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NSE Intra-day chart (06 January 2016)
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Market Commentary 07 January 2016
Markets to extend the somberness with a weak start

Indian benchmark indices continued their struggle for the third consecutive session of trade as they went home with over half a percent of loss. Sentiments got undermined after North Korea said it has successfully conducted a test of a miniaturised hydrogen nuclear device on Wednesday morning, marking a significant advance in the isolated state's strike capabilities and raising alarm bells in Japan and South Korea. The fifty shares nifty slipped over half a percent to settle a tad below the psychological 7,750 mark while BSE's 30-share sensitive index, Sensex registered over a hundred and fifty points cut to settle above the crucial 25,400 level. Risk sentiment was also dampened with the report that corporate earnings growth is expected to fall around 2% for the December quarter owing to a plunge in commodity prices coupled with weaker investment demand. The much-anticipated turnaround in earnings of India Inc is unlikely to take place in the December quarter season. Investors failed to draw any solace from report that India's services sector rebounded from flat activity in November and showed an encouraging growth in December, with the Nikkei Services Purchasing Managers' Index (PMI) climbing to a ten-month high of 53.6, compared with 50.1 last month. Earlier on Dalal Street, the benchmark got off to a sedate opening tracking the dismal leads prevailing in Asian markets. Thereafter, the indices traded on a lackluster note for most part of the morning deals. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Though the bourses recovered from the lows of the day but could not succeed in minimizing the huge losses by the end of trading session. Moreover, the broader markets succumbed to the selling pressure despite showing positive moves early on and settled with cuts of over quarter a percent.  Finally, the BSE Sensex declined by 174.01 points or 0.68% to 25406.33, while the CNX Nifty lost 43.65 points or 0.56% to 7,741.00.

The US markets after showing some consolidation in last session slumped again on Wednesday. The sharp sell-off on Wall Street came after North Korea claimed it successfully performed the republic's first hydrogen bomb test, showing that it has joined the ranks of advanced nuclear states. Also, the Institute for Supply Management released a report showing an unexpected drop by its index of service sector activity. Traders largely shrugged off the payroll processor ADP report showing stronger than expected private sector job growth in December. ADP reported that Private sector employment jumped by 257,000 jobs in December after climbing by a revised 211,000 jobs in November. The Dow Jones Industrial Average plunged 252.15 points or 1.5 percent to 16,906.51, the Nasdaq slumped 55.67 points or 1.1 percent to 4,835.76 and the S&P 500 slid by 26.45 points or 1.3 percent to 1,990.26.

Crude oil futures slumped on Wednesday near the lowest in eleven years, as Saudi Arabia slashed prices for European customers in a bid to hurt Iran. The rising tensions between Saudi Arabia and Iran provided further indications that the two Persian Gulf oil powers may be unwilling to engage in any diplomatic efforts to cut near-record oversupply on global markets. Iran foreign minister Mohammad Javad Zarif criticized the Saudi kingdom for restraining Iranian economic growth by keeping oil prices low. Concerns about demand from China too hit crude oil prices, now traders are eyeing the US inventory data for further cues. Benchmark crude oil futures for February delivery plunged by $ 2.00 or 5.56 percent to $34.19, after trading in a range of $33.78 and $36.35 a barrel on the New York Mercantile Exchange. In London, Brent crude for February delivery closed at $34.19, down $2.23 or 6.11% on the ICE.

Indian rupee ended weaker against dollar on Wednesday due to demand for American currency from banks and importers, tracking cautious trading in Asian currency markets on concerns over China's economic slowdown. Investor's sentiment dampened after Chinese yuan sank to a five-year low and losses in local equity markets. Sentiments remained under pressure after Industry body CII's said that the economy is not doing as good as it was expected and the pace of reforms have slowed down. Investors failed to draw any solace from report that India's services sector rebounded from flat activity in November and showed an encouraging growth in December, with the Nikkei Services Purchasing Managers' Index (PMI) climbing to a ten-month high of 53.6. On the global front, US Dollar was bullish against the major currencies ahead of the release of minutes from the Federal Open Market Committee's policy meeting in December.Finally, the rupee ended at 66.83, 24 paise weaker from its previous close of 66.59 on Tuesday.

The FIIs as per Wednesday's data were net sellers in equity segment, while they were net buyers in debt segment. In the equity segment gross buying was of Rs 3386.06 crore against gross selling of Rs 3631.12 crore, while in the debt segment, the gross purchase was of Rs 1763.51 crore with gross sales of Rs 1722.59 crore.

The US markets plunged once again and closed at their lowest level since early October in last session, on geo-political worries and global growth concern. Fed's minutes from the last policy meeting showed policymakers decided to raise interest rates after almost all of them gained confidence inflation was poised to rise, but some voiced worries inflation getting stuck at dangerously low levels. The Asian markets have steeply lower start tailing the US markets amid anxiety over China's management of its economic slowdown. The Indian markets losing their momentum in late hours ended weak by over half a percent in last session. Traders remained worried about the global developments and ignored the services PMI's better than expected performance. Today, the start is likely to remain weak on sombre global cues and Nifty may even retest the 7700 crucial mark. Some support can come in latter trade with the World Bank expectations of India's growth picking up to 7.8% in the next financial year, projecting it to be the fastest growing economy in the world for the next three years by a distance. Meanwhile, industry has backed Finance Minister's plan to raise infra spending, even if it results in the government's failure to meet the fiscal deficit target; saying that this would be more productive in the long run to prop up economic growth. The auto stocks will see some action, as the government ignoring protests from car makers -who will have to invest heavily and raise prices steeply, has decided to adopt Bharat Stage VI norms all over India by April 1, 2020.

Support and Resistance: CNX Nifty and BSE Sensex 


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  • Mahindra & Mahindra, India's leading SUV manufacturer, has launched Imperio, its premium, aspirational pick up.
  • Maruti Suzuki India, country's largest car maker, has reported 12.97% rise in its production to 1,07,773 units in December 2015 as compared to 95,400 units in same month last year.
  • Larsen & Toubro's construction arm L&T Constructions has won orders worth Rs 2,871 crore across various businesses.
  • Cipla has inked a pact with the US-based BioQ Pharma for registration and commercialisation of the latter's Ropivacaine infusion system, used in treating post-operative pain, in India.
  • Lupin's US subsidiary Lupin Pharmaceutical has launched its Tri-Lo-Marzia Tablets (Norgestimate and Ethinyl Estradiol Tablets USP, 0.180 mg/0.025 mg, 0.215 mg/0.025 mg, and 0.250 mg/0.025 mg). 

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