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NSE Intra-day chart (20 October 2016)
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Market Commentary 21 October 2016
Markets to make a flat-to-cautious start


A session after displaying consolidation, Indian benchmark indices ended higher on Thursday, on account of buying in frontline blue-chip stocks. Sentiments remained jubilant in the first half of trade amid firm cues from Asia and overnight gains on Wall Street, but investors started booking profits after weak opening in European counterparts. Investors got some confidence 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, gains remained capped 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. Finance minister Arun Jaitley however sounded confident about rolling out the proposed goods and services tax from next April even after a meeting between him and state finance ministers failed to break a deadlock on rates. Meanwhile, Moody's Investors Service has said that PPP model in India's infrastructure needs to be developed further to attract more private investment in the sector that would help propel growth. While the country's PPP mechanism has seen reasonable success in some sectors over the last 20 years, the level of activity has been low in the last four fiscal years due to challenges. On the global front, Asian markets ended mostly in green on Thursday, while European markets traded mixed. Back home, the local benchmarks got off to a positive start in the early trade as investors were largely influenced by the supportive leads from Wall Street overnight and a fairly steady trend in Asian markets.  Thereafter, the key indices soon capitalized on the momentum and touched intraday highs in late morning session but they failed to hold onto the highs and receded to lows in noon trades post weak European market opening. Yet, final hour buying ensured that the key indices do not shut shops way below the intraday highs. Finally, the BSE Sensex gained by 145.47 points or 0.52% to 28129.84, while the CNX Nifty rose 40.30 points or 0.47% to 8,699.40.


The US markets closed lower on Thursday, as a sharp drop in oil and telecommunications shares weighed on investors' sentiment. Investors also grappled with a mixed bag of economic data, earnings results, a steep drop in crude-oil prices, the prospect of a rate increase by the Federal Reserve and tumult wrought by the US presidential election. Federal Reserve Bank of New York President William Dudley stated that he expects the central bank will be able to raise interest rates before year-end, but the job this year should be more predictable than when it did so last December. On the economy front, the number of people who applied for unemployment benefits last week climbed 13,000 to 260,000 to match a six-week high, though the pace of layoffs in the US remains exceedingly low. On the other hand, manufacturing activity pulled back modestly in the Philadelphia region, but details of the report eased concerns about the durability of the factory sector. The Philadelphia Federal Reserve Bank's monthly index on regional manufacturing fell to 9.7 in October from 12.8 in September, which was the highest reading in 19 months. The Dow Jones Industrial Average lost 40.27 points or 0.22 percent to 18,162.35, Nasdaq dropped 4.58 points or 0.09 percent to 5,241.83, while S&P 500 was down 2.95 points or 0.14 percent to 2,141.34. 


Crude oil futures suffered profit taking on Thursday and slipped well off their more than one year high following a rally in the previous session fueled by an unexpectedly large U.S. oil inventory drawdown last week. Traders even overlooked OPEC official's optimism that Russia will join the cartel in curbing production in the near future. Benchmark crude oil futures for November delivery dropped $1.17 or 2.3 percent to expire at $50.63 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery declined by $1.33 or 2.51 percent to $51.33 a barrel on the ICE.


Snapping its two days gaining streak, Indian rupee ended weaker against dollar on Thursday, due to fresh demand for the American currency from banks and importers. The investors failed to get relief from the Prime Minister Narendra Modi's statement that India is capable of playing the significant role in providing strength to world economy that is facing slowdown. He said that at a time when world economy was facing slowdown like the one witnessed in 2008, India's economy was strong and was giving strength to world economy. Dollar strengthened against other currencies overseas ahead of a closely-watched European Central Bank meeting pulled the rupee down, but positive gains in the domestic equity market minimized some of its losses. Finally, the rupee ended at 66.81,14 paise weaker from its previous close of 66.67 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4235.93 crore against gross sell of Rs 4531.47 crore, while, in the debt segment, the gross purchase was of Rs 1367.83 crore with gross sales of Rs 1519.54 crore.  


The US markets made a modestly lower closing in the last session after showing a lackluster trade through the day, traders digested the European Central Bank's monetary policy decision to leave interest rates unchanged and confirmation that its monthly asset purchases of 80 billion euros are intended to run until the end of March 2017. The Asian markets have made a mixed start as corporate earnings in the region gave cause for caution and the euro sank to its weakest level since March. The Indian markets bounced back and posted decent gains in last session. Today, the start is likely to be flat-to-green on ECBs hint of additional stimulus and on some better than expected earnings, especially of Reliance Industries, India's second largest company by market value, which despite a profit decline in second quarter reported strong refining business performance and record petrochemicals segment earnings. But some cautiousness may creep in, as US Trade Representative Michael Froman underlining the need to improve the business environment in India in order to ensure greater investment inflow, has said that certain areas in the Indian economy like retail and financial services needed further opening up. Meanwhile, the government and the Reserve Bank of India have swung into action after the debit card data theft issue and RBI has directed banks to submit a report on the magnitude of the security breach at their ATM, while the finance ministry has asked for a detailed report from RBI and National Payments Corporation of India (NPCI) about the debit card information breach. The telecom stocks will be buzzing, as the Telecom Regulatory Authority of India (TRAI) has held that tariff plans of Reliance Jio, which is offering a lifetime free voice calling service, are compliant to existing rules and not discriminatory. There will be lots of earnings announcements too to keep the markets in action.



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  • Tata Motors has increased the prices of its passenger vehicles by one per cent ranging between Rs 5,000 and Rs 12,000 across models.
  • State Bank of India is reportedly planning to rise up to Rs 3,300 crore through additional tier-1   bonds.
  • Larsen & Toubro's construction arm has bagged contract under smart city programme in India.
  • Yes Bank has reported 31.31% rise in its net profit at Rs 801.54 crore for the quarter ended September 30, 2016 as compared to Rs 610.41 crore for the same quarter in the previous year.
  • Wipro has acquired US-based consultancy firm Appirio, a services firm with a large offshore firm that helps corporates implement cloud applications such as SalesForce.
News Analysis