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NSE Intra-day chart (05 October 2016)
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Market Commentary 06 October 2016
Markets to start in green tailing positive global cues


Wednesday turned out to be a weak day for the Indian equity indices, which got pounded by over quarter percentage on feeble global cues. Domestic sentiment was hit as US equities ended lower in wake of a report that the European Central Bank could start winding down its quantitative-easing program ahead of schedule. Through, the domestic indices ended the session in negative territory, it was more or less stable day as the indices remained in tight range below neutral line with minute losses for most part of the session as a drop in Banking, information technology (IT) and Oil & Gas counters were offset by some gains in Realty, Metal and Auto stocks.  Good buying was witnessed in select mid-cap and small-cap stocks. Steel stocks edged higher after the government extended the minimum import price (MIP) on 66 steel products by another two months to protect the industry against cheap imports. Telecom stocks remained on buyers' radar on the reports that spectrum auction received additional bids worth Rs 3,100 crore on the third day to take total commitments to Rs 59,981 crore, leaving two-thirds of total quantum of on-offer airwaves unsold as bidders stayed away from high-cost 700 Mhz and 900 Mhz bands. Further, Tyre and Paints stocks too remained in focus on expectation of healthy earnings growth for the quarter ended September 2016. Investors got some disappointment with slower growth in the services sector in September as pace of new orders moderated amid competitive pressure and unfavourable weather conditions. The widely tracked Nikkei India services Purchasing Managers Index (PMI) which tracks services sector companies on a monthly basis, stood at 52 in September, down from the 43-month high of 54.7 in the previous month of August 2016. Adding anxiety among market patients World Bank came up with report indicating that automation threatens 69 per cent of the jobs in India, while 77 percent in China. However, sentiments got some support as International Monetary Fund (IMF) in its latest assessment of global growth said India's economy is recovering strongly, bumping up the country's growth forecast for the current and next year as it warned of subdued global growth that could fuel protectionism. The IMF now expects the economy to expand 7.6% in 2016-17, up from its earlier projection of 7.4%. Finally, the BSE Sensex declined by 113.57 points or 0.40% to 28220.98, while the CNX Nifty dropped 25.20 points or 0.29% to 8,743.95.


The US markets closed higher on Wednesday, as stocks rebounded from losses of the past two sessions, fueled by rising oil prices. A resurgent services sector also helped to lift demand for equities and other assets perceived as risky. The services sector accelerated in September, reaching its highest level in 11 months. The Institute for Supply Management stated that its services index shot up to 57.1% in September from 51.4% in August. According to its scale, any reading over 50% indicates improving conditions. A reading on business activity vaulted 8.5 points to 60.3%. The index for new orders jumped 8.6 points to 60%. The index for employment grew an impressive 6.5 points to 57.2%. A similar report from Markit, however, showed a smaller gain, to 52.3% from 51% in August. Private-sector employment slowed a bit in September. Employers added 154,000 private-sector jobs last month, down from 175,000 in August, Automatic Data Processing Inc. reported. The Dow Jones Industrial Average added 112.58 points or 0.62 percent to 18,281.03, Nasdaq gained 26.36 points or 0.50 percent to 5,316.02, while S&P 500 was up 9.24 points or 0.43 percent to 2,159.73. 


Crude oil futures surged on Wednesday, touching a fresh four-month high after data showed that crude supplies in the US fell for the fifth week in a row. The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 2.976 million barrels in the week ended September 30. The report also showed that gasoline inventories increased by 222,000 barrels, while the distillate inventories including diesel, declined by 2.359 million barrels. Benchmark crude oil futures for November delivery surged by $1.05 or 2.2 percent to close at $49.74 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery ended up by $1.04 or 2.05 percent to $51.91 a barrel on the ICE.


Reversing its three-day uptrend, Indian rupee ended weaker against dollar on Wednesday, tracking losses in the other Asian currencies. Sentiments weakened after Nikkei India services Purchasing Managers Index (PMI) which tracks services sector companies on a monthly basis, stood at 52 in September, down from the 43-month high of 54.7 in the previous month of August 2016, pointing to a slower and moderate rate of expansion. Sentiment further dampened with the India Meteorological Department's statement that monsoon into October has led to crop damage in many areas. Also, dollar strengthened against other currencies overseas amid mounting expectations of higher borrowing costs in the US too weighed on the local currency. On the global front, euro extended its gains against dollar following a report of potential changes to European Central Bank policy. Finally, the rupee ended at 66.51, 5 paise weaker from its previous close of 66.46 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4953.86 crore against gross sell of Rs 4450.14 crore, while in the debt segment, the gross purchase was of Rs 1000.48 crore with gross sales of Rs 398.71 crore. 


The US markets after showing some weakness in last two sessions rebounded in last session and all the major indices posted gains of about half a percent, following the release of a slew of U.S. economic data including substantial acceleration in service sector growth. The Asian markets have made mostly a positive start tailing gains in US markets and pickup in oil prices. The Japanese market was up despite slight strength in yen.The Indian markets showing a downward trend ended lower in last session after a weak services sector data. Today, the start is likely to be in green but cautiousness may prevail lacking any major supportive cues.  Also, as the RBI Governor Urjit Patel signaled a marked departure in policy approach from his predecessor's unwavering focus on price stability. He said that "The NPA situation is an important issue for the RBI in India. We will be dealing with it with firmness but also with pragmatism so that the economy does not feel any lack of credit." Rate-sensitive stocks will be in action after Bank of India, Syndicate Bank and Punjab National Bank reduced their lending rates following RBI's decision to lower policy rates. The PSU oil marketing companies too will keep buzzing with international crude prices surging by 2 percent overnight. Sugar stocks will be in focus on reports that the government is keeping a close watch on prices of sugar, pulses and edible oils to check hoarding and ensure adequate availability in the market in the festival season.


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  • Maruti Suzuki India, country's largest car maker, has reported 24.08% rise in its production to 146,434 units in September 2016 as compared to 118,015 units in September 2015.
  • BPCL is reportedly planning to build a terminal on the west coast to import liquefied petroleum gas.
  • Tata Steel has allotted non-convertible debentures  worth Rs 1,000 crore on a private placement basis to investors
  • Bharti Airtel has launched 4G services in Gujarat with the rollout of the high speed Internet services in Ahmedabad.
News Analysis