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NSE Intra-day chart (18 January 2017)
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Market Commentary 19 January 2017
Markets to remain in cautious mood on mixed global cues


Erasing most of their initial gains, Indian equity benchmarks ended the Wednesday's trade with marginal gains. Local bourses made a jubilant start with an UN report claiming that India was still the fastest growing large developing economy and that the country would grow by 7.7 percent in the financial year 2017. The United Nations World Economic Situation and Prospects (WESP) 2017 report has said that India's economy is projected to grow by 7.7 percent in fiscal year 2017 benefiting from strong private consumption and gradual introduction of significant domestic reforms. Some support also came with report that Income Tax (I-T) Department soothed foreign investors' nerves by putting in abeyance its December 21 circular that amplified their concerns over a potential rise in tax liability. However, markets pared most of their gains in second half of the session as traders opted to book profit at higher levels ahead of a crucial meeting of Parliament's standing committee on finance over the demonetisation issue with Reserve Bank of India Governor Urjit Patel. Traders also remained on sidelines ahead of the Union Budget 2017 as they hope for incentives to support an economy hit by cash shortages after a ban on higher-value banknotes. Market participants also remained cautious after private poll report showed that India's economy lost momentum in the final three months of 2016 after Prime Minister Narendra Modi's ban on high-value notes hurt consumption and businesses but it is set to pick up this quarter. Having posted growth of above 7 percent for six consecutive quarters, India's gross domestic product is expected to have expanded just 6.5 per cent in the October-December quarter - the weakest in nearly three years. On the global front, European markets opened mostly in green helped by a slew of well-received company results from ASML, Novozymes and Burberry, though shares in Pearson slumped after its update, while Asian markets ended mostly in green. Backhome, finally, the BSE Sensex gained 21.98 points or 0.08% to 27,257.64, while the CNX Nifty was up by 19.00 points or 0.23% to 8,417.00.


The US markets closed mostly higher on Wednesday, while the Dow industrials closed at the lowest level of 2017, marking a fourth straight day in the red for the blue-chip gauge, but the broader stock market managed modest gains. The Federal Reserve's so-called Beige Book, a collection of anecdotes about the economy gathered before the central bank that makes interest-rate decisions, stated that prices pressures intensified somewhat in the last few weeks of 2016. Eight of the 12 Fed districts saw modest prices increases and the remainder saw smaller gains. Only Atlanta reported flat prices. Increases in input goods were more widespread than increases in final goods prices. Costs increases were reported for coal, natural gas, and selected building and manufacturing materials. Retailers still struggled to raise prices, and farm products stayed flat at very low levels. The majority of districts reported that labor markets were tight and many thought this trend would continue in 2017 with wage pressures likely to rise. The government reported that wage growth rose at a 2.9% annual pace in December, the fastest rate of growth since 2009. On the economy front, the consumer-price index, a widely watched gauge of inflationary pressure, showed price growth accelerated in 2016 at the fastest pace since 2011. In December, the index rose 0.3%. The Nasdaq gained 16.93 points or 0.31 percent to 5,555.66, S&P 500 was up 4 points or 0.18 percent to 2,271.89, while the Dow Jones Industrial Average lost 22.05 points or 0.11 percent to 19,804.72.


Crude oil futures plunged and settled at the lowest level in a week on Wednesday after the US Energy Information Administration said shale production is set to snap a three-month decline in February, as energy firms boost drilling activity following a rise in crude prices. EIA analysts indicate February production will increase to 40,750 barrels per day (bpd) to 4.748 million bpd. Meanwhile, OPEC in its monthly report said that it pumped 33.085 million barrels per day (bpd) last month, down from a 7-year high of 221,000 bpd from November. Benchmark crude oil futures for February delivery declined by $1.40 or 2.6 percent to $51.08 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended lower by 2.58 percent at $54.04 on the ICE.


Snapping two consecutive sessions winning streak, Indian rupee depreciated on Wednesday due to dollar demand from banks and importers amid continued capital outflows. Rupee was unable to get any support with the United Nations World Economic Situation and Prospects (WESP) 2017 report, which highlighted that India's economy is projected to grow by 7.7 percent in fiscal year 2017, on the back of robust private consumption and significant domestic reforms gradually being implemented by the government. Further, the dollar's strength against other currencies overseas put pressure on the domestic currency. On the global front, dollar rebounded on Wednesday after falling for five days in a row against its currency basket, as investors eyed a speech by the head of the Federal Reserve later in the day and US inflation data for clues on the path of interest rates. Finally, the rupee ended at 68.07, 11 paise weaker from its previous close of 67.96 on Tuesday.


The FIIs as per Wednesday'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 3471.58 crore against gross selling of Rs 3285.84 crore, while in the debt segment, the gross purchase was of Rs 179.83 crore with gross sales of Rs 560.91 crore.


The US markets showed a lackluster trade and ended mixed in last session, mainly due to uncertainty about President-elect Donald Trump's policies ahead of his inauguration on Friday and traders largely overlooked Labor Department report showing that consumer prices rose in line with estimates in December. The Asian markets have made a mixed start tailing overnight cues from Wall Street, though the Japanese market has bounced back with yen falling against the dollar after Janet Yellen said the American economy is strong enough to warrant higher interest rates. The Indian markets lost all the early momentum and showed some volatility in the final leg of trade to end with modest gains only in the last session. Today, the start is likely to remain flat on mixed global cues, though there will be some cautiousness too with US Fed Chair Janet Yellen sparking rate hike fear. On the domestic front traders will be getting some support with Minister for Road Transport and Shipping Nitin Gadkari's statement, who showcasing India's growth story before global business leaders at WEF annual meeting, said it is the appropriate time to invest in the country and added that the country is also working on ways to improve purchasing power of common men as that will present further opportunities. Meanwhile, Reserve Bank of India Governor Urjit Patel appearing before the Parliament's standing committee on finance has said that the discussions between the central bank and the government over the demonetisation issue began in early 2016 and also said that Rs 9.2 lakh crore worth of new currency notes have been put into the system since demonetisation. There will be some buzz in electronic manufacturing companies, as the Cabinet has approved the modified version of a key scheme that incentivizes electronics manufacturing in the country. Some important earnings announcements too will keep the markets buzzing.


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  • State Bank of India has concluded the issue of $500 million fixed rate Senior Unsecured Notes with maturity of five years at a coupon of 3.25 per cent payable semi-annually under Regulation-S.
  • Reliance Industries has inked a MoU with Russian petrochemical giant SIBUR to set up South Asia's first butyl rubber halogenation unit at RIL's integrated petrochemical site in Jamnagar, Gujarat.
  • Tata Motors has launched its all new multi-purpose vehicle Hexa on January 18, 2017.
  • Idea Cellular has filed a plea against the ? TRAI at the Telecom Disputes Settlement Appellate Tribunal for not taking action against Reliance Jio Infocomm for violating the rules on promotional offers.
  • ICICI Bank is planning to double the number of merchants using its point-of-sale machines and the Eazypay mobile application to 5 lakh in the next few months.
News Analysis