the utilities. Finally, the BSE Sensex declined by 43.01 points or 0.17% to 25580.34, while the CNX Nifty lost 6.65 points or 0.09% to 7,784.65.

The US markets after a day of sharp cuts remained choppy on Tuesday and ended mixed, with tech heavy Nsadaq extending its losses. Major averages kept moving in and out of the green, unable to sustain any significant moves, as traders expressed some uncertainty about the outlook for the markets following the steep losses posted on Monday. A lack of major US economic data also kept traders on the sidelines ahead of the release of some key economic reports in the coming days. The Dow Jones Industrial Average inched up 9.72 points or 0.1 percent to 17,158.66 and the S&P 500 rose 4.05 points or 0.2 percent to 2,016.71, while the Nasdaq dipped 11.66 points or 0.2 percent to 4,891.43.

Crude oil futures suffered sharp cuts on Tuesday, as the global supply glut offset escalating tensions between the Organization of Petroleum Exporting Countries' top producers Iran and Saudi Arabia. Meanwhile, the escalation of sectarian conflict in the region exacerbates fears that Iran could shut down the Strait of Hormuz, the world's primary chokepoint of oil. It is reported that approximately 17 million barrels of oil, representing 30% of all maritime-traded petroleum in the world, flows through the strait each day into the Gulf of Oman. Benchmark crude oil futures for February delivery plunged by $ 0.79, or 2.18 percent to $35.97, after trading in a range of $35.86 and $37.09 a barrel on the New York Mercantile Exchange. In London, Brent crude for February delivery closed at $36.44, down $0.81 or 2.15 percent on the ICE.

Indian rupee ended stronger against dollar on Tuesday on fresh selling of the US currency by banks and exporters. However, fall in the equity market and dollar's strength against other currencies overseas capped the rupee's gain. Investors overlooked the data of the retail inflation for farm labourers and rural workers in November which rose to 4.92 percent and 5.02 percent, respectively, due to increase in prices of food items. On the global front, euro declined against the dollar as investors awaited data on inflation in the 19-nation currency bloc.

The FIIs as per Tuesday's data were net sellers in equity and in debt segments both. In the equity segment gross buying was of Rs 2142.76 crore against gross selling of Rs 2717.64 crore, while in the debt segment, the gross purchase was of Rs 491.72 crore with gross sales of Rs 736.14 crore.           

The US markets ended the choppy trade on a flat note, traders preferred to remain on sideline and there was not much movement in the markets ahead of some important economic reports later in the week. The Asian markets have made a mixed start, with some of the indices still trading in red. Japanese market too was trading cautiously, as yen held near a two-month high. The Indian markets continued their decline for the second day in a row, though mid caps outperformed but the major averages made another close in red. Today, the start is likely to be mildly in green and recovery can be seen in later trade. Traders will also be eyeing the Services PMI data for further cues. Meanwhile, ahead of Finance Minister Arun Jaitley's pre-Budget consultations with India Inc. Confederation of Indian Industry (CII) has said that government must focus on demand creation and that private sector is not investing because there is a lack of demand. The iron and steel stocks will be in action, as the government meeting yet another demand of the domestic steel and mining sector reeling under low demand and weak price, has scrapped a 5% export duty imposed on iron ore pellets. The step is expected to benefit pellet makers, which include top miners, as well as leading steel players. There will be some buzz in the oil & gas stocks too, as the Prime Minister Narendra Modi has stressed on taking a "fresh look" at the petroleum sector during a meeting with global oil and gas experts, to bring in investment, technological upgradation and development of human resource. The auto component stocks too will be in action, as the government has initiated a probe into alleged dumping of an automobile component - Axle for Trailers - by China in the domestic market in order to protect domestic players in the automobile sector against cheap imports.

Support and Resistance: CNX Nifty and BSE Sensex


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  • Grasim Industries has completed the merger of the group company Aditya Birla Chemicals with itself.
  • Idea Cellular has entered into partnership with Eros International for the digital content distribution for over-the-top distribution service ErosNow on latter's 4G networks.
  • ICICI Bank has inked a Memorandum of Understanding with the Ajmer Nagar Nigam to help the latter collect tax online from the residents of Ajmer.
  • Bharat Heavy Electricals has achieved another milestone by successfully commissioning the first 600 MW coal-based thermal power plant in the state of Telangana.
  • SBI along with its associate bank State Bank of Travancore has sold loans extended to a unit of Kohinoor Group, as the company is struggling to repay its liabilities primarily due to a slowdown in the real estate business.

News Analysis