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NSE Intra-day chart (09 August 2016)
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Market Commentary 10 August 2016
Markets to make a cautious but green start


Indian benchmark indices staged a disappointing performance in Tuesday's volatile session of trade, erasing almost all the gains accumulated in the previous session. Marketmen, remained on sidelines after the Reserve Bank of India (RBI) at its policy meet kept key policy rates unchanged and retained FY17 GDP growth forecast at 7.6 percent. Inflation at a two-year high prevented Rajan from cutting interest rates at his final policy review.  Going forward, RBI indicated that the full implementation of the recommendations of the 7th central pay commission (CPC) on allowances will affect the magnitude of the direct effect of house rents on the retail inflation. RBI also noted that prices of pulses and cereals are rising and services inflation remains somewhat sticky. However, the central bank kept a positive outlook on the economy saying abundant monsoon will help in the recovery. Indian monsoon has been more than plenty this year, leading to better sowing averages. Promises of a better harvest also mean that food inflation could come down in the coming months, creating some space for his successor to cut rates later in the year. Further, dispelling fears of price rise due to the rollout of Goods and Services Tax, Raghuram Rajan said its impact could be assessed only after the GST rate is decided and inflation could be short-lived as seen in many other countries.  He further added that it will be challenging to roll out GST from April 1, 2017, but the new indirect tax regime will eventually boost business sentiment and investments. Meanwhile, local sentiments were also hurt by the private report that indicated consumer sentiment waned in July this year due to decreasing optimism towards personal finances, business environment, employment and the real estate market.  The MNI India Consumer Sentiment Indicator decreased 2.6 per cent on month-on-month basis to 111.6 in July, offsetting last month's pickup, which had left confidence running at a nine-month high of 114.7. On the global front, Asian markets ended mostly higher on Tuesday, while European stocks rose slightly in early trade. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, tracking mixed trade in Asian peers and sluggish cues from Wall Street in overnight trades. Thereafter, the key indices failed to show any fervor lacking encouraging leads. Finally, the BSE Sensex ended lower by 97.41 points or 0.35% to 28085.16, while the CNX Nifty dropped 33.10 points or 0.38% to 8,678.25. 


The US markets closed higher on Tuesday, shrugging off a weaker-than-expected report on US productivity. The thirst for yield-rich assets continued to support demand for stocks, despite falling corporate earnings and unsteady economic fundamentals. The next big event for the central bank will be Chairwoman Janet Yellen's appearance at the Jackson Hole conference on August 26. On the economy front, a measure of small-business sentiment rose in July, continuing a winning streak that began after it touched a two-year low. The National Federation of Independent Business optimism index rose 0.1 point to 94.6, better than the flat reading expected. But the index is still well below the 42-year average of 98. In July, four of 10 index sub-gauges rose, four declined, and two were unchanged. Wholesale inventories rose a revised 0.3% in June, up from an initial estimate of no change. Inventories in May were also revised higher, to a 0.2% gain from the previous estimate of a 0.1% gain. The Dow Jones Industrial Average added 3.76 points or 0.02 percent to 18,533.05, Nasdaq gained 12.34 points or 0.24 percent to 5,225.48, while S&P 500 was up 0.85 points or 0.04 percent to 2,181.74. 


Crude oil futures after a day of big gains, declined again on Tuesday after a volatile day of trade, ahead of the American Petroleum Institute's weekly crude inventory report. The trade was also impacted by a report that Iran exported 1.72 million barrels per day in June to China, India, Japan and South Korea, marking a 47% increase from its level in January. The return of Iran to markets in February following the removal of longstanding economic sanctions has exacerbated concerns related to the worldwide supply glut. Benchmark crude oil futures for September delivery dropped $0.36 or 0.84 percent to close at $42.66 a barrel after trading in a range of $42.51 and $43.48 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery declined by $0.52 or 1.15 percent to $44.87 a barrel on the ICE.


Indian rupee ended flat on Thursday due to mild dollar demand from banks and importers after Reserve Bank of India (RBI)  kept key policy rates unchanged and retained FY17 GDP growth forecast at 7.6%. Besides, a weak trend in the domestic equity market also weighed on the rupee. Traders failed to get any sense of relief with the GST Bill amendments being adopted by the Rajya Sabha last week getting unanimously passed by the Lok Sabha on Monday. On the global front, dollar rose against a basket of major currencies, still benefiting from slightly raised chances of higher Federal Reserve interest rates this year after Friday's stronger-than-expected US jobs data. Finally, the rupee ended unchanged from its previous close of 66.84 on Monday.


The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5234.89 crore against gross sell of Rs 4063.16 crore. While in the debt segment, the gross purchase was of Rs 693.65 crore with gross sales of Rs 388.87 crore. Thus, FIIs stood as net buyers of Rs 304.78 crore in debt.


The US markets managed a modestly higher close in last session, though the trade remained lackluster, as traders looked ahead to the release of reports on retail sale and producer prices on Friday. The Asian markets have made a mostly a lower start, with some indices showing cut of quarter to half a percent in early deals, as oil held declines, though the Chinese market was in green, on speculation the Federal Reserve will be slow to raise interest rates amid uneven global growth. The Indian markets suffered cut of over a quarter percent in the last session, after losing momentum in the second half of the trade and snapped their three days gaining streak. Today, the start is likely to remain cautious, though after initial consolidation some upmove too can be seen. Traders will be getting some encouragement with reports that India's direct tax collection for the June quarter of FY2017 grew 24 per cent, while indirect tax collection was up by 30 per cent. The collection up to July indicates that 18.82 per cent of the Annual Budget target of direct taxes has been achieved in the first four months of the fiscal. Meanwhile, RBI's outgoing Governor Raghuram Rajan, dispelling fears of price rise due to the rollout of Goods and Services Tax has said that it will be challenging to roll out GST from April 1, 2017 but the new indirect tax regime will eventually boost business sentiment and investments. There will be buzz in the steel stocks, as the government has slapped anti-dumping duty on import of hot-rolled steel products from six nations, including China and South Korea, in a bid to shield domestic manufacturers against cheaper inward shipments. The banking stocks too will be in action, with the Rajya Sabha passing a Bill that amends four different Acts to expedite disposal of debt recovery applications, and complementing the Insolvency and Bankruptcy Code passed by Parliament in May. There will be lots of important earnings announcements to keep the markets buzzing.



                                Support and Resistance: CNX Nifty and BSE Sensex


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  • Adani Ports has registered 2.12% fall in its net profit at Rs 602.84 crore for the quarter as compared to Rs 615.91 crore for the same quarter in the previous year.
  • Lupin has registered 55.96% jump in its net profit at Rs 1079.73 crore for the quarter as compared to Rs 692.29 crore for the same quarter in the previous year.
  • Tata Motors Group global wholesales in July 2016, including Jaguar Land Rover, were at 88,159 units, higher by 20%, over July 2015.
  • Sun Pharmaceutical Industries has extended its Imatinib Mesylate Savings Card Program beyond July 31, 2016.
  • Mahindra Agri Solutions,a 100 percent subsidiary of Mahindra & Mahindra, has launched 4 new varieties of branded pulses under its NuPro brand in Mumbai.
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