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NSE Intra-day chart (09 May 2017)
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Market Commentary 10 May 2017
Markets to make a positive start on normal monsoon forecast

Indian benchmark indices ended the session on a flat note, with the Nifty managing to hold on to its 9300 mark. Today's session largely remained characterized by consolidation as the aimless indices moved only sideways in a tight band amid lack of triggers. Sentiments got some support with IMF's report indicating that India's growth is expected to rebound to 7.2% in the 2017-18 fiscal and 7.7% in 2018-19. According to the report, the temporary disruptions (primarily to private consumption) caused by cash shortages accompanying the currency exchange initiative are expected to gradually dissipate in 2017 as cash shortages ease. It noted that the investment recovery is expected to remain modest and uneven across sectors as deleveraging takes place and industrial capacity utilisation picks up. Some support also came with the report that mutual fund (MF) industry's asset base crossed the Rs 19 lakh crore mark in April on the back of fresh inflows in equity, debt and money market segments. The assets under management (AUM) of the MF industry, comprising 42 players, rose to an all-time high of Rs 19.26 lakh crore at the end of April from Rs 17.55 lakh crore at the end of March 2017. However, traders turned cautious after agriculture minister Radha Mohan Singh asked chief ministers of all states and union territories to review their preparedness to mitigate possible drought in the event of a rain deficit in the upcoming monsoon season. As per the weather office's forecast issued earlier this month, the June-September monsoon rainfall this year is expected to be 96% of the long-term average, with a 5% error margin. Meanwhile, India's food safety regulator has proposed a tax on all packaged foods with high fat, sugar and salt content. The regulator also proposed strict labelling norms for such products and a bar on advertising them on children's television channels. The Food Safety and Standards Authority of India (FSSAI), however, did not specify the quantum of tax that it wants imposed. Finally, the BSE Sensex gained 7.10 points or 0.02% to 29933.25, while the CNX Nifty was up by 2.80 points or 0.03% to 9,316.85.


The US markets extending the sluggish trend made a mixed closing on Tuesday, though the tech-heavy Nasdaq reached a new record closing high. The trade remained lackluster and the traders seemed reluctant to make significant moves ahead of the release of key reports on retail sales and producer and consumer prices later this week. Traders were also keeping an eye on comments from Federal Reserve officials, with Boston Fed President Eric Rosengren suggesting the central bank could be forced to raise interest rates at a faster pace if unemployment drops below 4 percent. On the economy front the Commerce Department reported an unexpected increase in wholesale inventories in the month of March. The wholesale inventories rose by 0.2 percent in March after climbing by 0.3 percent in February. On the other hand, the report said inventories of non-durable goods fell by 0.5 percent amid steep drops in inventories of petroleum and farm products. The Commerce Department also said wholesale sales came in unchanged in March after rising by 0.7 percent in February. The Dow Jones Industrial Average was down by 36.50 points or 0.17 percent to 20,975.78 and the S&P 500 was lower by 2.46 points or 0.10 percent to 2,396.92, while the Nasdaq added 17.93 points or 0.29 percent to 6,120.59.


Crude oil futures got a halt to their recent rally on Tuesday, as concerns over rising US oil output returned, after the Energy Information Administration (EIA) raised its near-term outlook for U.S. oil production and revised down its projections for oil prices. The EIA now sees US output averaging 9.3 million barrels a day in 2017, and nearly 10 million barrels a day in 2018. The EIA revised down its projection for average oil prices in 2017 to $52.60 a barrel for Brent and $50.68 for WTI. Benchmark crude oil futures for June delivery ended down by $0.55 or 1.2 percent to $ 45.88 on the New York Mercantile Exchange. In London, Brent crude for June delivery lost 1.3 percent to end at $ 48.83 on the ICE.


Tracking losses in Asian currency markets, Indian rupee ended considerably weaker against the US dollar on Tuesday, on increased demand for the American currency from importers amid sustained foreign fund outflows. Foreign portfolio investors (FPIs) have sold stocks worth a net Rs 3081.98 crore into the secondary equity markets in May 2017 so far (till May 08, 2017). They sold stocks worth a net Rs 1645.32 crore in April 2017. Besides, the dollar's strength against other currencies overseas, as investors raised expectations of another US interest rate hike next month, also weighed on the domestic unit. On the global front, yen weakened against Dollar, on Tuesday following news of further earnings weakness in Japan. As per the official data, Labor cash earnings for March fell by 0.4% on the year. Total real cash earnings were miserable too, they fell by 0.8%, from a flat reading in February. Finally, the rupee ended at 64.62, 31 paise weaker from its previous close of 64.31 on Monday.


The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3364.40 crore against gross selling of Rs 3945.75 crore, while in the debt segment, the gross purchase was of Rs 1203.77 crore with gross sales of Rs 163.73 crore.


The US markets made a mixed closing in last session, as the traders remained on sidelines ahead of key economic data releases. Hope that US President Donald Trump will cut corporate and personal taxes too remained in focus for investors. The Asian markets have made mostly a positive start with dissipating concerns over North Korea's nuclear program. The Chinese market too was trading higher though the producer price index rose less than forecast in April at 6.4 percent from a year earlier. The Indian markets after struggling through the day managed a flat but positive close in the last session, investors mainly were reacting to earnings announcements and got some support with IMF report that India's growth will rebound. Today, the start is likely to remain in green and any downside is restricted on mostly positive regional cues and with the Indian Meteorological Department (IMD) predicting a ‘normal' monsoon this calendar and expecting 100 per cent rainfall instead of 96 per cent as predicted earlier. It has said that recent development on El-Nino indicates that the monsoon could be normal this year and it could reach 100 per cent of the long period average. There will be buzz in the market with commerce & industry minister Nirmala Sitharaman stating that India's manufacturing policy will soon be overhauled with the objective of creating more jobs in an environment where technology is rapidly replacing labour. There will be some buzz in companies doing business in defence sector, as Finance and defence minister Arun Jaitley has said that foreign companies need to be incentivised to set up defence manufacturing bases in India. The telecom sector stocks are likely to come under pressure, as the India's largest telecom services provider Bharti Airtel posted a 72% decline in net profit for the fourth quarter, impacted by free services offered by new entrant Reliance Jio Infocomm until 31 March. There will be lots of important earnings announcements too, to keep the markets in action.


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  • Indian Oil Corporation is in talks with Saudi Aramco on downstream investments, including a mega project on its west coast, which could help the OPEC member lock-in customers amid an oil supply glut.
  • Bharti Infratel has reported a fall of 16.95% in its consolidated net profit at Rs 596.60 crore for the quarter ended March 31, 2017, as compared to Rs 718.40 crore for the corresponding quarter in the FY16.
  • Bharti Airtel has entered into a strategic partnership with Ola, India's largest and most popular mobile app for transportation, to offer a range of exciting digital services to customers.
  • US Food and Drug Administration issued eight observations for Lupin's Aurangabad unit, which was inspected between April 17 and 26, 2017.
News Analysis