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NSE Intra-day chart (10 October 2016)
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Market Commentary 13 October 2016
Markets to make a cautious start ahead of TCS earnings

Back home, Indian equity benchmarks snapped the lackluster session with marginal gains on Monday, with Nifty recapturing its crucial 8,700 level, while Sensex ended just shy of 28,100 mark. Markets made a gap-up opening with credit rating agency Crisil in its latest report stating that revenues of companies in key sectors such as automobiles, IT services, power, steel products, telecom services, pharmaceuticals and FMCG are expected to grow 7 per cent in the July-September 2016 quarter, compared with a marginal 2 per cent in the year ago period. Traders also took some encouragement with NITI Aayog Vice-Chairman Arvind Panagariya's statement that India can become a $ 10 trillion economy in the next 15 years, from the existing $ 2 trillion, like China did in last one and a half decade. Some support also came with Finance Minister Arun Jaitley's statement that India is at the world's centre stage more than ever before for ‘aspiring to do better in an adverse' environment, though he also cautioned that by its own yardstick, the country's current growth rate is not enough. However, market participants booked most of their gains during the trade ahead of macro data scheduled to be announced through the week starting with factory output numbers later in the day. Gains also remained capped with the World Bank's new report stating that India, the world's largest remittance recipient in 2015, may receive a remittance of $ 65.5 billion this year, a drop of 5 percent due to weak economic growth in remittances-source countries and cyclic low oil prices. On the global front, European markets after weak start entered into green, while the Asian markets ended mixed. Closer home, appreciation in Indian rupee aided some sentiments. Finally, the BSE Sensex gained 21.20 points or 0.08% to 28,082.34, while the CNX Nifty ended up by 11.20 points or 0.13% to 8,708.80.

The US markets closed mostly higher on Wednesday, after minutes from the Federal Reserve's September policy meeting showed support for a rate rise relatively soon but implied a go-slow approach. As for the Fed, minutes indicate that policy makers wanted more evidence of full employment and gains in inflation before feeling confident in raising rates, but the minutes also said a rate increase was in the cards relatively soon. Several voting members of the Fed's policy committee stated that a rate hike would be needed relatively soon. These officials pushed for new language in the statement to reflect their growing sense of urgency. That wording emphasized that the case for an interest-rate hike had strengthened, but that the Fed policy committee had decided, for now, to wait for further evidence of continued progress toward full employment and faster inflation. A few Fed officials thought this statement might be misread as indicating that the passage of time, rather than the accumulation of evidence, would be the key factor in the US central bank's decisions at future meetings. On the economy front, US job openings fell to an eight-month low in August and hiring was little changed, suggesting some easing in labor market conditions amid an aging economic recovery. The Dow Jones Industrial Average added 15.54 points or 0.09 percent to 18,144.20, S&P 500 was up 2.45 points or 0.11 percent to 2,139.18, while Nasdaq dropped 7.77 points or 0.15 percent to 5,239.02.

Crude oil futures showed a volatile trade and ended lower on Wednesday, ahead of US inventories data that may show oil stockpiles have further dwindled. Prices were also under pressure with OPEC report that its oil production rose in September to the highest in at least eight years and raised its forecast for 2017 non-OPEC supply growth, pointing to a larger surplus next year despite the group's deal to cut output. The producer cartel reportedly pumped 33.39 million barrels per day (bpd) last month. Benchmark crude oil futures for November delivery was down $0.61 or 1.2 percent to $50.18 on the New York Mercantile Exchange. In London, Brent crude for December delivery ended at $51.81, lower by $0.60 or 1.1 percent on the ICE.

Indian rupee, appreciated for second consecutive session on Monday due to selling of American currency by banks and exporters. The domestic currency looked strong from the very beginning and was supported by the positive gains in the local equity markets. Sentiment got up-beat with NITI Aayog Vice-Chairman Arvind Panagariya's statement that India can become a $ 10 trillion economy in the next 15 years, from the existing $ 2 trillion, like China did in last one and a half decade. Weakness of dollar against the some major currencies overseas after weaker-than-expected US jobs data also supported the local currency. Meanwhile, traders turned cautious ahead of macro data scheduled to be announced through the week starting with factory output numbers later in the day. On the global front, yen slipped against dollar on Monday as the Bank of Japan may push back inflation target date. Finally, the rupee ended at 66.53, 14 paise stronger from its previous close of 66.67 on Friday.

The FIIs as per Monday'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 3305.14 crore against gross selling of Rs 3240.14 crore, while in the debt segment, the gross purchase was of Rs 718.51 crore with gross sales of Rs 1736.60 crore. 

The US markets after a lackluster trade ended flat in the last session after the minutes of last month's monetary policy meeting revealed that members of the Fed were divided regarding the timing of further interest rate hikes. The Asian markets have made a mixed start though the Japanese market has rebounded as the yen weakened against dollar with Fed minutes of meeting reinforcing the case for an interest-rate increase in 2016. The Indian markets had managed a modestly positive close in last session before going for two days holiday. Today, the start is likely to be a bit soft-to-cautious tailing the mixed global cues. Traders will also be reacting to Industrial production data, which contracted once again for the month of August. IIP dipped 0.7 percent in August due to a slump in manufacturing and mining, in the manufacturing space, capital goods brought about the maximum fall. Traders however may get some support in latter trade with S&P Global Ratings, calling GST as the most important structural reform till date by the Modi government and stating that the passage of the indirect tax law gives it additional conviction of India clocking 8 percent growth in the next few years. Also, the Government's revenue collection in April to September -- the first half of the current fiscal -- saw indirect tax-mop up growing at an impressive 26 percent. The total direct and indirect tax collections at the end of September stood at Rs 7.35 lakh crore, almost half the Rs 16.26 lakh crore target for 2016-17. There will be some buzz in oil & gas sector, as Niti Aayog has shot down petroleum ministry's demand for nearly Rs 10,000 crore of public money for building more strategic crude oil reserves as the proposal strays from the agreed plan to rope in private sector investments for crude storage beyond the existing 5 million tonnes. The gold and jewellery stocks too will be in action on report that exports of gems and jewellery grew by 11 percent to $ 14.43 billion during the first five months of the current fiscal, driven largely by demand in India's major markets like the US. Traders will also be eyeing the IT bellwether TCS earnings to be announced later in the day.

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  • ITC will be divesting 100% of its equity stake in US-based King Maker Marketing Inc for an estimated consideration of $24 million.
  • ONGC has inked a preliminary agreement to take an operating stake in Gujarat government firm Gujarat State Petroleum Corp KG basin gas block.
  • BHEL has commissioned another 660 MW coal based supercritical thermal power plant in Uttar Pradesh.
  • ACC has successfully stabilized operations of the new Cement Grinding Unit in Jamul which went into commercial production from September 14, 2016.
  • Tata Motors Group global wholesales in September 2016, including Jaguar Land Rover, were at 102,289 vehicles, higher by 5%, over September 2015.
News Analysis