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NSE Intra-day chart (19 October 2016)
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Market Commentary 20 October 2016
Markets to see some recovery with a positive start


After showing a firework in last session, Indian Benchmark indices ended the Wednesday's session on a dismal note as investors chose to remain on the sidelines eyeing the ongoing government meet on the goods and services tax (GST) for clarity on new rates. The crucial GST Council meeting, comprising federal and state finance ministers, will decide the main tax rate and those for different sectors. Also, Caution prevailed ahead of some key company results. This week, companies such as Biocon, Reliance Industries, ACC, Wipro and HCL Technologies are slated to report quarterly results. Sentiments remained subdued with minutes of the Reserve Bank of India's maiden monetary policy committee (MPC) meeting, released on Tuesday, whereby the rate panel eyed growth concerns. The minutes showed that broad concerns over economic growth and relief from the pullback in inflation, spurred the bank's recent rate cut decision. However, investors got some confidence with Steel Minister Chaudhary Birender Singh's statement that India is seen as the sole bright spot in a troubled global economy. Confident that 'Make in India' will transform the nation into a manufacturing powerhouse, Minister has also said that nearly $26 billion has flowed into the country this year so far since we opened the floodgates for FDI across sectors. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 345.04 crore on October 18, 2016. Meanwhile, selling was witnessed in selected FMCG stocks on fears that higher GST rate on select products would result in price hikes and hurt volume growth going forward. Financial stocks witnessed profit taking with ICICI Bank down 1.7 percent after gains of 11 percent in the previous two sessions. However, logistics companies edged higher after the goods and services tax (GST) council worked out a compensation formula for states and is now bracing for a testy debate on rates. The Centre has proposed a tiered rate structure with the rates varying from 4% for commodities like gold to 26% plus cess on so-called sin goods. Finally, the BSE Sensex declined by 66.51 points or 0.24% to 27984.37, while the CNX Nifty dropped 18.80 points or 0.22% to 8,659.10. 


The US markets closed higher for a second session on Wednesday, boosted by a rally in the energy sector and stronger-than-expected quarterly results. The Federal Reserve's Beige Book, an anecdotal economic survey, also indicated that the US economy continues its modest, albeit steady, expansion. Still, the mood in the market is generally subdued due to worries over valuation as stocks are trading near levels that had triggered strong sales in the past. The coming election is also keeping some investors from actively participating in the market. The Federal Reserve's so-called Beige Book, a collection of anecdotes about the economy gathered before the central bank makes interest-rate decisions, stated that the US economy in most of the country grew at a modest to moderate rate. On the economy front, builders broke ground on the fewest new homes in a year and a half in September, another setback as the housing market struggles for sustainable momentum. Housing starts ran at an annual 1.047 million pace. That was 9% lower than in August and 11.9% lower than a year ago. It was the slowest pace of starts since March 2015. The stumble in starts was slightly offset by a surge in building permits, which foreshadows a stronger pace of construction in the future. The Dow Jones Industrial Average added 40.68 points or 0.22 percent to 18,202.62, Nasdaq gained 2.57 points or 0.05 percent to 5,246.41, while S&P 500 was up 4.69 points or 0.22 percent to 2,144.29. 


Crude oil futures surged on Wednesday to fresh 15 months high, as official data confirmed U.S. inventories fell unexpectedly last week. The US Energy Information Administration (EIA) reported that domestic crude supplies dropped by 5.2 million barrels in the week ended Oct. 14. The report also showed that gasoline inventories rose by 2.469 million barrels, while distillate stockpiles dropped by 1.24 million barrels. Benchmark crude oil futures for November delivery surged by $1.31 or 2.6 percent to close at $51.60 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery up by $1.02 or 1.82 percent to $52.73 a barrel on the ICE.


Indian rupee appreciated for second consecutive session on Wednesday due to increased selling of the American currency by exporters and banks. Local currency got some support with Steel Minister Chaudhary Birender Singh's statement that India is seen as the sole bright spot in a troubled global economy. Minister has also said that nearly $26 billion has flowed into the country this year so far since we opened the floodgates for FDI across sectors. However, losses in the local equity markets capped the rupee gains. On the global front, dollar fell against its peers after a core U.S. inflation gauge rose less than forecast in September, suggesting the pace of interest-rate increases by the Federal Reserve will be gradual. Finally, the rupee ended at 66.67, 6 paise stronger from its previous close of 66.73 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 5590.84 crore against gross selling of Rs 5216.96 crore, while in the debt segment, the gross purchase was of Rs 1477.54 crore with gross sales of Rs 1610.20 crore. 


The US markets managed a modestly positive close in last session after the oil prices firmed up following the release of a report showing an unexpected drop in weekly crude oil inventories. Traders even overlooked Commerce Department report that housing starts unexpectedly tumbled to their lowest level in well over a year in September. The Asian markets have made mostly a positive start, led by the Japanese market which is up by over a percent in early deals as the yen weakened against the dollar. The Indian markets consolidated in the last session after surging in the previous one, traders booked some profit while the global cues remained mixed. Today, the start is likely to be in green. Market will be getting some strength with Prime Minister Narendra Modi's statement that India was the fastest growing economy and that it can play a major role in providing strength to global economy that is facing slowdown. However, there will be some cautiousness too, as the GST Council's third round of deliberations ended without a decision on the rates structure after most States objected to a proposal to levy an additional cess on demerit goods.  The GST Council will meet again on November 3-4 to take decision on the Goods and Services Tax rates, which will have four slabs. The Centre had proposed the cess as a means to finance the compensation it will have to pay States. There will be some buzz in the aviation stocks on report that domestic airlines flew 82.30 lakh passengers in September this year, registering a growth of 23.46 per cent, over the 66.66 lakh passengers carried during the same period in the previous year. The banking stocks too may see some reaction to report of huge data breach affecting several key banks. There will be lots of important earnings announcements too, to keep the markets buzzing.


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  • Tata Motors has received an approval for subscription, on a private placement basis, up to 5,000 Rated, Listed, Unsecured, 7.50% Coupon, Redeemable, NCDs of face value Rs 10,00,000 each, at par, aggregating up to Rs 500 crore, including green shoe amount of Rs 200 crore.
  • Bharti Airtel has entered into a network deployment deal with Nokia Networks to install and maintain 4G services in three new circles.
  • Mahindra & Mahindra has acquired 60% stake in Classic Legends on October 18, 2016.
  • Reliance Industries is planning to shut down the fluidized catalytic cracking unit in the DTA unit of its Jamnagar refinery for routine maintenance & inspection activities from the second week of November 2016 for about 5 weeks.
  • Bank of Baroda has acquired the semi-naming rights of Sikanderpur Metro Station in Gurugram.
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