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NSE Intra-day chart (13 December 2016)
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Market Commentary 14 December 2016
Markets to make a cautious start on soft regional cues


A session after displaying a distressing performance, Indian equity indices managed to pull through a shining performance by surging over half a percentage points on Tuesday, thanks to fresh buying by domestic investors in the Auto, IT and Oil & Gas counters. Sentiments got 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. Market participants are optimistically waiting 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 demonetize high value currency notes that month. The all-India general CPI inflation had dropped to 4.2% in October from 4.39% in the previous month. Meanwhile, many stock specific actions were seen during the session, which helped the indices to enlarge their gains.  Shares of Tata Motors surged as much as 4%, making them the top gainer on the BSE index, after an undisclosed buyer bought about 50 million shares in two block deals at an up to 10% premium to Monday's close. Adani Ports, Wipro, Axis Bank and Infosys were also among the gainers in the Sensex. Investors are closely looking at the Fed's statement on future action given fears that aggressive rate hikes could spark outflows from emerging markets to the United States. Such an outcome could hit Indian shares further given that markets are already under pressure over worries that demonetisation would hurt the economy bigger than expected. Asian Development Bank (ADB) has recently trimmed its 2016 growth estimate for India to 7% from the previous 7.4%. Also, one private report indicated that Private equity/ venture capital investments declined both in terms of value and volume in November 2016. In value terms, PE/VC investments in India stood at $908 million, down 50%, from $1.82 billion in November last year. Finally, the BSE Sensex gained 182.58 points or 0.69% to 26697.82, while the CNX Nifty added 51 points or 0.62% to 8,221.80.


The US markets closed higher on Tuesday, with the Dow Jones Industrial Average closing at a high for the seventh session in a row, as it moved within 100 points of the 20,000 milestone ahead of the Federal Reserve's interest-rate decision. The central bank will deliver its rate announcement on Wednesday. The market is pricing in a nearly 100% chance that the Federal Open Market Committee will lift key interest rates, which leaves much attention on clues for future policy decisions. On the economy front, small-business sentiment jumped by the largest monthly amount in more than seven years after Republicans swept to an election victory. The National Federation of Independent Business said its small-business optimism index jumped 3.5 points to a seasonally adjusted 98.4 in November, marking the strongest monthly gain since April 2009. That is only the third time since 2007 the optimism index has broken into what's considered above-average territory. The Dow Jones Industrial Average added 114.78 points or 0.58 percent to 19,911.21, Nasdaq was up 51.29 points or 0.95 percent to 5,463.83, while S&P 500 gained 14.76 points or 0.65 percent to 2,271.72.


Crude oil futures extended their gaining streak on Tuesday after OPEC's historic deal with Russia to curb oil supplies. Prices also got some encouragement with US President-elect Donald Trump choosing ExxonMobil CEO Rex Tillerson to serve as secretary of state. Though, the gains were mild ahead of US inventories data on Wednesday and some investors taking profits based on recent market gains, but the market remained broadly supported by the deal to cut output. Benchmark crude oil futures for January delivery was up by $0.15 or 0.3 percent to $52.98 on the New York Mercantile Exchange. In London, Brent crude for February delivery ended lower by $0.11 or 0.23 percent at $55.72 on the ICE.


Indian rupee depreciated against US dollar on Tuesday as investors turned cautious ahead of the two-day rate-setting meeting of the Federal Open Market Committee that begins later on day. The Fed is widely expected to raise interest rates by a quarter percentage point. Meanwhile, traders also remained cautious ahead of 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 demonetize high value currency notes that month. The all-India general CPI inflation had dropped to 4.2% in October from 4.39% in the previous month. Besides, dollar strengthened against other currencies overseas, weighing down the rupee but positive gains in the domestic equity market capped the fall. On the global front, pound spiked up against its major counterparts after data showed that U.K. inflation accelerated more than expected in November to the highest rate since October 2014. Finally, the rupee ended at 67.54, 13 paise weaker from its previous close of 67.41 on Friday.


The FIIs as per Tuesday'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 6379.87 crore against gross selling of Rs 6045.84 crore, while in the debt segment, the gross purchase was of Rs 1461.28 crore with gross sales of Rs 1706.92 crore.


The US markets moved higher in last session, with the advance, all three of the major averages reached new record closing highs, ahead to the Federal Reserve's monetary policy decision, scheduled to be announced on Wednesday. The Asian markets are trading mostly in red, giving up their early gains, with bets on a US rate increase. The Indian markets rallied in last session, coming out of the somberness seen in the previous one. Today, the start is likely to be mildly in green reacting to some positive economic data, while the retail inflation fell to a two-year low in November due to the ongoing cash crunch following the demonetization drive, the country's current account deficit (CAD) narrowed by more than a percentage point to 0.6 percent of GDP at $ 3.4 billion in the July-September, on account of lower trade deficit. Market will also be getting some support with Finance Minister Arun Jaitley's indication of lower tax rates, as he has said that higher tax revenues would enable the government at some stage to make taxes more reasonable which will apply to both direct and indirect taxes. The Finance Minister also said that future transactions would be substantially digital as India moves towards a less-cash society. Trade though may remain cautious ahead of the US Fed's rate hike decision later in the day, also the domestic rating agency ICRA has said that with consumption being affected by the demonetisation of higher currency old notes, tax revenues of the State governments for the current financial year is likely to be weaker than budgeted. The Tata group stocks will keep buzzing after shareholders of Tata Consultancy Services (TCS), voted out Cyrus Mistry as a director from its board at the much-awaited extraordinary general meeting.



Support and Resistance: NSE (Nifty) and BSE (Sensex)



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  • Tata Motors will hike prices of its passenger vehicles with effect from January 1, 2017.
  • GAIL India has won a second extension for completing the Kochi- Bengaluru-Mangaluru natural gas pipeline as it faces unprecedented problems in getting land in Kerala and Tamil Nadu.
  • Axis Bank is planning  to raise funds by issuing unsecured subordinated, perpetual, additional tier I, Basel III compliant non-convertible debentures of the face value of Rs 10 lakh each for cash at par aggregating to Rs 3500 crore.
  • YES Bank has been upgraded by MSCI ESG Research to AAA Rating from AA rating.
  • NTPC has partnered with Inox Wind for a 50-MW wind project to be deployed in Gujarat.
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