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NSE Intra-day chart (09 September 2016)
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Market Commentary 12 September 2016
Markets to start another truncated week on a weak note


The local benchmarks witnessed a sharp fall on Friday as investors booked profits following reports of a nuclear test in North Korea amid uncertainty over the European Central Bank's future policy steps. European Central Bank at its policy meet on Thursday maintained a status quo on key rates and also surprised the market by not extending the deadline of its bond-purchases programme. On the domestic front, sentiments were undermined by the report that the country-wide monsoon deficit stood at 4% with northeastern and eastern states reporting 13% less rains from June 1 to September 7, 2016. India mostly remained dry during last week, with many areas receiving scanty rainfall. June witnessed a rain deficiency of 11%, while July had 7% of surplus rainfall. August again witnessed a dip of 9.7%. Anxiety among investors further increased the private report indicating that lower food prices likely cooled India's inflation rate in August, but probably not by enough to give the central bank scope to ease monetary policy again anytime soon. Markets participants remained cautious ahead of IIP data due to be released later in the day. However, the downside remained capped with the President Pranab Mukherjee giving his assent to the landmark Goods and Services Tax (GST) Bill. Now the Centre will have to pass the Central GST and Integrated GST Bills, while the states will need to approve their respective GST legislations. The government targets to implement the GST system from 1 April, 2017. On the global front, Asian markets ended mostly lower on Friday as investors weighed the outlook for monetary policy in the US and Japan after the European Central Bank downplayed the need for more economic stimulus, while European shares posted their first back-to-back losses since mid-August. Back home, the local benchmarks got off to a gap down beginning following the hefty selling in Asian equities after investors largely remained influenced by gloomy global developments. Finally, the BSE Sensex declined by 248.03 points or 0.85% to 28797.25, while the CNX Nifty dropped 85.80 points or 0.96% to 8,866.70. 


US Markets ended deep in the red on Friday with S&P 500 tumbling to two-month closing lows, while the Nasdaq hitting its lowest closing level in well over a month, amid renewed concerns about the outlook for interest rates. Sentiments remained dampened after comments from some Federal Reserve officials reignited worries about a near-term interest rate hike. Boston Fed President Eric said gradual tightening of monetary policy is likely to be appropriate to ensure the U.S. economy remains at the full employment level it is now approaching. Rosengren added that ‘a failure to continue on the path of gradual removal of accommodation could shorten, rather than lengthen, the duration of this recovery'. Dallas Fed President Robert Kaplan also said the case for raising rates has strengthened in recent months and noted the markets have gotten plenty of notice the Fed is looking for opportunities to remove accommodation. The Fed is scheduled to hold its next monetary policy meeting in about two weeks, with two subsequent meetings scheduled for November and December. Geopolitical concerns too weighed on the markets following North Korea's claim that it successfully tested a miniaturized nuclear warhead. The Dow Jones Industrial Average slumped 394.46 points or 2.13 percent to 18,085.45, Nasdaq plummeted 133.57 points or 2.57 percent to 5,125.91, while S&P 500 was down by 53.49 points or 2.45 percent to 2,127.81.


Crude oil futures pared most of their last session gains on Friday, as the market discounted an unexpected slump in U.S. crude inventories as a storm glitch after US Rig count jumped post-hurricane. Baker Hughes said the number of active US rigs continued to rise and climbed by seven to 414, the most since February. Oil also came under pressure as dollar rose on concerns over the health of the EU economy and on remarks by Federal Reserve policymakers for a near-term increase in US interest rates. Still the crude managed its first weekly gain in three weeks, on hopes for a global deal on stabilizing crude output after Saudi Arabia and Russia agreed to cooperate in oversupplied markets. Benchmark crude oil futures for October delivery was down $1.74 or 3.7 percent to $45.88, on the New York Mercantile Exchange. In London, Brent crude for November delivery ended at $48.01, lower by $1.98 or 4.0 percent on the ICE.


Indian rupee declined further for the second consecutive day, lost considerable ground on Friday, on increased demand for the American currency from importers and banks amid weakness in the domestic equity market. The domestic currency remained weak since morning, weighed down by firmness in dollar against some other global currencies. Sentiments also remained down with the report that the country-wide monsoon deficit stood at 4% with northeastern and eastern states reporting 13% less rains from June 1 to September 7, 2016. June witnessed a rain deficiency of 11%, while July had 7% of surplus rainfall. August again witnessed a dip of 9.7%. On the global front, dollar rose against the yen after North Korea's latest nuclear test pulled cash into the perceived safety of the Japanese currency, at the end of a week that provided little clear direction for currency investors returning from US and European summer breaks. Finally the rupee ended at 66.68, weaker by 25 paise from its previous close of 66.43 on Thursday.


The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4689.69 crore against gross sell of Rs 4556.16 crore, while in the debt segment, the gross purchase was of Rs 1540.03 crore with gross sales of Rs 909.28 crore. Thus, FIIs stood as net buyers of Rs 630.75 crore in debt.


The US markets declined in last session, with S&P posting its worst day since June as investors nervousness increased following a nuclear test by North Korea and comments by Federal Reserve officials that lifted rate hike bets. The Asian markets have made a weak start with many of the indices trading lower by 1-2 percent in early deals, led by slump in commodities stock with questions being raised on benefits of loose monetary policy. The Indian markets suffered sharp profit taking in the last session and are likely to extend the trend with a gap-down start on feeble cues amid geopolitical concerns. Traders will be eyeing the Index of Industrial Production (IIP) data to be released after the market hours. Marketmen will also be eyeing the buzz in political circle that finance ministry will shortly move a cabinet note on a multidimensional recast of the budget. The proposal involves merging the rail budget with the general budget and advancing its presentation in Parliament to January from February end. There will be some support with Finance Ministry notifying the provisions of the Constitution Act, 2016 that will allow setting up of the crucial Goods and Services Tax (GST) Council, which will decide on all key issues relating to the indirect tax levy, including the rates, and will come into effect from September 12. There will be some buzz in the PSU stocks, as the government has started its biggest disinvestment programme through asset sales by appointing merchant bankers to divest minority stakes held in listed and unlisted companies through the Specified Undertaking of the Unit Trust of India (SUUTI). The telecom stocks too are likely to remain in action on reports that telecom regulator Trai has decided to reject the demand of incumbent mobile operators such as Bharti Airtel, Vodafone and Idea Cellular for an increase in the fee that they charge from Reliance Jio to terminate its calls on their networks.



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  • ONGC is in talks to acquire a certain portion of the oil and gas assets of Gujarat State Petroleum Corporation in the Krishna-Godavari basin, off the Andhra coast.
  • M&M has signed a Memorandum of Understanding with Union Bank of India whereby the lender will be financing the company's commercial vehicles pan- India.
  • Infosys is reportedly splitting itself into 12-15 smaller business units, each with revenue of $500 - $700 million, its own sales heads and P&L responsibilities.
  • Tata Motors has launched its first product, a versatile mini-truck SuperAce, in Vietnam.
  • ITC is hoping to cross Rs 10,000 crore mark in the food business in the next 18-24 months.
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