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NSE Intra-day chart (04 November 2016)
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Market Commentary 07 November 2016
Markets to see some recovery with a positive start

The carnage in Indian equity markets prolonged for yet another session as the frontline indices  continued to sway to the tune of gloomy global developments and deposed another half a percentage point on the last trading session of the week. The session was characterized by extreme volatility as nervous investors fretted over the potential outcome of the US presidential election, which has become too close to call, on November 8, 2016. Investors had largely priced in a Hillary Clinton win in the election, but nerves creeped in when news broke last week that the FBI was investigating new emails linked to the Democratic candidate. On domestic front, Sun Pharmaceuticals and Reliance Industries (RIL) have proved to be the main culprits for today's major fall. RIL, with the highest weightage on Sensex, got bludgeoned by close to two percent in the session after the Centre issued a penalty of $1.55 billion (approximately Rs 10,340 crore) on Reliance Industries for drawing and selling natural gas from the state-owned Oil and Natural Gas Corporation's idle block in the Krishna-Godavari basin. Further, Pharma stocks including Sun Pharmaceuticals edged lower after US prosecutors are bearing down on generic pharmaceutical companies in a sweeping criminal investigation into suspected price collusion, a fresh challenge for an industry that's already reeling from public outrage over the spiraling costs of some medicines. Meanwhile, investors also overlooked reports that the GST Council fixed a four-slab tax structure for GST implementation. Four-tier GST tax structure of 5, 12, 18 and 28 per cent that aims to lower tax incidence on most goods and keep out essential items was decided by a high-powered council, a major breakthrough for rollout of the Goods and Services Tax regime from April 1 next year. According to Chief Economic Advisor Arvind Subramanian, the GST Council's decision to peg the tax rate on items of mass consumption at 5 per cent will bring down prices and soften inflation. Finally, the BSE Sensex declined by 156.13 points or 0.57% to 27274.15, while the CNX Nifty dropped 51.20 points or 0.60% to 8,433.75. 

The US markets closed lower on Friday, with the S&P 500 ending lower for a ninth straight session in the longest losing streak since December 1980. Global equity weakness has been tied in part to Republican presidential nominee Donald Trump's gains against Democratic rival Hillary Clinton in the polls over the past week. He is viewed as more likely to inject uncertainty into domestic and global affairs, and investors generally don't like uncertainty. Economic data released were mixed, but underlined steady growth and were seen as not impacting the Federal Reserve's view for continued normalization of interest rates. According to the CME Group's FedWatch tool, market participants see a 71.5% chance of the Federal Reserve tightening policy next month. On the economy front, the US added 161,000 new jobs in October and the unemployment rate fell below 5% again, reflecting a tight labor market that's forced firms scrambling to fill open positions to boost pay at the fastest pace in seven years. Unemployment, meanwhile, fell to 4.9% from 5% and remained near an eight-year low. Separately, the US trade deficit plunged 10% in September to a 19-month low, aided by a fourth straight increase in exports that gave the economy a boost in the third quarter. The nation's trade gap shriveled to $36.4 billion from a revised $40.5 billion in August. Exports rose 0.6% to $189.2 billion and hit the highest level since the summer of 2015 despite a sharp pullback in shipments of soybeans. The Dow Jones Industrial Average lost 42.39 points or 0.24 percent to 17,888.28, Nasdaq dropped 12.04 points or 0.24 percent to 5,046.37, while S&P 500 was down 3.48 points or 0.17 percent to 2,085.18.

Crude oil futures continued their decline on Friday, making it the worst weekly settlement since September 20, as prices were down 9.5% this week. The commodity also remained under pressure amid growing skepticism over the implementation of a planned deal by OPEC to limit production. There were reports that OPEC may not finalize an agreement to curb supplies until the end of the month, and reports indicate Iran is unwilling to commit to any quotas. Iraq, Iran, Nigeria and Libya all signaled they might not take part in the proposed production cut deal.  Also, Baker Hughes reported a 12-site increase in the oil and gas rig count, bringing the total number of active rigs to 569. Benchmark crude oil futures for December delivery dropped $0.59 or 1.3 percent to close at $44.07 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery declined by $0.51 or 1.1 percent to $46.35 a barrel on the ICE.

Indian rupee snapping its two-day depreciating streak ended stronger against dollar on Friday on account of fresh selling of the American currency by banks and exporters. Sentiments got some support with report that the government has finalized four-tier GST tax structure of 5, 12, 18 and 28 percent that aims to lower tax incidence on most goods and keep out essential items. Meanwhile, Chief Economic Advisor Arvind Subramanian has said that the GST Council's decision to peg the tax rate on items of mass consumption at 5 per cent will bring down prices and soften inflation. Further, dollar weakened overseas also supported the rupee but a weak trend domestic equity markets capped the gains. On the global front, the safe haven Yen was pushed higher against US Dollar as FX traders consider the possibility that Donald Trump could become the next US President. Finally, the rupee ended at 66.70, 4 paise stronger from its previous close of 66.74 on Thursday.

The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 3827.03 crore against gross sell of Rs 3754.00 crore, while in debt segment, the gross purchase was of Rs 1224.64 crore with gross sales of Rs 1047.94 crore. 

The US markets ended lower in last session amid election outcome concerns and traders shrugged off the largely positive jobs report. Most of the Asian markets have made a green start and the Japanese market has advanced over a percent as the yen weakened the most in a month after dollar strengthened on latest FBI report. The Chinese market was marginally lower and the Hong Kong property shares tumbled after the government announced shock measures to cool the affordable housing market. The Indian markets had made a dismal closing of last week with another negative ending amid uncertainty over US election results, and the first week of Samvat 2073 witnessed cuts of over two percent. Today, the start is likely to be in green and the markets will see recovery tailing the gains in Asian markets after the US FBI informed Congress that a review of new emails found in relation to the bureau's investigation into Hillary Clinton's use of a private email server had not yielded any reason for charges against the Democratic presidential nominee. On the domestic front the traders will be getting support with a survey report that India improved its ranking by one spot in a global index of business optimism, with policy reforms and Goods and Services tax (GST) expected to become a reality soon. India was ranked second on the optimism index during the third quarter (July-September 2016). Also, foreign direct investment (FDI) into the country grew by over 30 percent to $ 21.62 billion during the first half of 2016-17. During April-September of 2015-16, India received FDI worth $ 16.63 billion. The Tata group stocks will once again be buzzing with a group of foreign institutional investors (FIIs) that together own more than 10% of Tata Motors expressing concerns over Tata Sons having access to strategic information about Tata Motors. There will be lots of important result announcements too, to keep the markets in action.

Support and Resistance: NSE (Nifty) and BSE (Sensex) 


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  • Yes Bank has launched 'Yes Mobile 2.0' mobile Banking app with multiple industry first features, and extensive support for Banking transactions on Apple and Android based SmartWatches.
  • Tata Motors has singed memorandum of understanding with Indonesia's state-owned enterprise PT Pindad to explore market potential of Tata-armoured vehicles in Indonesia and other agreed regions of Asean.
  • Maruti Suzuki India has reported 5.32% rise in its production to 132,980 units in October 2016 as compared to 126,251 units in October 2015.
  • Bharti Airtel has provided 7000 more additional points of interconnect to Reliance Jio, taking the total number of those provided to over 17,000, which claimed to be enough to cater a user base of 75 million.
  • The government has slapped a $ 1.55 million fine on Reliance Industries and its partners for extracting natural gas that came under the state-owned ONGC in the KG basin over the past seven years.

News Analysis