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NSE Intra-day chart (15 June 2016)
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Market Commentary 16 June 2016
Markets to get a positive but cautious start


After witnessing a wonderful recovery in previous session, Indian benchmark indices took a step forward and rallied over a percent on Wednesday, on account of fresh round of value-buying by funds and retail investors in the frontline bluechip sectors. Sentiments got a boost with Finance Minister Arun Jaitley's statement after a meeting of Empowered Committee of state FMs on the long awaited indirect tax reform that every state has either supported or accepted the idea of the pan-India Goods and Services Tax (GST) except Tamil Nadu. GST Empowered Committee Chairman Amit Mitra too said that there was "general consensus" on the issue of dual control over taxation structure between the Centre and states. Market participants also got some confidence with NITI Aayog Vice-Chairman Arvind Panagariya's statement that India's economic growth will cross the 8 per cent-mark this fiscal on the back of good monsoon and pick up in manufacturing. He said the growth in the last quarter of the previous fiscal touched 7.9 per cent because of uptick in manufacturing activity and improved performance of agriculture sector. Besides, appreciation in the rupee against dollar too supported sentiments. Indian rupee strengthened 14 paise to 67.11 against the US dollar at the time of equity markets closing on fresh selling of the American unit by exporters. Meanwhile, shares of all three listed airlines companies - Jet Airways (India), SpiceJet and InterGlobe Aviation (IndiGo) - gained after the Union Cabinet cleared Civil Aviation Policy, while public sector oil marketing companies (OMCs) gained, after the global crude prices fell to their three weeks low. Moreover, shares of State Bank of India's subsidiaries surged up to 20 per cent on Cabinet's approval to the proposed merger of SBI's five subsidiaries and Bharatiya Mahila Bank (BMB) with the parent bank. On the global front, Asian market ended mostly higher on Wednesday, while a rally in miners and retailers lifted European stocks out of a five-day rout. Back home, Second half of the session saw the key gauges capitalize on the momentum further and spurt to session's highest levels in dying hour on the back of broad based bottom fishing in undervalued stocks. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off intraday highs. Finally, the BSE Sensex surged 330.63 points or 1.27% to 26726.34, while the CNX Nifty rose 97.75 points or 1.21% to 8,206.60.


The US markets closed lower on Wednesday, stretching a losing streak to five days, as investors weighed the Federal Reserve's decision to delay rate increases. The committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Fed acknowledged that hiring slowed and that business fixed investment was soft and signaled a slower approach on raising borrowing costs. Although the unemployment rate has declined, job gains have diminished. Growth in household spending has strengthened. Since the beginning of the year, the housing sector has continued to improve and the drag from net exports appears to have lessened, but business fixed investment has been soft. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. On the economy front, industrial production contracted in May, almost erasing a promising expansion in the previous month. Industrial production fell 0.4% in May after a revised 0.6% rise in April. The Dow Jones Industrial Average was down by 34.65 points or 0.20 percent to 17,640.17, Nasdaq lost 8.62 points or 0.18 percent to 4,834.93, while S&P 500 dropped 3.82 points or 0.18 percent to 2,071.50.


Crude oil futures moved further low on Wednesday after Federal Reserve voted against raising interest rates in the wake of a dismal jobs report and concerns about the global economy. Traders largely shrugged off the data showing a draw down in U.S. oil inventories. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that US commercial crude oil inventories decreased by 0.9 million barrels for the week ending on June 10 at 531.5 million barrels. Total motor gasoline inventories decreased by 2.6 million barrels last week, while distillate fuel inventories increased by 0.8 million barrels. Benchmark crude oil futures for July delivery was down by $0.58 or 1.18 percent to $47.92 a barrel after trading in a range of $47.57 and $48.72 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery closed at $48.89, lower by $0.92 or 185 percent on the ICE.


Snapping its four day losing streak, Indian rupee bounced back against dollar on Wednesday, ahead of the outcome of two-day US Fed policy review later in the day which is likely to keep its interest rates unchanged. The domestic currency looked strong from the very beginning and was strongly supported by smart rally in the equity markets. Besides, fresh selling of American unit by banks and exporters too supported rupee. However, dollar's strength against some currencies overseas capped the gains. Sentiment got support with NITI Aayog Vice-Chairman Arvind Panagariya statement that India's economic growth will cross the 8 per cent-mark this fiscal on the back of good monsoon and pick up in manufacturing. On the global front, yen lost a bit of ground against the dollar as a bounce in Tokyo stocks slightly improved investor risk appetite. Finally, the rupee ended at 67.15, 12 paise stronger from its previous close at 67.27 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity, the gross buying was of Rs 2895.77 crore against gross selling of Rs 2988.03 crore, while in the debt segment, the gross purchase was of Rs 606.17 crore with gross sales of Rs 953.83 crore.             


The US markets made a negative close in last session, though the bourses remained in green for most part of the day but came under pressure going into the close, as the Federal Reserve seemed to offer a dovish assessment of the outlook for interest rates, while leaving rates unchanged. The Asian markets have made mostly a lower start and the Japanese market was still in red, despite the Bank of Japan's decision to keep the rates unchanged at -0.1%, as the yen strengthened against other major currencies. The Indian markets rallied in last session, supported by lower level buying in value stocks, while some sector related development too supported the markets to move higher. Today, the start is likely to remain cautious on sluggish global cues. Traders will also be concerned with report that India's merchandise exports contracted again, albeit at their slowest pace in 18 months in May as non-petroleum exports finally turned positive, led by exports of engineering goods and gems and jewellery. Exports contracted at 0.79% in May while imports slipped 13.16%, leaving a trade deficit of $6.27 billion. Markets however can see some upmove in the latter part of the trade as the crude in global markets continues to move lower. The power sector will be buzzing with a two day renewable energy conference, which will be discussing implementation of various ongoing schemes of the government and issues pertaining to power, coal and renewable energy sectors. The PSU stocks too will be in action, as part of its disinvestment plan as well as to meet market regulator (Sebi) guidelines on public holdings, the government has approved a 10% disinvestment in Housing and Urban Development Corporation (Hudco) through an initial public offer.


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  • Wipro has launched its analytics solution, Data Discovery Platform, which provides pertinent business insights across the value of chain of an industry through pre-defined 'apps'.
  • Tata Motors' subsidiary Jaguar Land Rover has opened $750m manufacturing facility and Education Business Partnership Centre in the state of Rio de Janeiro.
  • Axis Bank in association with Bengaluru Metropolitan Transport Corporation has unveiled India's first open loop contactless card 'Axis Bank BMTC Smart card'.
  • India's largest bank, State Bank of India and MasterCard announced pilot launch of a distribution alliance with travel prepaid cards distributor Centrum.
  • Mahindra and Mahindra's truck and buses division aims to double its market share in the heavy commercial vehicles space in the coming two years, beside strengthening its buses business.
News Analysis