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NSE Intra-day chart (16 November 2016)
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Market Commentary 17 November 2016
Markets to make a cautious but green start


It turned out to be a lackadaisical performance from the benchmark indices on Wednesday as they failed to snap the session in the positive territory and ended on flat note. Rupee depreciation against dollar, foreign fund outflows and slow replenishment in new bills in winter session, weighed on investors' morale. The winter session is likely to see a united opposition confronting the Narendra Modi government over the problems faced by people post the demonetisation move. The Congress has also sought discussion on issues relating to one rank, one pension (OROP), the situation in Jammu and Kashmir and proposed merger of Railway and Union budgets. However, investors got some comfort with the report that India's headline inflation rate based on the Consumer Price Index (combined) eased to 14 month low of 4.2% in October compared with 4.39% in September and 5% a year ago, raising hopes that the RBI (Reserve Bank of India) may cut monetary rate in its forthcoming monetary policy review next month. The country's wholesale inflation too softened to 3.39% in October from 3.57% in September. Meanwhile, shares of consumer durables companies continued to witness selling pressure with jewellery shares emerging as the top losers for the third straight trading sessions on fears of falling demand in wake of the demonetization. Textile and leather, which are labour-intensive industries, are also facing the heat of centre's decision to demonetise the higher currencies. Companies are not able to pay wages to workers and not able to procure raw materials. Also, Cigarette companies like ITC, Godfrey Phillips India and NTC Industries ended in red on reports that government may impose complete ban on FDI in tobacco sector. Meanwhile, after trading on firm note for most part of the session, many IT stocks witnessed profit booking in final hour of the trade after Information technology industry body Nasscom cut growth guidance for the industry to 8-10 percent in constant currency terms from 10-12 percent. Finally, the BSE Sensex declined 5.94 points or 0.02% to 26298.69, while the CNX Nifty ended up by 3.15 points or 0.04% to 8,111.60.


The US markets closed mostly lower on Wednesday, with the Dow Jones Industrial Average snapping its seven-session winning streak, as well as a string of four consecutive record close, as a postelection rally by financial stocks paused. Oil futures settled down after swinging between gains and losses. A rise in US crude supply outweighed reports that Russia's energy minister, Alexander Novak, stated that he sees a strong chance the Organization of the Petroleum Exporting Countries will reach an agreement to curb production. On the economy front, industrial production was unchanged in October after a big drop in output as warmer-than-normal temperatures reduced the demand for heating. The Federal Reserve sated that production was unchanged - economists had forecast a 0.2% gain - as utilities output cratered by 2.6%. Manufacturing output edged up 0.2%, while mining output stormed 2.1% higher, its best performance since March 2014. Moreover, an index of home builder sentiment was unchanged in November. The National Association of Home Builders' index was steady at 63. The Dow Jones Industrial Average lost 54.92 points or 0.29 percent to 18,868.14, S&P 500 edged lower 3.45 points or 0.16 percent to 2,176.94, while Nasdaq was up 18.96 points or 0.36 percent to 5,294.58.


Crude oil futures turned lower on Wednesday after surging in the previous one, after data showed that crude supplies rose the third straight week. The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 5.3 million barrels in the week ended November 11. The report also showed that gasoline inventories increased by 0.7 million barrels, while for distillate inventories including diesel, the EIA reported a gain of 0.3 million barrels. Benchmark crude oil futures for December delivery declined by $0.63 or 1.38 percent to close at $45.18 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for January delivery shed $0.54 or 1.15 percent to $46.41 a barrel on the ICE.


Indian rupee depreciated for the fourth consecutive session against the US dollar on Wednesday despite the data showing that country's trade deficit for October 2016 declined by 32.04 per cent to $ 53169.95 million as compared to $78238.60 million in October 2015. Steep fall in WPI and CPI too failed to provide any support to local currency. India's headline inflation rate based on the Consumer Price Index (combined) eased to 14 month low of 4.2% in October compared with 4.39% in September and 5% a year ago, raising hopes that the RBI (Reserve Bank of India) may cut monetary rate in its forthcoming monetary policy review next month. Also, dollar strengthened against other currencies overseas too weighed on the rupee sentiments. On the global front, dollar consolidated gains against the Japanese yen as solid U.S. retail sales and New York manufacturing data boosted expectations for a December rate hike by the Federal Reserve. Finally, the rupee ended at 67.94, 19 paise weaker from its previous close of 67.75 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 9013.48 crore against gross sell of Rs 11339.18 crore, while in the debt segment, the gross purchase was of Rs 1212.21crore with gross sales of Rs 3502.83 crore. 


The US markets once again made a mixed closing in last session, as traders took a break after the Dow closed higher for the seventh straight session on Tuesday to reach another new record closing high and traders also reacted to some economic data  showing that conditions largely held steady ahead of last week's elections. The Asian markets have made mostly a lower start ahead of American inflation data and testimony from Federal Reserve Chair Janet Yellen that will help shape US interest-rate expectations. The Indian markets paring all the early good works ended flat in last session. Traders turned cautious with foreign institutions continuing the selling. Today, the start is likely to be a flat-to-cautious tailing the somber trade in other regional peers, however some stabilization and recovery can be seen in latter trade and traders will be getting some support with Moody's Investors Service affirming India's sovereign rating at 'Baa3' with a positive outlook, saying it expects policymakers to continue reforms to achieve balanced growth and reduce the government's debt load. Though, it also said that the policy effort has not delivered a sufficiently clear prospect of the reform dividends -- sustained, high growth and the promise of a reduction in the country's debt burden -- to support an upgrade. Traders will also be eyeing the winter session of Parliament, where the government is unlikely to bring three bills related to GST in the coming days, but it is hopeful of pushing them in the latter half of the winter session. The IT stocks will be under pressure as the industry body Nasscom cropped the upper end of its yearly guidance of 10-12%, in view of creeping protectionism and rising anti-globalisation sentiment across the US and Europe. There will be some important result announcements too, to keep the markets buzzing.



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Bank of Baroda





Hindalco Industries






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