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NSE Intra-day chart (16 June 2016)
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Market Commentary 17 June 2016
Markets to get a bounce back on positive global cues


A session after showcasing a vivacious rally of over a percent, Indian equity indices faltered and failed to extend the winning momentum on Thursday as investors turned edgy after Bank of Japan maintained status quo and refrained from adding fresh stimulus. Besides, cautious policy stance by the US Fed on global growth worries and Brexit fears sparked panic selling at the local markets. Domestic sentiments remained dampened with the report that India's monsoon deficit widened to 25% since the beginning of this month as rainfall in the past day was less than half of the normal level, increasing the anxiety of farmers. Weather scientists say total rainfall is well below average, primarily because the monsoon hit peninsular India a week late and has not progressed smoothly after that. Moreover, investors also remained anxious over report that India's merchandise exports maintained its stubborn trend for the eighteenth straight month in May, although the rate of fall was lowest since November 2014. Exports contracted 0.79 per cent to $22.17 billion in May, against $ 22.34 billion in May 2015. However, market participants got some confidence with Minister of State for Finance Jayant Sinha's statement that the government is keeping a watch on the global risk factors to the economy including Brexit, turmoil in the Middle East and spike in oil prices in the international market. Some support also came with a report that India with a low leverage score looks promising among emerging Asian countries, which can deliver a solid growth rate and where the potential for a significant expansion is maximum. On the global front, Asian stock markets ended lower on Thursday after Federal Reserve boss Janet Yellen sounded a warning over a possible British exit from the EU, while the European stocks too declined in early trade. Back home, the key benchmarks failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of selling emerged in the local markets immediately after a somber European market opening. Finally, the BSE Sensex ended lower by 200.88 points or 0.75% to 26525.46, while the CNX Nifty dropped 65.85 points or 0.80% to 8,140.75.


The US markets closed modestly higher on Thursday, ending a five-day streak of losses. For the past several sessions, a British referendum scheduled for June 23 to decide whether the UK will remain in the European Union had been weighing on risky assets like equities. Meanwhile, at a news conference after policy statement, Fed chairman Janet Yellen stated that vulnerabilities in the global economy remain, and acknowledged that the pending UK vote, known as Brexit, which will help to determine whether Britons remain a member of the European Union, was a factor in its monetary-policy plans. On the economy front, initial US jobless claims rose by 13,000 to 277,000 in mid-June, but the increase is likely tied to seasonal quirks that could unwind in the next few weeks. Broadly, layoffs nationwide remain low. The number of new applications for benefits during the week stretching from June 5 to June 11 was little changed in most states except for California and Pennsylvania. Unadjusted claim soared by 55% to 54,805 in the Golden State, an unusually large increase. The Dow Jones Industrial Average was up by 92.93 points or 0.53 percent to 17,733.10, Nasdaq added 9.99 points or 0.21 percent to 4,844.92, while S&P 500 gained 6.49 points or 0.31 percent to 2,077.99.


Crude oil futures declining for the sixth straight session slumped on Thursday, to their lowest levels in five weeks, amid a surging dollar and continuing fears of Brexit. Markets are anxious that a fractured Europe could spell the start of another global recession. Global oversupply concerns too weighed on the crude prices in view of return of Iranian production. Benchmark crude oil futures for July delivery declined by $1.78 or 3.71percent to $46.20 a barrel after trading in a range of $46.16 and $47.75 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery closed at $47.21, down $1.76 or 3.59 percent on the ICE.


Indian rupee ended weaker against dollar on Thursday on fresh bouts of dollar demand from importers and banks. Besides, massive losses of local equities also added to the pessimistic environment. However, dollar's weakness against other currencies overseas after the US Federal Reserve left interest rates unchanged, capped the rupee losses. Investors remained cautious with the policy stance by the US Fed on global growth worries and Brexit fears. Moreover, investors also remained anxious over report that India's merchandise exports maintained its stubborn trend for the eighteenth straight month in May, although the rate of fall was lowest since November 2014. Exports contracted 0.79 per cent to $22.17 billion in May, against $ 22.34 billion in May 2015. On the global front, yen surged broadly on Thursday after the Bank of Japan held off from expanding its monetary stimulus. Finally, the rupee ended 67.28, 13 paise weaker from its previous close at 67.15 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity, the gross buying was of Rs 3168.16 crore against gross selling of Rs 3248.66 crore, while in the debt segment, the gross purchase was of Rs 883.41 crore with gross sales of Rs 643.68 crore.             


The US markets made some recovery in last session with stocks showing turnaround over the course of the trading day, mainly due to bargain hunting, with traders picking up stocks at reduced levels. The Asian markets have made an all green start tailing the positive cues from the US markets. Japanese market rebounded from a four-month low, as the yen weakened for the first time in six sessions. The Indian markets suffered sharp cuts in last session, as amid worries of Brexit, inaction by central banks in the US, Japan and Switzerland added to concerns over slowing global growth. Today, the start is likely to see some recovery on sanguine global cues and traders will be going for value buying at lower levels. Traders will be getting some support with report that India's current account deficit narrowed sharply to $0.3 billion or 0.1 percent of GDP in the fourth quarter of FY 2015-16 ended March 31, 2016 from the $ 7.1 billion or 1.3 percent in the third quarter, mainly on account of lower trade deficit. Meanwhile, Prime Minister Narendra Modi has set a target for the taxmen to double the taxpayer base to 10 crore as against 5.43 crore tax payers currently. However, there will be some concern in the markets too, with slow progress of the monsoon which continues to remain in the weak phase and has not made much progress. There will be buzz in the sugar stocks, as the government has slapped further 20% hike in export duty in order to curb shipment of domestic sugar and contain prices at home by raising supply. The duty is, however, lower than 25 per cent proposed by the Food Ministry. The aviation stocks too may see some action, as the government is considering allowing non-scheduled operators (NSOP) to fly on regional routes.


Support and Resistance: NSE Nifty and BSE Sensex



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Bank of Baroda





Bharti Infratel






  • Tata Power Company's wholly-owned subsidiary Tata Power Renewable Energy has raised Rs 575 crore through issuance of non-convertible debentures on private placement basis.
  • NTPC has sold surplus power from its stations in Singrauli, Vindhyanchal, Rihand, Unchahar and Dadri through the power exchanges for the first time.
  • Idea Cellular, one of the biggest cellular carrier of the country, has added 8.58 lakh new mobile subscribers in May, 2016.
  • In order to fund start-ups in the financial technology space, the country's largest lender State Bank of India has set up a Rs 200 crore fund.
  • Bharti Airtel, a leading global telecommunications company with operations in 20 countries across Asia and Africa, has added 21.18 lakh users in May, 2016.
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