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NSE Intra-day chart (12 December 2016)
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Market Commentary 13 December 2016
Markets to make a cautious start ahead of CPI data


Monday's session turned out to be a daunting day of trade for Indian equity benchmarks where frontline gauges tumbled below their crucial 26,600 (Sensex) and 8,200 (Nifty) levels. After a gap down opening, market never looked confident throughout the session and ended near the intraday low levels, as sentiments remained dampened with Industrial production shrinking an annual 1.9% in October, worsening from a 0.7% rise in the previous month and 9.8 per cent growth in the year-ago month. Industrial production has contracted in four out of seven months so far this fiscal. In the April-October period, production declined 0.3 per cent compared with 4.8 per cent growth last year. Weak economic data coupled with the fear of rise in inflation with the surge in crude prices after OPEC and non-OPEC producers reached a deal on Saturday, too weighed down the sentiments. Traders also remained on sidelines ahead of domestic trade deficit data, November CPI inflation and WPI inflation to be announced later in the week, while globally Fed rate decision is awaited. Sentiments also remained dampened with the Centre and States failing to approve the GST laws on Sunday and agreeing to meet on December 22 and 23 to hammer out a consensus, dashing hopes that the crucial bills would be introduced in the ongoing winter session of Parliament and making it tough to meet the April 1 rollout date across the country. Markets participants shrugged off robust growth in November indirect tax collection. Net indirect tax collections grew 23.1 per cent in November from a year ago. Overall, net indirect tax mop-up was up 26.2 per cent in April-November from a year ago, while net direct tax increased 15.1 per cent over this period. Total direct and indirect tax collections at the end of November stood at Rs 9.64 lakh crore, nearly 60 per cent of the budget target of Rs 16.26 lakh crore for FY17. Sentiment was also weakened by continued uncertainty about the impact on the economy and corporate profits from the cash shortage sparked by the country's demonetisation drive. On the sectoral front, information technology stocks remained under pressure by tough talk on visas by US president Donald Trump. Finally, the BSE Sensex declined 231.94 points or 0.87% to 26,515.24, while the CNX Nifty was down by 90.95 points or 1.10% to 8,170.80.


The US markets closed mostly lower on Monday, while the Dow notched the latest in a string of record close, while the S&P 500 and Nasdaq finished lower. Investors appeared reluctant to push shares higher following pronounced gains for Wall Street ahead of a key meeting by the Federal Reserve, which ends Wednesday. The central bank is widely expected to lift the target range for its federal-funds rate by a quarter of a percentage point to between 0.5% and 0.75%. That would be the first increase of 2016. On the economy front, the federal government ran a budget deficit of $137 billion in November, widening from the same month last year as the government spent more on health and other programs. The monthly deficit was more than double the amount from November 2015. When adjusting for a transaction related to benefits payments last year, however, the shortfall was just 21% higher. In November, outlays were up 25% to $337 billion. Spending was notably higher on Health and Human Services programs, especially Medicare. Receipts were down 2% from a year ago, to $200 billion. The Nasdaq was down 31.96 points or 0.59 percent to 5,412.54, S&P 500 dropped 2.57 points or 0.11 percent to 2,256.96, while Dow Jones Industrial Average added 39.58 points or 0.20 percent to 19,796.43.


Crude oil futures continued their upmove on Monday, extending their last session's rally and surged to their highest since mid-2015, after Russia and OPEC made concrete plans to cut oil production. Russia and others will join OPEC in trimming production by almost 600,000 barrels per day. Benchmark crude oil futures for January delivery was up by $1.33 or 2.6 percent to $52.83 on the New York Mercantile Exchange. In London, Brent crude for February delivery ended higher by $1.00 or 2.01 percent at $55.33 on the ICE.


The Indian money market remained closed on account of Id-e-Milad on Monday. 


The FIIs as per Friday'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 4352.68 crore against gross selling of Rs 3609.50 crore, while in the debt segment, the gross purchase was of Rs 803.32 crore with gross sales of Rs 3204.37 crore.


The US markets made a mixed closing in last session, though the Dow still managed to reach a new record closing high. Trading sentiments remained cautious ahead of the Federal Reserve's monetary policy announcement on Wednesday. The Asian markets have made mostly a soft start, with Chinese market extending the worst losses in six months, even as China's statistics bureau reported stronger-than-expected industrial output and retail sales. The Indian markets suffered sharp drop in last session and the major benchmarks deposed around a percent. Today, the start is once again going to be cautious one amid weak regional cues and markets may remain concerned with Fed's widely expected interest rates hike . On domestic front, with the persisting differences between the Centre and States over the draft GST Bill, it has started becoming likely that the Goods and Service Tax may not be rolled out from April 1. Also, a private report has stated that PE/VC investments in India declined both in terms of value and volume in November. Traders will be eyeing the Consumer Price Index (CPI), data which is expected to cool down for the month of November as the data accommodates the impact of the government's decision to demonetise high value currency notes that month. The all-India general CPI inflation had dropped to 4.2 per cent in October from 4.39 per cent in the previous month. Markets may get some support with Central Board of Direct Taxes (CBDT) clarification that an increase in turnover of a business owing to its accepting digital means of payment will not trigger reopening of cases of past years. Meanwhile, leading industrialist Adi Godrej has stated that demonetisation may have had “considerable negative effect” in the first few days but the situation now has improved and it will have a positive impact on the economy. The PSU oil marketing companies will continue to remain under pressure, as from midnight tonight, all petrol and diesel purchased using digital payment will get a discount of 0.75 percent and will be borne by state-owned oil marketing companies.



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  • ONGC is planning to set up a new ‘basin' in Agartala by the end of next year as it looks to focus more on exploration of oil and gas in the North-East region.
  • Tata Motors Group global wholesales in November 2016, including Jaguar Land Rover, stood at 91,832 units, higher by 1%, over November 2015.
  • Sun Pharma and Israel-based Moebius Medical have entered into an exclusive worldwide licensing deal to further develop MM-II, a novel pharmaceutical candidate for the treatment of pain in osteoarthritis.
  • Bank of Baroda is in advanced talks to buy a majority stake in Cent Bank Home Finance to strengthen its position in the home loan segment.
  • Axis Bank has concluded acquisition of 13.67% stake in Assets Care and Reconstruction Enterprise from IFCI for Rs 22.72 crore.
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