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NSE Intra-day chart (11 January 2017)
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Market Commentary 12 January 2017
Markets to continue the gaining momentum

Indian benchmark indices staged a blockbuster performance on Wednesday by vivaciously rallying close to a percent in the session and settling above the psychological 8,350 (Nifty) and 27,100 (Sensex) levels. Tuesday's optimism got spilled over into the Wednesday's session helping the frontline indices in extending the winning momentum for second successive session as investors are hoping that Budget 2017 to be unveiled on February 1, would contain incentives for companies to help prop up an economy being hit by a ban on higher-value cash notes. Market percipients continued to build hefty positions across the board as sentiments got a boost with Prime Minister Narendra Modi's statement that India is on threshold of becoming most digitised economy in the world. While he also declared his ambition to bring about a paradigm shift through a series of historic changes, reiterating the government's commitment to reforms and projecting India as a bright spot amid global gloom after having emerged as the world's fastest-growing economy. Some support also came with Finance Minister Arun Jaitley's statement that the Centre is still aiming to roll out the Goods and Services Tax (GST) regime from April 1. He further said while most of the issues have been resolved, there are a few critical issues that still need to be addressed. However, caution prevailed ahead of President-elect Donald Trump's first presser due later in the day and quarterly earnings from blue-chip companies. Market participants also await the key quarterly corporate results from software services firm TCS and Infosys. On the global front, Asian markets ended mixed on Wednesday, as investors looked to US President-elect Donald Trump's press conference later in the day for clues on his policies. Finally, the BSE Sensex rallied 240.85 points or 0.90% to 27140.41, while the CNX Nifty rose 92.05 points or 1.11% to 8,380.65.

The US markets closed higher on Wednesday, following President-elect Donald Trump's press conference, with the Nasdaq notching its fifth straight record close in a row. The Dow Jones Industrial Average closed less than 50 points from the psychologically-important 20,000 mark. US President-elect Donald Trump held his first press conference since July. Investors also watched the confirmation hearings of Rex Tillerson, Trump's nominee to head the State Department. Russia and China were major topics of discussion in the hearings. In a measure of how uncertainty wasn't alleviated by the news conference, the CBOE Volatility at one time rose more than 5%, though it remains well below its long-term average. Typically, the so-called 'fear index' has an inverse correlation with stocks. Investors will hear from several Fed officials over the next two days, including Chairwoman Janet Yellen, and retail sales data are due Friday. The Dow Jones Industrial Average added 98.75 points or 0.50 percent to 19,954.28, Nasdaq gained 11.83 points or 0.21 percent to 5,563.65, while S&P 500 was up by 6.42 points or 0.28 percent to 2,275.32.

Crude oil futures bounced back from last two session's fall and rallied on Wednesday, after a report confirmed that OPEC production fell in December, even though supply quotas were not required until the start of the new year. Output from the group's 13 members fell by 280,000 barrels a day in December from a month earlier, to 32.85 million barrels a day. Prices also got some support with weakness in dollar following a news conference by U.S. President-elect Donald Trump , which disappointed investors who had sent the currency to its highest level in a week ahead of this news conference. Benchmark crude oil futures for February delivery was up by $1.73 or 3.4 percent to $52.55 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended higher by $1.76 or 3.3 percent at $55.40 on the ICE.

Indian rupee ended weaker against US dollar on Wednesday, on incremental dollar demand by banks and importers in view of strength of American currency overseas. Sentiments remained dampened with the World Bank trimming India's Gross Domestic Product (GDP) growth to 7 percent from its earlier estimate of 7.6 percent on the back of demonetisation of high value currency notes. Furthermore, Fitch Ratings also downgraded India's rating to 6.9 percent for 2016-17 from the earlier 7.4 percent due to 'uncertainty' over the benefits of demonetisation. However, gains in equity market arrested some of the rupee's fall. On the global front, dollar gained against the yen on Wednesday ahead of a widely-anticipated press conference by President-elect Donald Trump, it is his first formal session since winning the November 8, 2016 election. Finally, the rupee ended at 68.33, 15 paise stronger from its previous close of 68.18 on Tuesday.

The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3597.89 crore against gross selling of Rs 3711.12 crore, while in the debt segment, the gross purchase was of Rs 729.43 crore with gross sales of Rs 2139.49 crore.

The US markets ended higher despite a volatile trade in last session, reacting to President-elect Donald Trump's comments during his first press conference in several months. Though his comments made the drug stocks nervous and they went for sell-off. The Asian markets have made a mixed start with some indices trading in red led by the Japanese market which is down due to strength in yen against dollar after Donald Trump's first press conference since his election victory gave scant detail on policy. The Indian markets rallied in last session with the Sensex hitting two months high after the World Bank said that the "adverse effects" of demonetization will disappear in the medium term. Today, the start is likely to be in green on mostly positive global cues and traders will be getting some support with Finance Minister Arun Jaitley's statement that the implementation of the Goods and Services Tax (GST), coupled with a digitised economy ushered in by demonetisation, will make India's economy "look much cleaner and bigger". However, there will be some cautiousness too, as the RBI governor Urjit Patel ahead of the budget has warned against squandering macroeconomic stability gains through giveaways and said that high government debt was hurting India's ratings. Meanwhile, NITI Aayog has estimated a growth rate of 8% for 2016-17 as per a 'cautiously optimistic' prognosis it has laid out in the appraisal document for the Twelfth Five-Year Plan, flagging the lack of reforms in land acquisition, labour and simplification of administrative procedures as impediments to growth. The review, however, does not take into account the impact of demonetisation. Steel stocks are likely to remain in action on reports of Chinese capacity shutdowns.

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  • Lupin has received final approval for its Desoximetasone Cream USP, 0.05% and Desoximetasone Cream USP, 0.25% from the United States Food and Drug Administration.
  • Tata Motors Group global wholesales in December 2016, including Jaguar Land Rover, were at 95,081 units, higher by 4%, over December 2015.
  • Axis Bank has opened new branch at Thadagam Road, Coimbatore in state of Tamil Nadu.
  • BPCL's indirect subsidiary BISPL is planning to raise $600 million long term funds from the international debt capital market.
  • Bharti Airtel will take a crucial step towards entering the financial services business as it launches its Payments Bank operation across India on January 12, 2017.

News Analysis