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NSE Intra-day chart (12 August 2016)
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Market Commentary 16 August 2016
Markets to start in green after a long weekend


Indian benchmarks carried forward their northbound journey for yet another session on Friday, optimistic cues from Asian market helped the indices to surpass crucial support levels of 8,650 and 28,150 and move in higher trajectories. A strong lead from Wall Street and a rebound in oil prices gave Asian stock markets a lift on Friday, even as fresh economic data from China missed expectations. On the domestic front, sentiments got some support from India Meteorological Department (IMD's) reports that monsoon rains in India were 15 percent above average in the week ended August 10, 2016. The weather office has retained its forecast for an above-average monsoon this year, boosting hopes of a rise in farm output and income after two years of drought. Investors got some comfort with the report that India's gold imports, one of the primary causes of the current account deficit, fell sharply by 76 percent to 60 tonnes in the April-July period this fiscal on high import duty and other taxes. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 608 crore on August 11, 2014.  However, market participants showed some cautiousness too ahead of key economic data of industrial production (IIP) for June and consumer price index (CPI) for July, to be released after market closing. Shares of public sector undertaking (PSU) banks rallied after the nation's top lender by assets, reported stability in its asset quality for the quarter ended June 30, 2016. State Bank of India (SBI), which accounts for more than a fifth of India's total bank loans and deposits, reported a net non-performing assets (NPA) of around 4%, which  is very comforting given much higher NPA levels in other state-run banks. Further, auto stocks like Mahindra & Mahindra and Tata Motors gained traction after the Supreme Court lifted the ban on registration of diesel cars with capacity above 2000cc in Delhi-NCR. Finally, the BSE Sensex gained 292.80 points or 1.05% to 28152.40, while the CNX Nifty rose by 80.00 points or 0.93% to 8,672.15. Indian markets remained closed on Monday on account of Independence Day holiday.


The US markets closed higher on Monday, with the Dow Jones Industrial Average, the S&P 500 index, and the Nasdaq Composite Index all closing at record highs for the second time since 1999, on back of sharp uptick in oil prices, which boosted energy and materials shares. Markets were also supported by an upbeat housing market gauge. Builder confidence in the market for new single-family homes rose more than expected in August, a hopeful sign for increased construction. The closely-watched index from the National Association of Home Builders rose 2 points to 60 from a downwardly-revised 58 reading in July. A sub-gauge that measures current sales conditions rose 2 points to 65, while the index of expected conditions over the coming 6 months increased 1 point to 67. The index that tracks buyer traffic dropped 1 point to 44. However, manufacturing conditions in the New York region weakened in August. The Empire State manufacturing index for August fell to negative 4.2 from positive 0.6 in July. The deterioration in August was below the forecast. The Dow Jones Industrial Average added 59.58 points or 0.32 percent to 18,636.05, Nasdaq gained 29.12 points or 0.56 percent to 5,262.02, while S&P 500 was up 6.10 points or 0.28 percent to 2,190.15. 


Crude oil futures surged on Monday to fresh 3-week highs with Nymex crude regaining its $45 a barrel mark after Russia energy minister Alexander Novak hinted that his nation could be open to holding discussions with major producers from the Middle East in the coming weeks. Novak said that "With regard to the cooperation with Saudi Arabia, the dialogue between our two countries is developing in a tangible way, whether in the framework of a multi-party structure or on a bilateral level." Benchmark crude oil futures for September delivery surged by $1.23 or 2.76 percent to close at $45.72 a barrel after trading in a range of $44.38 and $45.77 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery gained $1.36 or 2.90 percent to $48.33 a barrel on the ICE.


Indian rupee depreciated against dollar on Friday due to demand for the dollar from importers and banks. Besides, dollar strengthened against the other currencies oversees too weighted on the rupee sentiment. Rupee failed to get any support with India Meteorological Department's (IMD's) statement that monsoon rains in India were 15 percent above average in the week ended August 10. The weather office has retained its forecast for an above-average monsoon this year, boosting hopes of a rise in farm output and income after two years of drought. On the global front, yen weakened against the dollar in the wake of a rise in U.S. bond yields amid hawkish interest-rate comments from a senior Federal Reserve official. Finally the rupee ended at 66.89, weaker by 5 paise from its previous close of 66.84 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 segment, the gross buying was of Rs 5051.00 crore against gross selling of Rs 4410.06 crore. While in the debt segment, the gross purchase was of Rs 312.91 crore with gross sales of Rs 962.58 crore. Thus, FIIs stood as net sellers of Rs 649.67 crore in debt.


The US markets surged in last session with all the major averages reaching new record closing highs. Traders turned bullish amid indications that the US economy is outperforming after the National Association of Home Builders released a report showing an improvement in homebuilder confidence in the month of August. The Asian markets have made mixed start , though many of them are in green on record-high close for US equities and oil's return to more than $45 a barrel. The Indian markets before going for a long weekend posted strong gains in last trading session, today the start of the truncated week is likely to be in green, traders will first be reacting to the mixed economic data announced after the market hours on Friday, while the Index of Industrial Production (IIP) improved to 2.1% in June as compared to 1.2% in May, the consumer price index (CPI) rose for fourth straight month to 6.07% in July as compared to 5.76% in June 2016. Marketmen will be getting some encouragement with Prime Minister Narendra Modi, vowing to keep inflation under control stating that he has tried to stay away from populism which the past regimes practiced to get recognition while 'emptying the exchequer'. Meanwhile, Finance Minister Arun Jaitley has called for reforms at municipal and panchayat levels to complement the efforts of the Centre and the states to improve ease of doing business. However, there will be some cautiousness too, as the after rising for the first time in 18 months in June, exports shrank again in July, contracting 6.84 percent due to decline in shipments of engineering goods and petroleum products. There will be some buzz in the oil marketing companies, as the price of petrol has been cut by Rs 1 a litre and diesel by Rs 2 per litre, the fourth reduction in rates since July. Power stocks too will be in action, as a report under government's ambitious Sagarmala project has said that Coastal movement of coal could cut power costs by 50 paisa per unit for power plants besides saving Rs 17,000 crore annually.


                                Support and Resistance: CNX Nifty and BSE Sensex


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  • State Bank of India has reported 31.73% fall in its net profit at Rs 2520.96 crore for the quarter ended June 30, 2016 as compared to Rs 3692.43 crore for the same quarter in the previous year.
  • Sun Pharmaceutical Industries has reported net loss at Rs 151.46 crore for the quarter as compared to net loss of Rs 396.35 crore for the same quarter in the previous year.
  • Bharti Airtel, the country's largest telecommunication services provider, has launched 4G services in Kharagpur.
  • Axis Bank in association with Suvidhaa Infoserve, a payments/remittance firm, has launched 'Nano Credit', a pre-approved, instant and unsecured loans for the urban low-income customer segment.
  • Coal India has targeted to produce 71.77 million tonnes of coking coal of the total production of 1,000 MT by 2019-20.
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