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NSE Intra-day chart (15 November 2016)
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Market Commentary 16 November 2016
Markets to see some recovery with a positive start


The carnage in Indian stock markets prolonged for yet another session as the benchmarks continued to correct further for the second-straight session on Tuesday amid rupee plunging by over 115 paise in last three trading days. Indian rupee extended fall for the third consecutive session to hit over four-and-a-half-month low on Tuesday as the American currency strengthened overseas. A weak rupee does not auger well for foreign inflows, as any depreciation in local currency eats into profits of foreign investors when they redeem their investments. FPIs have already sold Rs 3,175 crore worth of domestic stocks this month following a Rs 4,306 crore worth of selloff in the previous month. Furthermore, muted second quarterly earnings posted by some more bluechip companies as well as poor growth in factory output, also accelerated selling activity in the local markets. The industrial production (IIP) data was announced after market hours on November 11, showed that Industrial production grew a meagre 0.7% in September mainly due to poor show by manufacturing and mining sectors coupled with decline in capital goods output. Sentiments also remained somber with many agencies criticizing the government over demonetisation of Rs 500 and Rs 1,000 notes, saying the move has led to 'financial chaos' across the country as well as condemning that the decision was taken without proper planning or preparation. Also, the sudden decline in money supply and simultaneous rise in bank deposits post demonetisation is going to adversely impact consumption in the economy in the short term and may lead to a lower GDP growth.  Meanwhile, aviation stocks came under pressure with the government's decision to levy up to Rs 8,500 per flight on major routes to fund the regional air connectivity scheme. The levy amount would be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight. Also, Gems & Jewellery stocks extended their losses on Tuesday after Prime Minister Narendra Modi hinted that his government may come out with stricter measures to curb black money. The Central excise department has asked city's top jewellers to immediately declare their stock and sale of the past four days. Finally, the BSE Sensex declined 514.19 points or 1.92% to 26304.63, while the CNX Nifty dropped 187.85 points or 2.26% to 8,108.45. 


The US markets closed higher on Tuesday, with the Dow Jones Industrial Average turning in a seventh winning session in a row and its fourth straight record close. There also was a temporary respite in what has been a rout in US government bonds, suggesting that investors are reassessing their positions after a sharp swing in the wake of Republican Donald Trump's surprise election win. On the economy front, sales at US retailers surged in October to cap the best two-month stretch since early 2014, offering more proof that a vastly improved jobs market is encouraging Americans to spend and keep the economy growing at a steady pace. Retail sales jumped 0.8% last month after a revised 1% gain in September. The increase in retail sales suggests the US economy got off to a good start in the fourth quarter. Consumer spending is the main driver of growth. The improvement in October was spearheaded by a strong month for auto dealers, whose sales hit an 11-month high. Excluding autos and gas, sales still rose a healthy 0.6%. The Dow Jones Industrial Average gained 54.37 points or 0.29 percent to 18,923.06, Nasdaq was up 57.22 points or 1.10 percent to 5,275.62, while S&P 500 edged higher 16.19 points or 0.75 percent to 2,180.39.


Crude oil futures rebounded on Tuesday from its multi months low, on renewed expectations that OPEC will agree to cut production to reduce a supply glut that has weighed on prices for more than two years. Also, news of an attack on a major oil pipeline in Nigeria, the Nembe Creek Trunk Line in the southern Niger Delta, gave an additional push to prices. However, some gains were capped with report of rising Libyan oil production. Benchmark crude oil futures for December delivery surged by $2.49 or 5.75 percent to close at $45.81 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery gained $1.88 or 4.2 percent to $46.31 a barrel on the ICE.


Indian rupee further weakened to over four-and-a-half month low against the US dollar on Tuesday, after foreign institutional investors (FIIs) continued to sell in the local equity markets. There was continued demand for the American unit from importers and the greenback's persistent gains against other Asian currencies, weighed on the rupee. The domestic currency touched a low of 67.82, a level last seen over four months back and remained under pressure with local equities slumping again. On the global front, the dollar eased against a basket of the other major currencies on Tuesday, but remained in sight of almost 14-year highs amid expectations for an interest rate increase. Finally, the rupee ended at 67.75, 50 paise weaker from its previous close of 67.25 on Friday.


The FIIs as per Tuesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 5106.18 crore against gross sell of Rs 6538.52 crore, while in the debt segment, the gross purchase was of Rs 1137.40 crore with gross sales of Rs 2233.88 crore.


The US markets ended higher in last session following report from Commerce Department showing that retail sales increased by more than expected in the month of October. Also a spike in crude prices supported the markets upmove. The Asian markets have made mostly a positive start led by the Japanese market, which is up by over a percent in early deals after the dollar fell from a five-month high versus the yen as investors questioned whether financial markets overreacted to Donald Trump's shock U.S. election victory. The Indian markets suffered sharp slump in last session with major averages further plunging on FII selling. Today, the start is likely to be in green and some recovery can be seen tailing positive global cues and some good domestic economic data. Retail inflation on the back of easing food and fuel prices eased to 14-month low of 4.20 percent in October this year, strengthening the case for RBI rate cut next month. On the same time, exports continued to grow for the second month in a row, expanding by 9.59 percent to $ 23.51 billion in October on healthy growth in shipments of jewellery and engineering products. Though, imports too increased by 8.11 percent to $ 33.67 billion, leaving a trade deficit of $ 10.16 billion in the month under review. Banking stocks will be in focus, as the Reserve Bank of India (RBI) has decided to stick to its deadline of March 2017 to clean up balance sheets of ban. There will be some buzz in the oil marketing companies, as the prices of petrol and diesel has been cut by Rs 1.46 and Rs 1.53 a litre respectively. Tata group shares too will be buzzing with the Tata Global Beverages sacking Cyrus Mistry as chairman of the company.


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  • Reliance Industries' partner Niko Resources of Canada has put on sale its 10% stake in the flagging KG-D6 gas block off the east coast.
  • Tata Motors has reported a net loss of Rs 630.76 crore for the quarter ended September 30, 2016 as compared to a net loss of Rs 288.79 crore for the same quarter in the previous year.
  • Maruti Suzuki is planning to set up a first-of-its-kind Industrial Training Institute in Mehsana, Gujarat.
  • State Bank of India, the country's largest public sector lender, has collected Rs 83,702 crore in deposits in the last five days.
  • GAIL has has reported around three fold jump in its net profit at Rs 924.65 crore for second quarter ended September 30, 2016.
News Analysis