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NSE Intra-day chart (14 September 2016)
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Market Commentary 15 September 2016
Markets to make a cautious start, extending consolidation mood


After trading on a feeble note for most part of the session, Indian benchmark indices managed to negotiate a close in the green terrain, breaking the two session downtrend, as investors showed renewed buying interests in Consumer Durables, Banking and PSU counters. Investors' sentiments got some comfort after the country's retail inflation slowed to 5.05 percent in August led by easing food prices especially vegetables and making a strong case for the newly appointed RBI governor Urjit Patel to cut rates in the next monetary policy review on October 4, 2016. Lower inflation in vegetables in August helped as the rate of price rise stood at a mere 1.02 percent against 14.06 percent in July.  However, other two microeconomic data came as bummer for domestic markets as India's industrial output fell by 2.4 percent in July after a spurt in May and June, while Wholesale price inflation soared to a two-year high in August to 3.74 percent driven mainly by a gradual increase in prices in the manufacturing sector. A slowdown in industrial activity does not bode well for Asia's third largest economy, especially after overall growth faltered to a 15-month low between April and June.  Furthermore, there were report that India is likely to post its first current account surplus in nine years in the latest quarter, which should bolster the rupee though it is not a good sign for the economy as it reflects weak investment demand at home and subdued exports. Sentiments got some support with a survey report stating that implementation of Goods & Service Tax (GST) will lead to increased tax compliance and attract more foreign direct investments across sectors due to tax transparency and ease of doing business. Adding the optimism among market participants the private report indicated that the US expressed willingness to have a bilateral investment treaty with India that will boost investor confidence and help increase size of bilateral trade. Finally, the BSE Sensex ended up by 18.69 points or 0.07% to 28372.23, while the CNX Nifty gained 11 points or 0.13% to 8,726.60.


The US markets closed mostly lower on Wednesday, with the Dow industrials and the S&P 500 ending in negative territory in the wake of slumping crude-oil prices, erasing earlier gains for the major benchmarks, while the tech-heavy Nasdaq bucked the losing trend. A report on oil supplies published by the Energy Information Administration showed inventories declined by 600,000 barrels last week, much smaller than the 14.5 million barrel drop from the week before. The CBOE Volatility Index, which measures investors' expectations for stock swings, jumped 18% to 17.85, its highest level since June 28. On the economy front, the cost of imported goods slipped 0.2% in August largely because of lower oil prices. The import price index fell last month for the first time since February. In the 12 months ending August 2016, import prices dropped 2.2%. Excluding fuel, import prices were flat. The Dow Jones Industrial Average lost 31.98 points or 0.18 percent to 18,034.77, S&P 500 was down 1.25 points or 0.06 percent to 2,125.77, while Nasdaq gained 18.51 points or 0.36 percent to 5,173.77. 


Crude oil futures fell again on Wednesday to the lowest since September 1, after government data showed US crude oil stockpiles were little changed after a massive drawdown two weeks ago. The US Energy Information Administration said in its weekly report that crude oil inventories fell by 0.559 million barrels in the week ended September 9. The report also showed that gasoline inventories increased by 0.567 million barrels, while distillate stockpiles rose by 4.617 million barrels. Benchmark crude oil futures for October delivery lost $1.32 or 2.90 percent to close at $43.58 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for November delivery declined by $1.25 or 2.7 percent to $45.85 a barrel on the ICE.


Indian rupee, after making a weak start, recouped some of its losses and ended marginally strong on Wednesday on account dollar selling by banks and exporters. Some gains in the domestic equity market also added to the rupee gains. Further, sentiments got some upbeat after India Ratings and Research stated that the sharp fall in retail inflation in August has increased the chances of monetary easing by the central bank. Retail inflation, based on Consumer Price Index (CPI) eased at 5.05% in August from 6.07% in July, on account of decline in food prices especially vegetables. However, dollar strengthened against other currencies overseas capped the rupee's gains. On the global front, yen slipped to a one-week low against the dollar on Wednesday, after a report stated that the Bank of Japan is considering further monetary easing steps, including taking interest rates deeper into negative territory. Finally the rupee ended at 66.89, stronger by 3 paise from its previous close of 66.92 on Monday.


The FIIs as per Wednesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3574.07 crore against gross selling of Rs 4165.22 crore, while in the debt segment, the gross purchase was of Rs 299.72 crore with gross sales of Rs 131.32 crore.


The US markets made a mixed closing in last session, the trade remained lackluster and the major averages moved to the upside early in the session but showed a lack of direction as the day progressed. The Asian markets have made a similar start and some of the indices in the region are down by over half a percent led by the Japanese market, as the yen gained and gold edged higher following gains in US Treasuries. The Indian markets bucking the global trend showed some recovery in the last session and posted modest gains despite a choppy trade, on hopes of a rate cut after decline in CPI inflation and weak IIP data. Today, the start is likely to remain cautious as indicated by global cues. There will be some concern with reports that in September rainfall fell 15 per cent below average, which could mean the season will end up in deficit. Meanwhile, Prime Minister Narendra Modi has reviewed preparations for roll out of the new Goods and Services Tax (GST) regime, possibly from April 1 next year, with Finance Minister Arun Jaitley and his team making a presentation on the milestones achieved and the road ahead. The presentation detailed the steps to follow including the timetable to get the supporting legislations approved. There will be some action in infra sector stocks, on report that government may soon come up with an ambitious Rs 3-lakh-crore Economic Corridor project to develop 35,000 km of highways for faster movement of freight. Telecom stocks too could be in focus after Anil Ambani-led Reliance Communication agreed to merge its wireless telecom business with Aircel to create India's third biggest telecom operator in terms of subscriber base.


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  • Dr. Reddy's Laboratories has been listed as an Index component of the Dow Jones Sustainability Indices 2016 in the Pharmaceuticals, Biotechnology & Life Sciences Industry Group.
  • Coal India has registered 99.24% fall in its net profit at Rs 3.68 crore for the quarter as compared to Rs 487.10 crore for the same quarter in the previous year.
  • BHEL and NHPC have signed a contract agreement for the Renovation and Modernization of the 180 MW Baira Siul HEP in Himachal Pradesh.
  • HDFC has completed the third issue of Rupee Denominated Bonds to overseas investors aggregating to Rs 1,000 crore, on September 12, 2016.
  • HCL has won a contract to provide application management services for Western Australia's leading energy provider, Synergy.
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