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NSE Intra-day chart (18 May 2016)
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Market Commentary 19 May 2016
Markets to extend the weakness with a soft start


Indian benchmarks showed a lackadaisical performance on Wednesday as they failed to snap the session in the green territory and settled marginally below the neutral line amid weak global cues. Investor's sentiments turned subdued in the very beginning with a top US official's statement that India needs to modernise and reform its economic governance to expand trade and attract the kind of foreign direct investment it needs to build infrastructure. Confidence was further hit by the repot that foreign portfolio investors (FPIs) sold shares worth a net Rs 224.97 crore on May 17, 2016.  Besides, depreciation in the rupee against dollar, which fell for the fifth day, also weighed on the sentiment. Indian rupee depreciated by eight paise to trade at 66.95 against the US dollar at the time of equity markets closing, due to fresh buying of the American currency by banks and importers. However, market participants got some support with the private repot that indicate the growth recovery in Indian economy is becoming more 'broad-based' with rise in public sector capital expenditure and foreign direct investment. Also, going forward the consumption growth is expected to pick up further. Also, Indian consumers were the most confident in the world in terms of job prospects, personal finances and concerns in the first quarter of 2016 with their confidence index touching a nine-year high during the period, according to a study by global performance management company, Nielsen. The Consumer Confidence Index score for India increased three index points in the first quarter to a score of 134, the highest for the country since 2007 and comes after three consecutive quarters at 131. On the global front, European shares declined on Wednesday, while Stock markets in Hong Kong and China fell amid concerns that signs of recovery in its economy may be short-lived. Back home, the benchmark got a gap down beginning after investors largely remained influenced by gloomy global developments as strong US inflation data rekindled prospects of the central bank raising rates later this year. Thereafter, the key indices failed to show any kind of aggressive move as they oscillated around the lower levels for most part of morning trades and drifted deeper into the red terrain in late session. Finally, the BSE Sensex ended lower by 69 points or 0.27% to 25704.61, while the CNX Nifty dropped 20.60 points or 0.26% to 7,870.15. 


The US market closed mostly higher on Wednesday, following a bumpy session after minutes from the Federal Reserve's most recent meeting indicated that most of its members are ready to lift rates as early as June if the economy shows more life. The minutes of the April 26-27 Federal Open Market Committee meeting appear to echo concerns articulated in recent speeches from Federal Reserve officials, namely that the market is too complacent over the interest-rate-hike desires at the central bank. Some Fed officials stated that financial markets might not be expecting a rate hike in June and emphasized the importance of communicating clearly. Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen and inflation making progress toward the Fed's 2% objective, then it likely would be appropriate for the Fed to increase the target range for the federal funds rate in June. The Nasdaq added 23.39 points or 0.50 percent to 4,739.12, S&P 500 was up by 0.42 points or 0.02 percent to 2,047.63, while Dow Jones Industrial Average lost 3.36 points or 0.02 percent to 17,526.62.


Crude oil futures declined on Wednesday, despite showing a good show in early trade, as the Federal Reserve sent strong indications in its April minutes that it could raise interest rates next month, triggering a rapid increase in the slumping dollar. Benchmark crude oil futures for June delivery declined by $0.17 or 0.41percent to $48.14 a barrel after trading in a range of $48.00 and $48.94 a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery closed at $48.86, down $0.43 or 0.87 percent on the ICE.


Indian rupee extending its early losses, depreciated against dollar on Wednesday on sustained dollar demand from importers, foreign fund outflows and rising global crude oil prices amid dollar's strength against other currencies overseas. The domestic currency was trading weak from the start and losses in local equity market too added to the pessimistic environment of the currency. Besides, losses in Asian currencies' market too pressurized rupee. The domestic unit ended weaker for fifth straight session against dollar. On the global front, dollar rallied to a three-week high against the euro and a basket of currencies on Wednesday on renewed expectations that the Federal Reserve could raise interest rates soon. Finally, the rupee ended at 66.98, 11 paise weaker from its previous close at 66.87 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, the gross buying was of Rs 4506.67 crore against gross selling of Rs 4374.72 crore, while in the debt segment, the gross purchase was of Rs 299.39 crore with gross sales of Rs 3254.28 crore.            


The US markets made a mixed closing in last session, as traders turned a bit cautious following the release of the minutes of the latest Federal Reserve meeting, which hinted strongly at the possibility of an interest rate hike next month. The Asian markets have made mostly a weak start, with prospect of US Fed's June interest-rate hike firming up. While the Chinese market was modestly in red, the Japanese market has declined marginally on yen strength. The Indian bourses snapped their two days gaining streak in last session led by auto companies, even though the banking shares bucked the trend. Today, the start is likely to be weak on somber global cues. Traders will be concerned with April FOMC minutes, which showed most of its rate-setting officials, were in favor of boosting borrowing costs next month should the U.S. economy continue to improve. On domestic front traders will be eyeing the state assembly election results for cues. However, there will be some support with global rating agency Standard and Poor's (S&P) statement that India is likely to remain insulated from the developments in the Chinese economy provided the government carries out structural reforms to take the economy to an eight per cent growth path. There will be some buzz in the pharma sector, as the government has approved three foreign direct investment proposals, all related to the pharmaceutical sector, worth Rs. 60.73 crore. The oil & gas sector too may see some action, Minister of State for Petroleum and Natural Gas, Dharmendra Pradhan stating that natural gas from coal bed methane is likely to contribute to five per cent of national gas production by 2017.Also there will be lots of important earnings announcements to keep the markets buzzing.


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  • Tata Consultancy Services has entered into a five-year partnership with Lidingoloppet, the legendary Swedish sports event, widely regarded as the world's largest cross-country run.
  • Maruti Suzuki India's Alto 800, now comes with a more attractive front design, fresh interiors, vibrant colours, higher fuel efficiency and new features.
  • State Bank of India is planning to sell part of its holding in National Stock Exchange through a competitive bidding process, where it owns 15% stake.
  • Housing Development Finance Corporation, the country's largest mortgage lender, has decided to raise Rs 1500 crore by issuing debentures on a private placement basis.
  • Hindustan Unilever has received an approval from fair trade regulator Competition Commission of India to sell its rice exports business to Delhi-based LT Foods.
News Analysis