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NSE Intra-day chart (13 February 2017)
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Market Commentary 14 February 2017
Markets to make a positive start on good CPI numbers

Indian benchmark indices ended the range bound day of trade on a flat note with positive bias as investors remained on the sidelines and refrained from any buying activity ahead of the key consumer price inflation (CPI) data due later in the evening. The CPI-based inflation is likely to come down in January to the lowest in the new series due to subdued demand post-demonetization and base effect before spiking up again in the next two months. Sentiments got some support with a report that the government's revenue collection during April-January, 2016-17 has shown healthy growth, indirect tax collection jumped 23.9 percent to Rs 7.03 lakh crore on the back of robust central excise mop-up, while direct tax collection rose by 10.79 percent to Rs 5.82 lakh crore. The total direct and indirect tax collections at the end of January stood at Rs 12.85 lakh crore, more than half the Rs 16.26 lakh crore target for 2016-17. Some support also came in from reports that after four months of intense selling, overseas investors turned net buyers in February and have so far pumped in over Rs 5,800 crore in the capital market. The latest inflow followed a net pullout of Rs 80,310 crore from equity and debt together in the past four months (October-January). However, gains remained capped with the report that Industrial production contracted in December 2016 due to a sharp decline in production of consumer goods, confirming a demonetisation led contraction in demand. Index of Industrial Production (IIP) was 0.4% lower in December 2016 from the same period a year ago. The number was well below the 5.7% growth in November and consensus expectation of around 1% growth in December. Adding anxiety among investors, the Nomura's report indicated that India's economic growth is likely to remain muted in the first quarter of this calendar year with the GDP likely to grow at 5.7 per cent in the January-March period amid subdued activity. Finally, the BSE Sensex gained 17.37 points or 0.06% to 28351.62, while the CNX Nifty was up by 11.50 points or 0.13% to 8,805.05.


The US markets closed higher on Monday, with major indexes closing at record highs for a third session in a row, as financial and industrial stocks paved the way to higher ground. This extended gain is due to a confluence of a few factors, including the earnings recession being over, a very strong bull market, and the hope for future prosperity under the pro-growth policies of the new administration. Gains have been pronounced since Donald Trump's presidential election victory in November, and the latest move higher was pegged to the president hinting that he would announce a tax plan in the near term. Banks have been the biggest beneficiaries of the postelection rally, with investors betting they will benefit from both deregulation and an environment with rising interest rates. Industrial stocks have gained on hopes that a massive infrastructure deal, which Trump also touted during the campaign, would increase demand for the sector. On economy front, a measure of US inflation expectations rose for a second straight month in January to its highest level since mid-2015, according to a Federal Reserve Bank of New York survey released showed that reinforced the view that interest rates would keep climbing. The Dow Jones Industrial Average added 142.79 points or 0.70 percent to 20,412.16, the Nasdaq was up 29.83 points or 0.52 percent to 5,763.96, while S&P 500 gained 12.15 points or 0.52 percent to 2,328.25. 


Crude oil futures snapped their gaining streak on Monday amid speculation that robust U.S. production has offset OPEC's supply cuts. A forecast by the government showed an expected higher production level from U.S. shale drillers in response to higher prices. US Energy Information Administration (EIA) said that Shale oil output in the US is expected to grow by 79,000 barrels per day by March, taking the overall output levels in the US to 4.83 million bpd. Benchmark crude oil futures for March delivery fell by $0.93 or 1.73 percent to $52.93 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended lower by 1.96 percent at $55.59 on the ICE.


Extending its weakness for the second straight session, Indian rupee depreciated against dollar on Monday, ahead of the release of key consumer price inflation (CPI) data due later in the day. The rupee sentiment was also hit as industrial production contracted to a four-month low of 0.4 per cent in December 2016 from the same period a year ago, due to a sharp decline in production of consumer goods. The cumulative IIP growth for April-December was 0.3% against 3.2% for the same period in 2015. Additionally, increased demand for the American currency from importers too weighed on the rupee sentiment. On the global front, dollar rose to a two-week high against yen on Monday, as investors focused again on the U.S. reflation trade which dominated the aftermath of Donald Trump's election in November but has stalled this year. Finally, the rupee ended at 67.01, 13 paise weaker from its previous close of 66.88 on Friday.


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4952.76 crore against gross selling of Rs 4397.49 crore, while in the debt segment, the gross purchase was of Rs 1849.38 crore with gross sales of Rs 1134.09 crore.


The US markets extended their upmoves in last session to reach fresh record highs, on optimism about reduced corporate taxes under President Donald Trump. Though there was not much activity in the market lacking any major U.S. economic data. The Asian markets have made  mostly a lower start with the rally fizzling out, traders are pricing in a 30 percent chance the US Fed will lift rates at its March 15 meeting. Japanese market too was in red ahead of Bank of Japan governor Haruhiko Kuroda's speech later in the day. The Indian markets continued their consolidation mood and once again made a flat closing in last session, some weak earnings updates from the major companies weighed on markets. Today, the start is likely to be cautious on mostly a lower start of the regional peers, however traders will be getting some encouragement with retail inflation easing to 3.17 percent in January, its lowest level in at least five years, mainly due to a drop in the annual food inflation, which stood at 0.53 percent last month, lower than 1.37 percent in December. Markets will also be getting some support with Finance Minister Arun Jaitley's statement that the Modi government's emphasis is on bold decision making and a clean economy with business friendly environment, the returns of which can be spent on the poor. Meanwhile, the Chief Executive Officer of NITI Aayog Amitabh Kant has said that US President Donald Trump will soon realise that protectionist measures like restrictions on H1B visa will impact America itself. There will be some buzz in the dye and chemical stocks on report that China has launched anti-dumping and countervailing duties investigations against some Indian manufactures for allegedly exporting a chemical product - widely used in dyes and pharmaceutical. There will be lots of important earnings announcements too, to keep the markets in action.


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  • Larsen & Toubro is planning to set up an IT Park and IT SEZ in Bengaluru for a combined investment of Rs 2,080 crore.
  • Lupin is planning to launch around 25 products in the US in next finance year.
  • Idea Cellular has reported consolidated net loss after taxes of Rs 383.88 crore for the quarter ended December 31, 2016, as compared to a net profit of Rs 659.36 crore for the same quarter in the previous year.
  • Mahindra & Mahindra is planning to make an investment of Rs 1500 crore at its Nasik and Igatpuri plants in Maharashtra.
  • Coal India has reported 20.26% fall in its consolidated net profit after taxes, minority interest and share of profit of jointly controlled entities and associates at Rs 2884.47 crore for the quarter ended December 31, 2016, as compared to Rs 3617.18 crore for the same quarter in the previous year.
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