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NSE Intra-day chart (06 February 2017)
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Market Commentary 07 February 2017
Markets to make a soft start on weak global cues


It turned out to be a stable day for the Indian equity indices, which sustained sanguinity for the fourth successive session and climbed well over half a percent on Monday on hopes of a rate cut by the Reserve Bank of India at its policy meet scheduled on Wednesday, and increased inflows by foreign funds. Slowing inflation and a fiscally responsible budget may sway the Reserve Bank of India (RBI) to cut interest rates this week. Further, after four months of selling frenzy, overseas investors turned net buyers in February and pumped in over Rs 2,300 crore in the capital market over the last three sessions, enthused by clarity on FPI taxation. The latest inflow followed a net pullout of Rs 80,310 crore from equity and debt together in the past four months (October-January). Prior to that, FPIs had invested over Rs 20,000 crore in the capital market. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. Investors' morale remained upbeat with Economic Affairs Secretary Shaktikanta Das' statement expressing confidence that the economy will grow upwards of 7 per cent next fiscal. He reiterated that there will be transient impact of demonetisation on the economy, but it will not spill over to the next fiscal. The Economic Affairs Secretary taking a dig at global rating agencies for failing to upgrade India's sovereign rating despite significant improvement in macroeconomic parameters, has said the agencies are several steps behind from reality and are missing out on something which only they can best explain. Meanwhile, Realty stocks extended their gains for the fourth consecutive sessions after finance minister Arun Jaitley accorded infrastructure status to affordable housing in Budget 2017 to encourage investment in the segment and offered tax sops for developers sitting on completed unsold inventories. Further, Auto stocks gained traction on Union Minister Nitin Gadkari's statement that government is keen on implementing vehicle policy that aims at scrapping 15-year old commercial vehicles in the first phase and it will send the proposal to GST Council after Cabinet nod. Finally, the BSE Sensex gained 198.76 points or 0.70% to 28439.28, while the CNX Nifty was up by 60.10 points or 0.69% to 8,801.05.


The US markets closed lower on Monday, as the S&P 500 snapped a three-day winning streak after mixed earnings. There were no major economic data scheduled for Monday. Over the past two weeks, investors have shown to be jittery after controversial policy announcements, such as travel ban applying to people from seven predominantly Muslim countries. The head of an influential US business group said that any move to tear up the North American Free Trade Agreement (NAFTA) would devastate the economies of members Canada, Mexico and the United States. US President Donald Trump, who says NAFTA has been a disaster for American workers wants to renegotiate the deal and says he is prepared to walk away if he does not get the changes he wants. Meanwhile, the Federal Reserve in a quarterly survey reported that loan officers at US banks reported largely unchanged lending standards and slightly looser terms for business loans in the last three months of 2016. About a third of the 69 institutions surveyed, however, said they had tightened somewhat the standards for commercial real estate construction and land development loans, and close to a fifth had tightened standards on loans secured by multifamily properties. The Dow Jones Industrial Average lost 19.04 points or 0.09 percent to 20,052.42, Nasdaq was down 3.22 points or 0.06 percent to 5,663.55, while S&P 500 dropped 4.86 points or 0.21 percent to 2,292.56.


Crude oil futures made a soft start of the new week and declined on Monday despite a weaker dollar and tensions between the U.S. and Iran, as traders become nervous about the outlook for demand. The Trump administration's new sanctions against Iran, though not affecting oil output, raised concern about the potential for further developments that could hinder export growth in OPEC's third-largest producer. Benchmark crude oil futures for March delivery declined by $0.82 or 1.5 percent to $53.01 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended lower by 1.09 or 1.9 percent at $55.72 on the ICE.


Indian rupee appreciated on Monday, maintaining its upward trend for the ninth straight day on sustained selling of the US currency by exporters and banks and also tracking the gains in its Asian peers. Local currency got some support with Economic Affairs Secretary Shaktikanta Das' statement expressing confidence that the economy will grow upwards of 7 per cent next fiscal. He reiterated that there will be transient impact of demonetisation on the economy, but it will not spill over to the next fiscal. Besides, positive gains in the domestic equity market along with dollar struggle against some other currencies overseas too gave the rupee an upper hand. On the global front, dollar slipped against yen on Monday after US data showed a smaller-than-expected rise in wages in January that reinforced expectations the Federal Reserve will refrain from raising interest rates next month. Finally, the rupee ended at 67.22, 9 paise stronger from its previous close of 67.31 on Friday.


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5376.17 crore against gross selling of Rs 4772.35 crore, while in the debt segment, the gross purchase was of Rs 729.92 crore with gross sales of Rs 537.85 crore.


The US markets made a modestly lower closing in last session after showing a lackluster trade through the day, amid lingering uncertainty about the impact of President Donald Trump's policies with lack of major US economic data keeping some traders on the sidelines. The Asian markets have made mostly a lower start led by the Japanese index, as the yen strengthened against the dollar with political uncertainty infecting markets across the globe. The Indian markets rallied in last session posting gains of over half a percent on the hopes of a rate cut by RBI in its next policy meeting on Wednesday. Today, the start is likely to be a bit cautious on mostly somber global cues. Traders will be concerned with Commerce Minister Nirmala Sitharaman's statement that the proposed changes in the regime for issuing H-1B visas for skilled workers by the US government will have an impact on Indian companies and the Commerce Ministry will soon hold a meeting with the industry to discuss its strategy for dealing with it. Meanwhile, Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra has said that the Union Budget 2017-18 focuses on increasing tax compliance while at the same time safeguarding the honest tax payers from any harassment. Traders will be eyeing the rupee movement after it ended at a nearly three-month high against the US dollar on Monday.  There will be buzz in Tata group stocks, as the shareholders of Tata Sons during an Extraordinary General Meeting (EGM) passed with requisite majority a resolution to remove Cyrus Mistry as the Director of the company. There will be lots of important result announcements to keep the markets in action.


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  • HDFC Bank has decided to increase the fees for savings account holders on a slew of activities involving cash, to discourage cash transactions.
  • Mahindra & Mahindra has reported 4.58% fall in its production to 40827 units in January 2017 as compared to 42788 units in same month last year.
  • Sun Pharmaceutical Industries is recalling 2,71,212 bottles of bupropion hydrochloride extended-release tablets, USP (SR) in the strengths of 150 mg and 200 mg from US market due to failed dissolution specifications.
  • Maruti Suzuki India has reported 32.61% rise in its production to 153,541 units in January 2017 as compared to 115,783 units in January 2016.
  • Bharat Heavy Electricals has secured an EPC order for the installation of Solar PhotoVoltaic Rooftop systems totaling to 3.6 MW capacity from the Surat Municipal Corporation.
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