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NSE Intra-day chart (11 August 2016)
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Market Commentary 12 August 2016
Markets to extend the gains with a positive start


After trading on a feeble note for most part of the session, domestic benchmarks managed to negotiate a close in the green terrain, breaking the two session downtrend, as continued heavy buying by foreign investors helped lift blue chips such as IDEA, BPCL, ITC even though overall sentiment remained cautious. Although Asian markets ended on mixed note and European stocks made an optimistic start, global sentiments remained somewhat subdued as oil prices came under pressure after the International Energy Agency offered a downbeat outlook for oil prices. However, investors got some comfort with monsoon session of parliament proceeding rather smoothly, fallowing GST Amendment. Lok Sabha on Tuesday passed the Taxation Laws (Amendment) Bill, 2016, that, among other things, will pave the way for the textile sector getting tax sops. Further, sentiments got some support with the report that the government is working out a plan to optimally utilize land banks of state run companies as part of its bigger ambition to monetize the assets of public sector enterprises. The government will look at all central public sector companies (CPSEs), including profit making firms, to assess if their existing resources can be utilized for spurring the economic growth. Meanwhile, mild buying was observed in selected textile counters, as the Lok Sabha passed the Taxation Laws (Amendment) Bill, 2016, relaxing the rules for the textile sector to avail itself of the income tax benefit on additional employment created. On the global front, Asian markets ended mixed on Thursday, while the European equities hovered near a seven-week high. Back home, the benchmark got off to a positive opening, in tandem with the cautiously optimistic sentiments prevailing in Asian markets. The frontline indices soon gathered momentum and touched intraday highs in noon trade, but could not succeed in holding their gains for long as selling pressure at higher levels brought the indices to intraday lows in late morning session. Thereafter, the bourses recovered from the lows of the day but could not succeed in recovering all of their early gains by the end of trading session. Finally, the BSE Sensex gained 84.72 points or 0.31% to 27859.60, while the CNX Nifty rose by 16.85 points or 0.20% to 8,592.15.


The US markets closed higher on Thursday, as better-than-expected economic data and a rebound in oil prices boosted sentiment. Crude-oil prices bounced from a sharp drop and settled up, as talk of a possibly output freeze gains traction. Prices had been choppy as the International Energy Agency cut its forecast for global oil demand next year, citing a dimmer economic outlook. Thursday's stock-market rise to fresh records may reinforce the view that equity valuations are inflated, as central banks maintain accommodative monetary policies around the world, and as earnings have been weak on a year-over-year basis. On the economy front, the number of people filing for unemployment benefits declined 1,000 to a seasonally adjusted 266,000 in the August 6 week. Initial claims have been below the key 300,000 threshold for 75 weeks in a row, the longest such streak since 1970. The 4-week moving average, which smooths out weekly volatility, rose 3,000 to 262,750. The Dow Jones Industrial Average added 117.86 points or 0.64 percent to 18,613.52, Nasdaq gained 23.81 points or 0.46 percent to 5,228.40, while S&P 500 was up 10.30 points or 0.47 percent to 2,185.79. 


Crude oil futures made a strong rebound on Thursday, posting one of their strongest one-day moves in three months, amid expectations for further tightening between global supply and demand, after Saudi Arabia's Energy Minister said oil producing nations may discuss possible action to stabilize the market at a meeting next month. Also, International Energy Agency (IEA) indicated on Thursday that global energy markets could be on the verge of rebalancing in the coming months. Benchmark crude oil futures for September delivery surged by $1.69 or 4.05 percent to close at $43.40 a barrel after trading in a range of $41.11 and $43.86 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery was up by $1.89 or 4.29 percent to $45.94 a barrel on the ICE.


Indian rupee depreciated against dollar on Thursday on demand for the American currency from importers and banks. Investors remained cautious ahead of the Consumer Price Index (CPI) inflation and index of industrial production (IIP) data to be scheduled on Friday. On the global front, dollar moved higher against the other major currencies on Thursday, pulling away from the previous session's one-week trough as investors turned their attention to upcoming U.S. data. Finally the rupee ended at 66.84, weaker by 13 paise from its previous close of 66.71 on Wednesday.


The FIIs as per Thursday'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 4306.58 crore against gross selling of Rs 3805.80 crore. While in the debt segment, the gross purchase was of Rs 953.60 crore with gross sales of Rs 3031.63 crore. Thus, FIIs stood as net sellers of Rs 2078.03 crore in debt.


The US markets made a positive close in last session, supported by some upbeat earnings, a substantial increase by the price of crude oil. Also, initial jobless claims edged slightly lower in the week ended August 6th. The Asian markets have made mostly a positive start, tailing the good US market cues and on gain in crude prices, though Chinese economic data fell short of estimates. The Indian markets recovering from a volatile trade posted gains of over a quarter percent in the last session. Today, the start of the day is likely to be in green and the bourses will be extending the gains. Though, traders will be eyeing the key macro data of IIP and CPI inflation slated to be announced after the market hours. Meanwhile, Reserve Bank of India has included factoring transactions under priority sector lending with an aim to increase cash flow to small and medium enterprises. RBI said the factoring transactions taking place through TReDS shall also be eligible for classification under priority sector upon operationalisation of the platform. There will be buzz in the power stocks, as the government has said that there is no shortage of coal in the country and coal stock for 23 days is available with thermal power stations. Coal Minister Piyush Goyal has said that multi-dimensional efforts are underway by Coal India to substantially enhance coal production to meet the coal requirement. There will be lots of scrip specific actions to keep the markets buzzing as many big names will be coming up with their June quarter earnings.


                                Support and Resistance: CNX Nifty and BSE Sensex


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  • Larsen & Toubro's wholly owned subsidiary - L&T Hydrocarbon Engineering, has inked a Memorandum of Understanding with GE, for manufacturing subsea manifolds for deep water projects in the Krishna-Godavari basin.
  • Yes Bank is set to launch a $1-billion share sale to institutional investors in what would be the biggest such exercise this year to support its expansion and take advantage of an expected economic revival in India.
  • Bank of Baroda has reported 59.74% fall in its net profit at Rs 423.62 crore for the quarter ended June 30, 2016 as compared to Rs 1052.15 crore for the same quarter in the previous year.
  • NTPC has declared Commercial Operation Date of 50 MW capacity of NP Kunta Ultra Mega Solar Power Project at Anantapuram.
  • Lupin's US subsidiary, Gavis Pharmaceuticals LLC., USA has received final approval for its Potassium Chloride Extended-Release Tablets USP, 8 mEq and 10 mEq from the United States Food and Drug Administration.
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