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NSE Intra-day chart (13 May 2016)
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Market Commentary 16 May 2016
Markets to extend the sluggishness amid weak global cues


Indian markets suffered severe drubbing on Friday, weighed down by weak set of macro data and sluggish global surroundings. The benchmarks which had shown a terrific performance just a day ago remained under pressure from the very beginning amid weak global cues. Though, the start was in red but the initial trends showed that markets may resist any sharp fall despite getting twin disappointment of India's industrial production growth slowing to 0.1 percent in March as compared to 2.5 percent during same month last year, and retail inflation inching up in April to 5.39 percent, compared to 4.83 per cent in March. But as the trade progressed the markets started losing momentum and by the mid of the session completely lost their way with both the major indices losing over a percent each. The rupee weakness added pressure to the market slump, Indian rupee sliding for the third straight day lost substantial ground against the US dollar on fears of foreign outflows. On the global front, the Asian markets followed the US trend and made a weak closing, while the European markets too made a soft start. Back home, markets ended the dismal day of trade on a weak note with Sensex losing its crucial psychological level of 25500, while Nifty just managing to hold the 7800 mark. Markets, apart from the macro data remained jittery with some other developments like the Reserve Bank of India (RBI) proposing to raise provisioning and risk weights for fresh loans given to highly leveraged companies. In order to discourage banks from lending to such companies, which are said to have caused a high concentration of credit risk in the banking sector. In other development, acting upon recommendations of the Special Investigation Team on black money, market watchdog Sebi plans to tighten due diligence requirements for issuance and transfer of controversy-ridden P-Notes and put the onus on investors to ensure compliance with anti-money laundering law. Finally, the BSE Sensex plunged by 300.65 points or 1.17% to 25489.57, while the CNX Nifty lost 85.50 points or 1.08% to 7,814.90.


After a choppy start US Markets extended their southward journey in afternoon deals with Dow and the S&P 500 ending the session at their lowest closing levels in a month. The major averages closed firmly in negative terrain but off their lows for the session. Sentiments remained dampened as upbeat retail sales data led to renewed concerns about the outlook for interest rates. The retail sales surged up by 1.3 percent in April after slipping by 0.3 percent in March. Excluding a jump in auto sales, retail sales still rose by 0.8 percent in April compared to an upwardly revised 0.4 percent increase in March. Ex-auto sales had been expected to rise by 0.5 percent. A separate report from the University of Michigan also showed that consumer sentiment jumped to an eleven-month high in May. The reports generated some optimism about the economic outlook, although the data also led to speculation about the possibility of an interest rate hike next month. Meanwhile, the Labor Department released a report showing a modest rebound in producer prices in the month of April, although prices were flat compared to the same month a year ago. The Nasdaq dropped by 19.66 points or 0.41 percent to 4,717.68, S&P 500 lost 17.50 points or 0.85 percent to 2,046.61 and Dow Jones Industrial Average was down by 185.18 points or 1.04 percent to 17,535.32. 


Crude oil futures extending its fall from the six months high fell further on Friday, trimming some of the weekly gains as the dollar strengthened on an upbeat retail sales report. The Commerce Department said retail sales surged up by 1.3 percent in April after slipping by 0.3 percent in March. Also, traders turned cautious with a slight uptick in OPEC production in April reinforcing long-term concerns related to the excessive supply glut. OPEC in its Monthly Oil Report for May reportedly said that crude oil production last month rose by 188,000 barrels per day to average 32.44 million bpd.  Traders even overlooked oil services firm Baker Hughes weekly rig count report that oil rigs last week fell by 10 to 318, dropping to the lowest level since October, 2009. Oil rigs throughout the US have now fallen in eight consecutive weeks. Benchmark crude oil futures for June delivery declined by $0.54 or 1.16 percent to $46.16, after trading in a range of $45.76 and $46.48 a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery ended at $47.74, down $0.34 or 0.71 percent on the ICE.


Indian rupee extending its weakness for the second day, depreciated against dollar on the last trading session of the week after the weak macroeconomic data. IIP growth plunged to 0.1% in March due to poor performance of manufacturing and mining sectors coupled with a sharp decline in the output of capital goods, while retail inflation soared to 5.39% in April on higher food prices, reversing a downward trend seen in recent months. Besides, increased demand for the American currency from importers and losses in the local equity market too dampened the rupee sentiment. On the global front, dollar hit a two-week high against a basket of currencies on Friday, boosted by the hope that the U.S. Federal Reserve is still on track to raise rates before any other major central bank. Finally, the rupee ended at 66.77, 15 paise weaker from its previous close at 66.62 on Thursday.


The FIIs as per Friday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity, the gross buying was of Rs 3481.67 crore against gross selling of Rs 3430.42 crore, while in the debt segment, the gross purchase was of Rs 501.68 crore with gross sales of Rs 703.10 crore.            


The US markets ended sharply lower in last session, the trade remained volatile as strong US retail sales data rekindled talk that the Federal Reserve could more quickly lift interest rates.  Most of the Asian markets too were trading in red, tailing decline on Wall Street and soft Chinese economic data released over the weekend, though the Japanese market rallied in early trade on bargain-hunting following a string of good corporate earnings. The Indian markets suffered severe loss in last session and benchmarks lost over a percent, reacting to the weak macro data and sluggish global cues. Today, the start is likely to be soft-to-cautious on mostly listless trade in other regional markets. Traders will also be reacting to IMD's latest forecast of a likely late arrival of monsoon on the Kerala coast.  Also, there will be some concern in the market with a industry body FICCI's survey that growth of India's manufacturing sector may decelerate during June quarter due to factors like bleak export outlook, poor demand and high cost of borrowing. It also stated that hiring outlook for the sector also looks unpromising. However, there will be some support and recovery in latter trade with Economic think-tank NCAER projecting India's economic growth rate to improve marginally to 7.7 percent in 2016-17 against the backdrop of IMD's forecast of better monsoon rains this year. On the sectoral front, some buzz can be seen in the banking stocks, as the Finance Ministry's annual report, attributing mounting bad loans to economic sluggishness has said gross non-performing assets (GNPAs) of banks could soar to 6.9 per cent by March 2017 in a "severe stress scenario". There will lots of important earnings announcements too, to keep the markets in action.


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  • Aurobindo Pharma has received final approval from the US Food & Drug Administration to manufacture and market Zolmitriptan Tablets, 2.5 mg and 5 mg.
  • Eicher Motors' promoters have reportedly sold 11.40 lakh shares, or 4.3 per cent stake, in the company worth of Rs 2,160 crore via block deal.
  • ICICI Bank in association with Jet Airways has launched the country's first contactless business credit card for small and mid-sized enterprises and their employees. 
  • Bank of Baroda has reported a net loss of Rs 3230 crore in January-March quarter from Rs 598.3 crore in corresponding quarter last fiscal.
  • Coal India will hold the second phase of special e-auction for the current financial year for providing coal to power plants as the government's targets 24X7 power supply across the country.
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