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NSE Intra-day chart (21 March 2016)
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Market Commentary 22 March 2016
Markets to consolidate with a flat start


Indian equity indices showcased yet another euphoric performance and went on to outclass indices around the world by vivaciously rallying by over a percentage points in the session and settling above the psychological 7,700 (Nifty) and 25,200 (Sensex) levels. Friday's optimism got spilled over into the new week, helping the frontline indices in extending the winning momentum for second successive session on Monday as hopes increased that Reserve Bank of India (RBI) could cut rates by as much as 50 basis points next month after the government slashed the country's retail savings rate last week. Sentiments got some support from a report, indicating growth prospects remain positive for the Indian economy, with the government strongly accelerating its reform announcements.  According to the report, the real estate Bill, the new Hydrocarbon Exploration Licensing Policy, the Bill to amend the Companies Act and the proposed introduction of the bankruptcy code bear testimony that the government is well focused on reviving the investment climate and improving ease of doing business scenario in India. Appreciation in Indian rupee too aided sentiments. Indian rupee recovered from its early lows by surging 7 paise to 66.43 against the US dollar at the time of equity markets closing at the Interbank Foreign Exchange. Some support also came with the report that foreign portfolio investors (FPIs) bought shares worth a net Rs 1712.62 crore on March 18, 2015. On the global front, Asian markets ended mixed as a retreat in oil prices made investors cautious, while stock markets in Europe recovered early losses to trade positive. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, tracking weak trade in Asian markets. But the frontline indices gradually started gathering steam and surged by over half a percent by late morning trades. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. Finally, the BSE Sensex gained 332.63 points or 1.33% to 25285.37, while the CNX Nifty rose 99.90 points or 1.31% to 7,704.25.


The US markets closed modestly higher after a choppy trade on Monday. While, the traders remained concerned about the near-term outlook for the markets on the heels of the recent strength, the upcoming Easter holiday also contributed the lackluster performance. On economy front, the National Association of Realtors (NAR) released a report showing a much steeper than expected pulling back in existing home sales in February. NAR said existing home sales tumbled 7.1 percent to an annual rate of 5.08 million in February from 5.47 million in January. Economists had expected sales to show a more modest decrease to a rate of 5.31 million. The Dow Jones Industrial Average edged up 21.57 points or 0.1 percent to 17,623.87, the Nasdaq gained13.23 points or 0.3 percent to 4,808.87 and the S&P 500 ended up by 2.02 points or 0.1 percent to 2,051.60.


Crude oil futures rebounded on Monday after data showed crude inventories at the Cushing, Oklahoma delivery hub for US futures fell for the first time since January. Crude stockpiles in Cushing fell 570,574 barrels to 69.05 million in the week to March 18. Traders also got some support with Organization of the Petroleum Exporting Countries (OPEC's) secretary general stating that Iran may join other oil producers planning to freeze production to support prices at a later date. Benchmark crude oil futures for April delivery gained $0.47 or 1.20 percent to $39.91 a barrel after trading in a range of $38.96 and $39.98 a barrel on the New York Mercantile Exchange. In London, Brent crude for May delivery closed at $41.54, up $0.34 or 0.80 percent on the ICE.


Indian rupee could not extend its gains to the new week and witnessed some profit taking, after three straight sessions of upmoves on Monday against the US dollar. The domestic currency showed some strength in the beginning and touched its more than two months high, even though most Asian currencies traded lower. However, profit taking with dollar demand from importers halted the gaining streak of the rupee and despite the gains in the local equity markets amid sustained foreign fund inflows, rupee ended weaker, as traders avoided long positions owing to a shortened week. On the global front, dollar was little changed against the euro and the yen in quiet trade on Monday, while the euro came under pressure after ECB Chief Economist Peter Praet said that euro zone interest rates could go even lower. Finally, the rupee ended at 66.53, 3 paise weaker from its previous close of 66.50 on Friday.


The FIIs as per Monday's data were net buyers in equity and in debt segments both. In equity segment, the gross buying was of Rs 7308.58 crore against gross selling of Rs 5420.73 crore, while in the debt segment, the gross purchase was of Rs 965.78 crore with gross sales of Rs 842.70 crore.         


The US markets ended modestly higher on Monday, though the trade remained choppy throughout the day, as traders expressed uncertainty about the near-term outlook for the markets on the heels of the recent strength. The Asian markets have made a mixed start and some of the indices in the region are marginally in red, though the Japanese market coming after a long weekend has rallied ahead of the releases a gauge of manufacturing, with the yen extending its drop against the greenback into a third day.  The Indian markets went for a surprise rally in the last session and benchmarks surging over a percent in the final hour of trade, ended near their two months high. Today, the start is likely to be a bit cautious, as the regional peers are giving a mixed cues. Traders will be concerned with slow growth of the manufacturing activity, as the the yearly SBI Composite Index for March has declined below 50 and is at 49.5, compared with last month index of 51.3. However, the monthly Index jumped to 54.5 in March 2016, from 49.1 in February 2016. Though, traders will be getting some support with rating agency ICRA projecting Indian economic growth to improve to 7.7 percent in next fiscal, led by domestic consumption demand on the back of implementation of 7th Pay Commission and OROP recommendations. In other positive news India's current account deficit (CAD) narrowed to 1.3 percent of GDP in third quarter of the fiscal as against 1.5 percent in the same period last year, mainly on account of lower trade deficit. There will be some buzz in the banking stocks, especially the PSU ones, as the finance ministry has asked banks to pull all stops to recover bad loans, failing which banks run the risk of not being capitalised by the government.


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  • NTPC has commissioned the Unit-I of 250 MW of Nabinagar Thermal Power Station of Bhartiya Rail Bijlee company on March 20, 2016.
  • BHEL   has commissioned another 270 MW unit at Goindwal Sahib coal-fired power project in Punjab.
  • ITC's sales of its instant noodles brand Yippee are recovering and its market share has risen to anywhere between 30 percent and 40 percent.
  • Bharti Airtel has entered into a deal with American Tower Corp to sell around 1,350 of its communications towers in Tanzania.
  • Mahindra & Mahindra, India's leading SUV manufacturer is planning to launch its electric model e2o in the United Kingdom.
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