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NSE Intra-day chart (16 May 2016)
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Market Commentary 17 May 2016
Markets to get a positive start amid supportive global cues


Indian stock markets ended the first day of the week on an optimistic note as gains in a few blue chips such as Dr. Reddy's Laboratories and ITC offset a slump in state-run lenders such as Bank of Baroda. Sentiments got boost after data showed India's wholesale prices unexpectedly rose for the first time in 18 months in April, ending a period of deflation. India's annual wholesale price inflation (WPI) moved up into the positive zone at 0.34% for April, from (-) 0.85% in March and (-) 2.43% during the corresponding month of the previous year. Some support also came with the report from 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. However, investors remained cautious with 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. Furthermore, the report that onset of the southwest monsoon over Kerala is likely to be delayed from the normal date of June 1, the first negative signal since it forecast above-normal rainfall this season after two years of drought, also weighed on the sentiment. On the global front, most of Asian markets ended the day on a firm note, while some weakness was seen at European counters at opening. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, lacking any significant upside cues. The indices moved only sideways thereafter but touched intraday lows in the noon session as fresh bouts of selling pressure was witnessed after weak European opening. However, the frontline gauges managed to pare the losses and rise above the neutral line in the afternoon trades, as investor turned optimistic. The bourses further capitalized on the momentum and spurted in final hour of trades on the back of broad based bottom fishing in undervalued stocks. Finally, the BSE Sensex surged 163.66 points or 0.64% to 25653.23, while the CNX Nifty rose 45.85 points or 0.59% to 7,860.75.


The US market closed higher on Monday, rebounding after three straight weeks of declines, as a surge in oil prices and a rally in tech stocks overshadowed weaker-than-expected manufacturing data from the New York region. On the economy front, home builder sentiment was unchanged in May. The National Association of Home Builders' index was 58 for the fourth month in a row. Readings over 50 signal improvement and NAHB stated that the index's current level points to slow and steady growth. A sub-gauge tracking expectations of sales over the next six months jumped three points to 65. The two other components, current sales conditions and buyer traffic, were unchanged at 63 and 44. On the other hand, a reading of New York-area manufacturing conditions fell sharply in May, one that could make the likelihood of an interest rate hike more remote. The Empire State general business conditions index nose-dived to a reading of negative 9, from positive 9.6 in April. The Dow Jones Industrial Average gained 175.39 points or 1.00 percent to 17,710.71, Nasdaq added 57.78 points or 1.22 percent to 4,775.46, while S&P 500 was up by 20.05 points or 0.98 percent to 2,066.66.  


Crude oil futures surged on Monday to near six-months high, as investors reacted to a string of production outages in Nigeria and Venezuela. In Nigeria, there were pipeline outages that reduced the production to multi-year low. Wildfires curtailed production in Canada, while in Libya sectarian conflict is interrupting supplies. Traders' mood turned jubilant with Goldman Sachs stating that the global supply glut has rapidly dwindled. Benchmark crude oil futures for June delivery surged by $1.54 or 3.33 percent to $47.75 a barrel after trading in a range of $46.15 and $47.85 a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery closed at $48.95, up $1.12 or 2.34 percent on the ICE.


Extending its weakness for the third straight session, Indian rupee depreciated against dollar on Monday on continued dollar demand from importers. Besides, gains in American currency overseas also put pressure on the rupee. Meanwhile, investors remained cautious on report that India's exports dipped by 6.74 percent to $20.5 billion in April on account of sharp fall in shipments of petroleum and engineering products amid tepid global demand. However, positive local equity market and gains in the Asian currencies capped the rupee losses to some extent. On the global front, yen eased on Monday as Japan stepped up its threat of intervention in the currency market before the Group of Seven meeting it will host this week. Finally, the rupee ended at 66.80, 3 paise weaker from its previous close at 66.77 on Friday.


The FIIs as per Monday's data were net buyers in equity and in debt segments both. In equity, the gross buying was of Rs 5595.93 crore against gross selling of Rs 3994.42 crore, while in the debt segment, the gross purchase was of Rs 712.70 crore with gross sales of Rs 557.33 crore.            


The US markets surged in last session, offsetting the pullback seen over the past few weeks, amid a sharp increase by the price of oil and traders ignored a New York Fed report that its general business conditions index slid to a negative 9.0 in May from a positive 9.6 in April. The Asian markets have made a jubilant start and some of the indices are trading higher by over half a percent, led by energy shares as crude oil climbed to six months high. However, the Chinese market continued its somber run with a modest cut in early deals. The Indian markets bounced back from the intraday low to post gains of over half a percent in last session, supported by some value buying at lower levels. Today, the start is likely to be in green and the markets will be extending the last session gains on positive global cues. Traders will also be getting some encouragement with Finance Minister Arun Jaitley exuding confidence in getting the GST Bill passed in the upcoming monsoon session. Jaitley has said that he has spoken to the chief ministers of all states, including those ruled by the UPA and the Congress, and they are a "strong supporter" of the idea. However, there will be some cautiousness too, with Finance Minister stating that India will have to renegotiate the tax treaty with Singapore to extend the capital gains tax provisions of the recently-concluded tax pact with Mauritius. Meanwhile, there will be some buzz in the markets with the Reserve Bank of India proposing to allow foreign portfolio investors investing in unlisted corporate bonds following the budget announcement earlier in February. Some action can be seen in banking stocks, as SBI chairwomen has called for the government to park surplus funds with banks instead of the RBI to make up for fund shortage. There will be lots of important result announcements too, to keep the markets in action.


Support and Resistance: NSE Nifty and BSE Sensex



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  • Bharat Heavy Electricals has bagged an order worth Rs 1600 crore for setting up a coal-based thermal power project in Odisha.
  • HDFC Bank, the country's second largest private sector bank has unveiled SmartUp, a first-of-its-kind dedicated solution for start-ups in Kolkata.
  • The Delhi government will soon issue fresh directions to the NTPC-run Badarpur thermal power plant to come up with an action plan for disposing of fly ash, a major source of air pollution in summer.
  • RIL has received nod for carrying out eight additional exploratory well drilling to ascertain reservoir capacity from Centre's green panel.
  • Coal India has signed a Joint Venture Agreement with NTPC for setting up of a Joint Venture Company at 50:50 shareholding basis for revival of Sindhri & Gorakhpur units of Fertiliser Corporation of India.
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