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NSE Intra-day chart (07 December 2016)
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Market Commentary 08 December 2016
Markets to make a good start on jubilant global cues


It turned out to be a lackadaisical performance from the Indian benchmark indices on Wednesday as they failed to snap the session in the green territory and settled below the neutral line. Though the start was good tracking the positive cues of the global markets, but sentiments got spooked in the second half of trade after Reserve Bank of India (RBI) Governor Urjit Patel-led Monetary Policy Committee (MPC) maintained 'accomodative policy stance'  keeping the repurchase (repo) rate unchanged at 6.25% in its bi-monthly policy review. The MPC committee unanimously decided to keep the policy rate unchanged considering the "heightened uncertainty" of volatility related to US rate hike and the local demonetization drive. The expectation of slow pace of recovery in the economy also weighed on market sentiment.  Acknowledging the threat to economic growth from notes ban, the RBI has cut its GDP forecast, slashing gross value added growth outlook to 7.1% for FY17 from 7.6% earlier. However, in a positive move for the banking sector, the central bank withdrew incremental cash reserve ratio (CRR) of 100% on deposits. The RBI also forecast inflation to be around 5% for the fourth quarter of FY17 stating that some of the price reduction resulting out of demonetisation could be temporary. Meanwhile, former RBI Governor D Subbarao said that the Indian government's decision to delegalise high denomination currency notes may hurt growth in short-term, but in the medium- to long-term it will have positive macroeconomic implications. According to him, the banks will see their cost of funds declining even in the absence of any further policy easing by the RBI, and this should encourage them to reduce lending rates and pump credit into the economy. Also, investors got some comfort with Asian Development Bank's (ADB's) report, indicating that the largest economies of Asia - India and China - will help maintain the growth rate of the region at 5.7% in 2016 and 2017. The report also mentioned that India's growth prospects have got a boost from the acceptance of the 7th pay panel recommendations and likely implementation of the Goods and Services Tax (GST) regime next year. Finally, the BSE Sensex declined by 155.89 points or 0.59% to 26236.87, while the CNX Nifty dropped 41.10 points or 0.50% to 8,102.05.


The US markets closed higher on Wednesday, with the Dow industrials and S&P 500 notching new records. The stock market's post-election ascent has been underpinned by hopes that Trump will follow through with a slate of pro-business policies, including boosting infrastructure spending and cutting taxes for the wealthy. Another factor that may be supporting stock gains is the belief that traditional selling patterns that occur at the end of the year aren't being followed because investors are making bets on lower taxes under a Trump administration. On the economy front, job openings and hires were little changed in October, as the labor market remained strong. There were 5.5 million openings on the last day of October. That was down 2% from an upwardly revised 5.6 million in September. Hires were little changed at 5.1 million. Meanwhile, growth of consumer borrowing continued in October but at the slowest pace since June, suggesting there may be limits on how much debt consumers are willing to take on. Total consumer credit increased $16 billion in October to a seasonally adjusted $3.7 trillion. The Dow Jones Industrial Average added 297.84 points or 1.55 percent to 19,549.62, Nasdaq was up 60.76 points or 1.14 percent to 5,393.76, while S&P 500 gained 29.12 points or 1.32 percent to 2,241.35.


Crude oil futures extended their weakness on Wednesday and made another lower close. The prices settled at their lowest level in a week after U.S. government data revealed a weekly decline in crude stockpiles, though petroleum-product inventories rose much more than expected. The Energy Information Administration (EIA) reported that domestic crude supplies fell by 2.4 million barrels for the week ended Dec. 2, however Gasoline supplies climbed by 3.4 million barrels and distillate stockpiles rose 2.5 million barrels. Benchmark crude oil futures for January delivery declined by $1.16 or 2.3 percent to $49.77 on the New York Mercantile Exchange. In London, Brent crude for February delivery ended lower by $0.93 or 1.7 percent at $53 on the ICE.


Indian rupee appreciating for second consecutive session ended stronger against dollar on Wednesday on increased selling of US currency by banks and exporters. Though, the Central Bank's decision to keep repo rate unchanged at 6.25 percent weighted on rupee sentiment, withdrawal of 100% incremental cash reserve ratio (CRR) requirement, give some comfort to local currency. Some support also came with Asian Development Bank's (ADB's) report, indicating that the largest economies of Asia - India and China - will help maintain the growth rate of the region at 5.7% in 2016 and 2017. The report also mentioned that India's growth prospects have got a boost from the acceptance of the 7th pay panel recommendations and likely implementation of the Goods and Services Tax (GST) regime next year. On the global front, dollar edged up against yen as investors looking ahead to Thursday's European Central Bank policy meeting. Finally, the rupee ended at 67.63, 27 paise stronger from its previous close of 67.90 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 3162.24 crore against gross selling of Rs 2956.05 crore, while in the debt segment, the gross purchase was of Rs 1086.73 crore with gross sales of Rs 3499.10 crore.


The US markets coming off the initial sluggishness surged in last session, with Dow and the S&P 500 once again reaching new record closing highs, as traders looked ahead to the European Central Bank's monetary policy announcement on Thursday. The Asian markets have made an all green start taking cues from the US markets. The Japanese market has taken the lead ahead of the Bank of Japan Governor Haruhiko Kuroda's speech at a party for economists. The Indian markets lost the momentum in final hours of trade in last session after the Reserve Bank of India (RBI) kept the interest rates unchanged. RBI lowered GDP growth estimate to 7.1 percent in 2016-17 from earlier projection of 7.6 percent and said that retail inflation will be 5 percent in fourth quarter of current fiscal. Today, the start is likely to be in green and the markets will be recovering from the knee-jerk reaction of the monetary policy review. Traders will be getting some support with finance minister Arun Jaitley's statement that demonetisation will boost growth in long run. The finance minister said the country will now have a cleaner economy, cleaner ethics and better GDP, he added that the economy, in the long term, is looking for a major change and policy makers now have a vision. Meanwhile, the government has sought the approval of the Lok Sabha for gross additional expenditure of Rs 59,978.29 crore as part of the Second Batch of Supplementary Demands for Grants for the fiscal 2016-17. Marketmen will also be getting some support with S&P Global Ratings stating that India with a large domestic economy will be less affected by the changes in growth and monetary policy in the new set-up under Donald Trump administration. There will be some buzz in construction equipment makers, on report that the government is firming up a Construction Equipment Manufacturing (CEM) legislation to introduce a separate regulatory framework and Act for off-highway equipment.


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  • Lupin's US subsidiary, Lupin Pharmaceuticals, Inc. (collectively Lupin) has received final approval for its Desoximetasone Ointment USP, 0.25% from the United States Food & Drug Administration.
  • State Bank of India has signed a memorandum of understanding with VST Tillers Tractors to offer loans to farmers to purchase products such as tractors, tillers, power seeders and reapers.
  • ICICI Bank is planning to raise funds through bonds in the next three months.
  • Tata Steel is reportedly planning to keep its Port Talbot plant in South Wales, the UK's biggest steelworks, fully operational.
  • NTPC has successfully exposed coal in its first coal mine - Pakri Barwadih located in the state of Jharkhand after removal of overburden.
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