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NSE Intra-day chart (08 March 2017)
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Market Commentary 09 March 2017
Markets to make a soft start on weak global cues

Indian benchmarks indices extended the sorrow of closing in the red territory for the second consecutive session on Wednesday as caution prevailed ahead of the exit poll results due tomorrow for the ongoing assembly elections. State elections results, including that of Uttar Pradesh, which will have a key influence on Prime Minister Narendra Modi's chances of clinching a second term in 2019, is to be revealed on Saturday. Sentiments remained subdued on the report that sovereign wealth funds (SWFs), considered one of the stickiest foreign portfolio investors (FPIs), are reducing bets on Indian equities. The share of SWFs in the total FPI holding in India shrank to 6% in January compared with 10.4% in July 2016. The AUM of the SWFs stood at Rs 1.4 lakh crore at the end of January, while total FPI AUM was at Rs 21.51 lakh crore. Furthermore, investors also remained nervous with the report that Consumer price inflation is likely to rise in February for the first time since demonetization and this could prompt the Reserve Bank of India (RBI) to hike rates much sooner than most expect. However, downside remained capped with Prime Minister Narendra Modi's statement that his government has been able to tame inflation which had gone out of control before 2014 and no political party could raise the issue during the polls in five states. PM cited examples of how different organisations around the world including the World Bank, IMF and others have appreciated the demonetisation move. Meanwhile, sugar stocks came under selling pressure after the report that India's sugar output will fall 19% this season due to poor crop yields in Karnataka, Maharashtra and Andhra Pradesh. According to Indian Sugar Mills Association (ISMA), the country' output in the 2016-17 season beginning October would be about 20.3 million tonnes, compared with 25.1 million tonnes in the earlier season. Further, some pharma stocks slipped after US President Donald Trump's tweet about lowering drug prices. Trump said he was working on a new system to increase competition in the drugs industry and bring down prices. On the other hand, Aviation stocks gained traction on the reports that the Delhi government will cut tax of air turbine fuel (ATF) to 1% from 25% in a bid to boost connectivity between the capital and northeast areas. Finally, the BSE Sensex declined 97.62 points or 0.34% to 28901.94, while the CNX Nifty was down by 22.60 points or 0.25% to 8,924.30. 


The US markets closed lower on Wednesday, with the Dow industrials and S&P 500 closing lower for the third consecutive session, as oil prices dropped and a stronger-than-expected report on private-sector employment helped to bolster expectations for an interest-rate hike next week. On the economy front, the increase in productivity among American firms and workers was left unchanged at 1.3% in the fourth quarter, marking the performance in 2016 as the worst in five years. The government's first revision of fourth-quarter productivity showed little change in output, hours worked or labor costs. The increase in output, or how much goods and services companies produce, was raised to 2.4% from 2.2%. Hours worked rose 1% instead of 0.9%. Productivity increases when output rises faster than hours on the job. Unit-labor costs advanced 1.7%, the same as the government originally reported. That reflects how much it costs a business to produce one unit of output, such as a ton of coal or a bushel of wheat. The private sector recorded the third-best showing for jobs creation during the current economic recovery. The Dow Jones Industrial Average lost 69.03 points or 0.33 percent to 20,855.73, S&P 500 dropped 5.41 points or 0.23 percent to 2,362.98, while Nasdaq was up 3.62 points or 0.06 percent to 5,837.55.


Crude oil futures slumped on Wednesday to 2017 lows, after data showed another gargantuan build in US stockpiles, adding to record inventories. A stronger dollar also weighed on oil prices after a blockbuster ADP jobs report cemented calls for an interest rate hike. Meanwhile, the Energy Information Agency (EIA) reported a much larger increased than expected in US crude inventories. The EIA said that crude oil inventories rose by 8.209 million compared to estimates of an increase of 1.967 million barrels. Gasoline inventories decreased by 6.555 million, while distillate stockpiles fell by 2.676 million barrels. Benchmark crude oil futures for May delivery plunged by $2.86 or 5.4 percent to $50.28 on the New York Mercantile Exchange. In London, Brent crude for May delivery ended lower by $2.89 at $53.03 on the ICE.


Snapping two-day winning streak, Indian rupee ended marginally lower against dollar on Wednesday due to fresh demand for the American currency from banks and importers. Investors maintained a cautious approach over a hike in interest rates by the US Federal Reserve next week. Besides, weak trade in the domestic equity market also kept pressure on the local currency. On the global front, pound continued to hover around a seven-week low against the dollar on Wednesday, as investors and traders await Philip Hammond's first full Budget statement as Chancellor. Finally, the rupee ended at 66.70, 3 paise weaker from its previous close of 66.67 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 4853.97 crore against gross selling of Rs 3965.24 crore, while in the debt segment, the gross purchase was of Rs 265.04 crore with gross sales of Rs 59.13 crore.


The US markets continued their consolidation and made a mixed closing in last session, with the Dow and the S&P 500 eventually closing lower for the third straight session, as traders looked ahead to the monthly jobs report due on Friday as well as next week's Federal Reserve meeting. The Asian markets have made a weak start tailing the US counterparts, though the weakness in yen against dollar is supporting the Japanese market, which is modestly up in early trade. The Indian markets ended lower for a second consecutive day in last session, as market participants remained cautious ahead of state elections results and a US Federal Reserve policy meeting next week. Today, the start is likely to remain cautious on weak Asian cues and the consolidation may extend amid lack of any supportive cues. Traders will be eyeing the state election results due on Saturday, as a victory in Uttar Pradesh is important for the ruling party to shore up its numbers in Rajya Sabha. The exit polls will be out later today after 5.30 pm. Traders will also be concerned with the 2017 Trade Policy Agenda unveiled by the Trump administration. This document says ominously that the US will come down on India's export subsidy programmes, and push for a stricter regime for intellectual property rights and patents. There will be some buzz in the PSU oil marketing companies with the international crude oil prices slumping by 5 percent overnight. The aviation stocks too will remain in action, after the Delhi government announced a reduction in value added tax (VAT) on ATF to 1% from 25% earlier on planes fuelling tanks for flying to airports under the RCS. Now the airlines want the government to reduce taxes on ATF for all routes and not just those covered under RCS, as the operating cost is expected to increase by about 10% in FY18 on the back of hike in oil.


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  • Infosys Public Services, a US-based subsidiary of Infosys, has entered into partnership with the Texas Department of Family & Protective Services to modernize the agency's IMPACT system.
  • BPCL has raised Rs 550 crore through private placement of secured non-convertible debentures at a coupon of 7.35% p.a. payable semi-annually with a door-to-door maturity of 5 years.
  • NTPC has commissioned 45 MW of Bhadla Solar Power Project.
  • Tech Mahindra has set up a state-of-the-art lab, which works on technologies that are expected to power the future factory floors.
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